Firstcall recommends ABB for mid- to long-term for target of RS1,480 after Q1CY15 net profit hits Rs542.9m

1. Recommendation BUY
CMP 1374.00
Target Price 1480.00
ISIN: INE117A01022 MAY 7th
, 2015
ABB INDIA LIMITED
Result Update (PARENT BASIS): Q1 CY15
STOCK DETAILS
Sector Heavy Electrical Equipment
BSE Code 500002
Face Value 2.00
52wk. High / Low (Rs.) 1525.00/807.30
Volume (2wk. Avg ) 11000
Market Cap ( Rs in mn ) 291150.60
Annual Estimated Results (A*: Actual / E*: Estimated)
Years CY14A CY15E CY16E
Net Sales 77332.70 83519.32 91036.05
EBITDA 5729.70 6477.07 6872.75
Net Profit 2285.10 2758.21 2951.20
EPS 10.78 13.02 13.93
P/E 127.41 105.56 98.65
Shareholding Pattern (%)
1 Year Comparative Graph
ABB INDIA LTD S&P BSE SENSEX
SYNOPSIS
ABB India Ltd is a leader in power and automation
technologies that enable utility and industry
customers to improve their performance while
lowering environmental impact
During Q1 CY15, net profit jumps to Rs. 542.90 mn
against Rs. 516.80 mn in the corresponding quarter
ending of previous year, an increase of 5.05%.
Revenue for the quarter stood at Rs. 18145.70 mn
from Rs. 18277.10 mn, when compared with the
prior year period.
During the quarter, EBIDTA is Rs. 1443.20 mn as
against Rs. 1268.50 mn in the corresponding period
of the previous year, grew by 13.77%.
PBT increased by 5.07% to Rs. 812.90 mn in the first
quarter of 2015, as compared to Rs. 773.70 mn in the
same period last year.
EPS of the company stood at Rs. 2.56 a share
during the quarter, registering 5.05% increased over
previous year period.
The company has received orders worth Rs. 18560
mn in the first quarter of 2015.
The company’s order backlog of Rs. 79730 mn as on
March 31, 2015, provides visibility for future
revenue.
ABB has won an order of Rs. 900 mn from Techno
Electric and Engineering Company Ltd to deliver gas-
insulated switchgear and transformers for a 400/220
kilovolt (kV) substation at Patran in Punjab.
Net Sales and PAT of the company are expected to
grow at a CAGR of 6% and 19% over 2013 to 2016E
respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
COMPANY NAME (Rs.) Rs. Mn. (Rs.) Ratio Ratio (%)
ABB India Ltd 1374.00 291150.60 10.78 127.41 10.35 185.00
Siemens Ltd 1256.10 448747.10 34.98 36.02 10.26 300.00
BHEL Ltd 230.50 558787.10 9.71 23.51 1.69 141.50
Voltamp Transformers Ltd 658.00 6657.10 25.46 25.84 1.57 100.00

2. FINANCIAL HIGHLIGHTS (PARENT BASIS)
Results updates- Q1 CY15,
ABB is the leading power & automation engineering
companies and its portfolio ranges from light
switches to robots, and from huge electrical
transformers to control systems that manage entire
power networks & factories in the world and the
largest in India, reported its financial results for the
quarter ended 31st Mar, 2015.
Months Mar-15 Mar-14 % Change
Net Sales 18145.70 18277.10 -0.72%
Net Profit 542.90 516.80 5.05%
EPS 2.56 2.44 5.05%
EBITDA 1443.20 1268.50 13.77%
The company net profit jumps to Rs. 542.90 million against Rs. 516.80 million in the corresponding quarter
ending of previous year, an increase of 5.05%. Revenue for the quarter fell by 0.72% to Rs. 18145.70 million from
Rs. 18277.10 million, when compared with the prior year period. Reported earnings per share of the company
stood at Rs. 2.56 a share during the quarter, registering 5.05% increased over previous year period. Profit before
interest, depreciation and tax is Rs. 1443.20 million as against Rs. 1268.50 million in the corresponding period of
the previous year.
Expenditure:
Break up of
Expenditure
Rs. million
Q1 CY15 Q1 CY14
%
Change
Cost of materials
consumed & Purchases
of project items
10100.60 10333.50 -2%
Purchase of Stock in
Trade
763.20 823.30 -7%
Subcontracting
Expenses
1090.00 1076.00 1%
Employee Benefit
Expenses
1827.70 1681.40 9%
Depreciation &
Amortization Expense
422.30 274.10 54%
Other Expenditure 2956.30 3001.80 -2%

3. Segment Revenue
Orders
• The company received orders worth Rs. 18560 mn in the first quarter of 2015. A double digit growth in short
cycle orders helped sustain business momentum. A consistent order backlog of Rs. 79730 mn as on March 31,
2015, provides visibility for future revenue.
• ABB has won an order of Rs. 900 mn from Techno Electric and Engineering Company Ltd. (Techno), an Indian
EPC player, to deliver gas-insulated switchgear (GIS) and transformers for a 400/220 kilovolt (kV) substation
at Patran in Punjab. The project is due for completion in 2016.
Company Profile
ABB Group Company was incorporated in India in 1949; it is leader in power automation technologies. These
technologies enable industrial customers to improve performance along with lower environment impact. The
ABB Group has 14 manufacturing units in India. It operates in 100 countries and has employed 140,000 people.
In India it has presence across 30 marketing offices, 8 service centers, 3 logistics warehouses and network of 750
channel partners.
ABB is a global leader in power and automation technologies that enable utility and industry customers to
improve performance while lowering environmental impact. For more than 100 years, ABB and its predecessor
companies have set the pace for innovation in technologies to harvest energy, improve productivity, safeguard
the environment, increase profits, and more. The company modern-day power and automation technologies are
derived from the efforts of dozens of leading companies and thousands of talented individuals worldwide.

4. Financial Highlight (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance sheet as at December 31st, 2013-2016E
ABB INDIA LTD CY13A CY14A CY15E CY16E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 423.80 423.80 423.80 423.80
Reserves and Surplus 26351.80 27696.00 30454.21 33405.41
1. Sub Total - Net worth 26775.60 28119.80 30878.01 33829.21
Non Current Liabilities
Other Long term Liabilities 41.70 45.10 47.36 49.72
Long Term Provisions 57.10 374.40 434.30 490.76
2. Sub Total - Non Current Liabilities 98.80 419.50 481.66 540.49
Current Liabilities
Short-term borrowings 6201.10 3710.70 2894.35 2460.19
Trade Payables 20825.80 19840.20 20733.01 21562.33
Other Current Liabilities 13959.50 12977.00 13755.62 14250.82
Short Term Provisions 2634.50 3149.30 3621.70 4020.08
3. Sub Total - Current Liabilities 43620.90 39677.20 41004.67 42293.43
Total Liabilities (1+2+3) 70495.30 68216.50 72364.34 76663.12
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
Tangible Assets 12680.20 12840.20 13482.21 14021.50
Intangible Assets 1234.90 1155.20 1212.96 1261.48
Capital work-in-progress 474.90 319.30 341.65 358.73
a) Sub Total - Fixed Assets 14390.00 14314.70 15036.82 15641.71
b) Non-current investments 164.70 163.90 180.29 194.71
c) Deferred tax assets 279.30 152.30 137.07 126.10
d) Long Term loans and advances 3508.90 4015.30 4497.14 4946.85
e) Other non-current assets 83.00 74.80 80.04 84.84
1. Sub Total – Non Current Assets 18425.90 18721.00 19931.35 20994.22
Current Assets
Current Investments 0.80 0.80 0.84 0.92
Inventories 9888.50 8938.20 9653.26 10328.98
Trade receivables 32357.20 31575.20 33153.96 35129.10
Cash and Bank Balances 3165.80 2259.60 2485.56 2684.40
Short-terms loans & advances 2567.70 2774.50 2915.86 3090.82
Other current assets 4089.40 3947.20 4223.50 4434.68
2. Sub Total - Current Assets 52069.40 49495.50 52432.98 55668.91
Total Assets (1+2) 70495.30 68216.50 72364.34 76663.12

5. Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn) CY13A CY14A CY15E CY16E
Description 12m 12m 12m 12m
Net Sales 77219.90 77332.70 83519.32 91036.05
Other Income 69.90 172.80 129.60 136.08
Total Income 77289.80 77505.50 83648.92 91172.13
Expenditure -72520.70 -71775.80 -77171.85 -84299.39
Operating Profit 4769.10 5729.70 6477.07 6872.75
Interest -1011.30 -1049.50 -997.03 -1036.91
Gross profit 3757.80 4680.20 5480.04 5835.84
Depreciation -1033.10 -1128.10 -1207.07 -1267.42
Profit Before Tax 2724.70 3552.10 4272.98 4568.42
Tax -955.80 -1267.00 -1514.77 -1617.22
Profit After Tax 1768.90 2285.10 2758.21 2951.20
Extraordinary Items 24.20 0.00 0.00 0.00
Net Profit 1793.10 2285.10 2758.21 2951.20
Equity capital 423.80 423.80 423.80 423.80
Reserves 26351.80 27696.00 30454.21 33405.41
Face value 2.00 2.00 2.00 2.00
EPS 8.46 10.78 13.02 13.93
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 18449.70 22384.10 18145.70 19052.99
Other income 10.50 146.90 7.20 8.06
Total Income 18460.20 22531.00 18152.90 19061.05
Expenditure -17208.40 -20583.80 -16709.70 -17604.96
Operating profit 1251.80 1947.20 1443.20 1456.09
Interest -275.40 -299.80 -208.00 -232.96
Gross profit 976.40 1647.40 1235.20 1223.13
Depreciation -283.40 -292.00 -422.30 -447.64
Profit Before Tax 693.00 1355.40 812.90 775.49
Tax -243.20 -513.80 -270.00 -272.97
Net Profit 449.80 841.60 542.90 502.52
Equity capital 423.80 423.80 423.80 423.80
Face value 2.00 2.00 2.00 2.00
EPS 2.12 3.97 2.56 2.37

6. Ratio Analysis
Particulars CY13A CY14A CY15E CY16E
EPS (Rs.) 8.46 10.78 13.02 13.93
EBITDA Margin (%) 6.18% 7.41% 7.76% 7.55%
PBT Margin (%) 3.53% 4.59% 5.12% 5.02%
PAT Margin (%) 2.29% 2.95% 3.30% 3.24%
P/E Ratio (x) 162.37 127.41 105.56 98.65
ROE (%) 6.61% 8.13% 8.93% 8.72%
ROCE (%) 17.59% 21.54% 22.75% 22.43%
Debt Equity Ratio 0.23 0.13 0.09 0.07
EV/EBITDA (x) 61.69 51.07 45.01 42.33
Book Value (Rs.) 126.36 132.70 145.72 159.65
P/BV 10.87 10.35 9.43 8.61
Charts

7. Outlook and Conclusion
At the current market price of Rs.1374.00, the stock P/E ratio is at 105.56 x CY15E and 98.65 x CY16E
respectively.
Earning per share (EPS) of the company for the earnings for CY15E and CY16E is seen at Rs.13.02 and
Rs.13.93 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 6% and 19% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 45.01 x for CY15E and 42.33 x for CY16E.
Price to Book Value of the stock is expected to be at 9.43 x and 8.61 x for CY15E and CY16E respectively.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.1480.00 for Medium to Long term
investment.
Industry Overview
Capital goods and engineering turnover in India is expected to reach US$ 125.4 billion by 2017 from US$ 57.6
billion in 2012, while the electrical equipment market size is forecasted to touch US$ 105 billion by 2022 from
US$ 24.2 billion in 2011. Also, the Indian telecom equipment market is expected to reach US$ 37 billion by 2020
from US$ 16 billion in 2011.
The Indian engineering sector is divided into two major segments - heavy engineering and light engineering.
Indian engineering exports stood at US$ 62.3 billion in FY14, registering a compound annual growth rate (CAGR)
of 10.8 per cent over FY08-14.
The Government of India has de-licensed the engineering industry and 100 per cent foreign direct investment
(FDI) has been permitted in the sector. The government has also eliminated tariff protection on capital goods and
reduced custom duties on a range of engineering equipment. It launched the National Manufacturing Policy with
the aim of enhancing the sector's share in gross domestic product (GDP) to 25 per cent within a decade and
creating 100 million jobs by 2022.
Demand for machine tools from the capital goods sector (especially automobile and textile industries) is
projected to remain high. Considering the industry's demand for higher productivity, superior precision and
accuracy, as well as low-cost manufacturing solutions, computer numerically controlled (CNC) machine tools are
set to be in greater demand.

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purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

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the recipients’ investment decision based on this document.
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