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ABB INDIA LTD.,

ABB INDIA LTD.,. Buying Level : 1580-1650. Target :1820-2000-2350. The Scrip has formed a ascending triangle between 1560-1650 on daily chart. We recommend to accumulate At these levels. The scrip had taken a strong support at lower Level.

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ABB INDIA LTD.,

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  1. ABB INDIA LTD., Buying Level : 1580-1650. Target :1820-2000-2350. The Scrip has formed a ascending triangle between 1560-1650 on daily chart. We recommend to accumulate At these levels. The scrip had taken a strong support at lower Level. A weekly close above 1660 will move the stock to the target.

  2. Company Outlook ABB unveils growth plan ABB announced its growth plan for India. The company sees significant potential in India and has plans to double its business volumes by 2010 (We assume that the base for doubling of revenues would be CY07). We are encouraged by the management's outlook for growth as it is in conformity with our growth expectations. However, we note that our projections already factor in the company doubling its revenues by 2010. • Business volumes in India expected to double by 2010 • n Additional USD 100 mn investment announced • n Employee strength expected to touch 10000 by 2010

  3. Company Outlook ABB continues to look at India as a key focus area for the group. The Chairman of ABB Group expects Indian operations to play an integral role in strengthening ABB's global footprint. To support its growth plans, ABB India plans to significantly rampup manpower to 10000 from 6000 currently. India is expected to be among the top five markets for ABB in the coming years and ABB's strong presence, it expects the business volumes for ABB in India to double by 2010. ABB India has completed its previously announced investment programme of USD 100 mn. It now plans to invest an additional USD 100 million for capacity and range expansion over the next 2-3 years. The upcoming manufacturing units would also be used to cater to the markets in neighboring countries.

  4. Company Outlook Capacity Expansion plans include a new greenfield facility near Bangalore for manufacturing Low Voltage products and Power Electronics. The company is also establishing new manufacturing units in Vadodara for Small Power Transformers and Distribution Automation products. ABB will double its production capacity for high voltage (HV) breakers , instrument transformers and HT (high tension) machines as well as expand the capacity of large power transformers to 17000 MVA as part of its expansion plans. n Looking at the strong emerging market potential in the High-Voltage segment, ABB will also manufacture 765 kV equipment in India. n In addition to its existing global Operations and Engineering Center in Bangalore a second such Center has recently been established in Chennai to support Power Systems and Process Automation projects across the world. The company plans to double its headcount at these centers from the present strength of around 350 engineers.

  5. Earnings Outlook and Valuation Earnings Outlook and Valuation ABB's order inflows have grown 34.5% in 9M CY07. Order backlog stood at Rs 49 bn providing a revenue visibility of 10 months. In our view, given ABB's lower order execution cycle, visibility of 10 months is good enough to deliver a 34.8% revenue growth in CY08. For CY09, we have projected 30% growth in revenues. Thus based on our estimates, ABB would report Rs 80 bn in revenue in CY08. Doubling of CY07 revenues would require ABB to deliver 14% rise in revenue in CY10. This implies that our growth projections capture the management's target of doubling CY07 revenues over next three years. Since March 07, ABB has clearly outperformed the broad market and has returned 136% against Sensex return of 57% over the same period. We expect earnings to grow at 42% and 35% in CY08 and CY09 respectively. As against this, the stock currently trades at 48.4x and 35.8x CY08 and CY09 earnings respectively. We highlight that investment momentum in power transmission continues to be strong on the back of rollout of power transmission infrastructure and upgradation of power distribution system.

  6. Income Statement

  7. Income Statement

  8. Balance Sheet

  9. Balance Sheet

  10. Ratios

  11. Ratios

  12. Ratios

  13. Disclaimer: This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information/ article. This report is exclusively for the clients of Venkataraman & Co. only. VENKATARAMAN & CO., Stock & Share Brokers, New No.2 (Old No.52) Dr. Ranga Road, Mylapore, Chennai 600 004. Web: www.venkataraman .com E-mail: vnkco@vsnl.com

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