Robust Order Intake Improves Revenue Visibility
Q1 order booking, backlog and revenue better in many years: Order booking during Q1CY17 grew by 28.0% with base orders growing by 17.0% on YoY basis to Rs.23,420mn and order backlog standing at Rs.120bn by end of Q1CY17 which includes Rs.3.5bn transmission order and rest of the book split equally between large and short cycle orders. Revenue (net) for ABB grew by 8.4% on YoY basis to Rs.21,460mn during Q1CY17. Exports business grew by 120.0% accounting for 15.0% of revenues and services business grew by 40.0% to 12.0% of revenues by Q1CY17.
ABB reorganises business segments: Beginning CY17, ABB had rearranged businesses into four segments. Now, Electrical products include electric vehicle charging, solar and power quality businesses of erstwhile Discrete Automation & Motion division. The residual Discrete Automation & Motion division now renamed as Robotics & Motion division while the Process Automation division renamed as Industrial Automation division. In terms of revenue and growth, Robotics & motion segment grew by 10.8% to Rs.4,993mn, Electrification products grew by 3.5% to Rs.6,910mn, Industrial automation grew by 3.4% to Rs.3,075mn and Power grids grew by 12.9% to Rs.8,665mn during Q1CY17 vis-a-vis last year same quarter.
Margins impacted due to multiple factors during Q1CY17: Material margin improved by 44bps however due to business segment reorganisation and first time adoption of IND AS by ABB; there was an impact on reassessment of employee benefit, forward contracts, credit losses and other liabilities. These impacts could be transitory in few cases however could spill for next four quarters depending on execution mix. Absolute EBITDA, EBIT and PAT reached to Rs.1,486mn, Rs.1,524mn and Rs.882mn respectively with EBITDA, EBIT and PAT margins standing at 6.9%, 7.1% and 4.1% lower by 60bps, 58bpsand 21bps respectively for Q1CY17. Segment margins were also impacted in the range of 240bps to 280bps in Robotics, electric products and automation segments.
Estimates revised: We revise our revenue, EBITDA and PAT estimates for CY17E to Rs.94,945mn, Rs.8,963mn and Rs.4,552mn respectively and for CY18E the same stands revised at Rs1,08,136mn, Rs.10,518mn and Rs.5,451mn respectively.
Valuation and Outlook
At CMP of Rs.1532, ABB is trading at 59.6x of CY18E EPS of Rs.25.7 and I value ABB at 63.9x of CY18E EPS (15% discount to 11 year one year forward mean multiple averaged to 75.1x) for an upwardly revised target of Rs.1,644.
Q1 order booking, backlog and revenue better in many years: Order booking during Q1CY17 grew by 28.0% with base orders growing by 17.0% on YoY basis to Rs.23,420mn and order backlog standing at Rs.120bn by end of Q1CY17 which includes Rs.3.5bn transmission order and rest of the book split equally between large and short cycle orders. Revenue (net) for ABB grew by 8.4% on YoY basis to Rs.21,460mn during Q1CY17. Exports business grew by 120.0% accounting for 15.0% of revenues and services business grew by 40.0% to 12.0% of revenues by Q1CY17.
ABB reorganises business segments: Beginning CY17, ABB had rearranged businesses into four segments. Now, Electrical products include electric vehicle charging, solar and power quality businesses of erstwhile Discrete Automation & Motion division. The residual Discrete Automation & Motion division now renamed as Robotics & Motion division while the Process Automation division renamed as Industrial Automation division. In terms of revenue and growth, Robotics & motion segment grew by 10.8% to Rs.4,993mn, Electrification products grew by 3.5% to Rs.6,910mn, Industrial automation grew by 3.4% to Rs.3,075mn and Power grids grew by 12.9% to Rs.8,665mn during Q1CY17 vis-a-vis last year same quarter.
Margins impacted due to multiple factors during Q1CY17: Material margin improved by 44bps however due to business segment reorganisation and first time adoption of IND AS by ABB; there was an impact on reassessment of employee benefit, forward contracts, credit losses and other liabilities. These impacts could be transitory in few cases however could spill for next four quarters depending on execution mix. Absolute EBITDA, EBIT and PAT reached to Rs.1,486mn, Rs.1,524mn and Rs.882mn respectively with EBITDA, EBIT and PAT margins standing at 6.9%, 7.1% and 4.1% lower by 60bps, 58bpsand 21bps respectively for Q1CY17. Segment margins were also impacted in the range of 240bps to 280bps in Robotics, electric products and automation segments.
Estimates revised: We revise our revenue, EBITDA and PAT estimates for CY17E to Rs.94,945mn, Rs.8,963mn and Rs.4,552mn respectively and for CY18E the same stands revised at Rs1,08,136mn, Rs.10,518mn and Rs.5,451mn respectively.
Valuation and Outlook
At CMP of Rs.1532, ABB is trading at 59.6x of CY18E EPS of Rs.25.7 and I value ABB at 63.9x of CY18E EPS (15% discount to 11 year one year forward mean multiple averaged to 75.1x) for an upwardly revised target of Rs.1,644.
No comments:
Post a Comment