Motilal Oswal Financial Services has maintained its Buy rating on ABB India, but slashed the target price to ₹6000 from ₹6700. The brokerage flagged short-term challenges, including forex fluctuations, implementation-related costs of the new Quality Control Order (QCO), and weak ordering activity.
While the second half of CY25 is seen as a recovery phase, MOSL has lowered its estimates by 15%, 8%, and 2% for CY25, CY26, and CY27, respectively, to reflect lower margin assumptions.
At present, ABB India is trading at 63.7x/53.6x/45.6x CY25E/CY26E/CY27E earnings. The brokerage expects revenue, EBITDA, and PAT to grow at a CAGR of 14%, 19%, and 18%, respectively, over CY25–CY27.
Despite near-term underperformance due to margin pressure and soft demand from private and government sectors, MOSL believes ABB has the potential to expand margins in the long run once QCO implementation stabilizes. A re-rating to higher valuation multiples will depend on clear visibility of order inflows and margin recovery.
Disclaimer: The views and recommendations in this article are those of Motilal Oswal and do not represent the opinion of this publication. Investors are advised to consult their financial advisors before making any investment decisions.
