Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
1Q was marginally below our forecasts, with margin pressure due to material costs. The worst
seems to be over in terms of provisioning. The macro environment is challenging and we expect
orders to pick up only in 2H12. Valuations look demanding; we prefer Crompton Greaves.
Maintain Sell.
1Q result below our forecasts, but good growth returns to the power segment
ABB reported 1Q numbers that were marginally below our forecasts. Sales, at Rs18bn (up 22%
yoy), were 4% higher than our numbers, while PAT, at Rs572m (down 21% yoy), was 10% below.
The EBITDA margin remained subdued at 5.7% (down 143bp yoy), primarily on a material cost
increase. We expect margins to improve, as major provisioning for exit costs from the rural
electrification business has been completed. In terms of segments, execution returned to the
power business, which grew 24% yoy, although margin improvement seems to be a couple of
quarters away. Order inflows were flat yoy at Rs17bn, but improved sequentially by 21%. Order
backlog is flat sequentially at Rs83bn.
Macro environment remains challenging
The macro environment for the Transmission and Distribution (T&D) space remains challenging.
We expect ordering to remain tepid for the next few quarters in fiscal 1H12, but pick up in 2H12
as Powergrid ordering improves. This is also evident in management commentary from
competitor Crompton Greaves. The competitive environment is tough, with pressure from
Chinese and Korean vendors; although we feel their pricing is not sustainable long term, it can
result in a testing time for Indian T&D players in the short term.
We maintain earnings forecasts and Sell rating; we prefer Crompton
Although the worst may be behind us in terms of major provisioning costs for rural electrification,
margin risk remains due to higher commodity prices and future provisioning. The current macro
environment could lead to a higher-than-anticipated slowdown in inflows from the industry sector,
affecting revenue and profitability in FY11-12. We maintain our forecasts and our Sell rating. The
stock currently trades at a PE of 37x FY12F and is expensive compared to peers, based on our
forecasts. We still prefer Crompton in this space, as its product-focused business gives it an
advantage over peers.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
1Q was marginally below our forecasts, with margin pressure due to material costs. The worst
seems to be over in terms of provisioning. The macro environment is challenging and we expect
orders to pick up only in 2H12. Valuations look demanding; we prefer Crompton Greaves.
Maintain Sell.
1Q result below our forecasts, but good growth returns to the power segment
ABB reported 1Q numbers that were marginally below our forecasts. Sales, at Rs18bn (up 22%
yoy), were 4% higher than our numbers, while PAT, at Rs572m (down 21% yoy), was 10% below.
The EBITDA margin remained subdued at 5.7% (down 143bp yoy), primarily on a material cost
increase. We expect margins to improve, as major provisioning for exit costs from the rural
electrification business has been completed. In terms of segments, execution returned to the
power business, which grew 24% yoy, although margin improvement seems to be a couple of
quarters away. Order inflows were flat yoy at Rs17bn, but improved sequentially by 21%. Order
backlog is flat sequentially at Rs83bn.
Macro environment remains challenging
The macro environment for the Transmission and Distribution (T&D) space remains challenging.
We expect ordering to remain tepid for the next few quarters in fiscal 1H12, but pick up in 2H12
as Powergrid ordering improves. This is also evident in management commentary from
competitor Crompton Greaves. The competitive environment is tough, with pressure from
Chinese and Korean vendors; although we feel their pricing is not sustainable long term, it can
result in a testing time for Indian T&D players in the short term.
We maintain earnings forecasts and Sell rating; we prefer Crompton
Although the worst may be behind us in terms of major provisioning costs for rural electrification,
margin risk remains due to higher commodity prices and future provisioning. The current macro
environment could lead to a higher-than-anticipated slowdown in inflows from the industry sector,
affecting revenue and profitability in FY11-12. We maintain our forecasts and our Sell rating. The
stock currently trades at a PE of 37x FY12F and is expensive compared to peers, based on our
forecasts. We still prefer Crompton in this space, as its product-focused business gives it an
advantage over peers.
No comments:
Post a Comment