ABB India breaches key level, could deliver 20% return

Mumbai: Shares of ABB India on Monday decisively broke past a 13-year consolidation phase to trade above ₹1,600 apiece. If it sustains above that level, it can easily give a 20% return in the near term, according to technical analysts.ABB India is better placed to gain from the expected pickup in capex in the coming months, said analysts.“ABB has given breakout after consolidating for 13 years from 2008 to 2021 and with strong capex recovery, one can expect the stock to continue its upward journey,” said Ashish Chaturmohta, director-research, Sanctum Wealth. “In the short term, we expect ₹1,900-2,000 levels in the stock”. Shares of ABB India rallied 21% in the last month, compared to a 6.5% gain in the Nifty index. It ended 4.85% higher at ₹1,668 on Monday.Analysts said that the stock is also making higher tops-higher bottom from the last six trading sessions with rising trading and delivery volumes.“Technically, it has completed a rounding formation which has bullish implications on a weekly scale and is set to start the next leg of the rally,” said Chandan Taparia, technical analyst, Motilal Oswal Financial Services. “It has immediate support near to 1,600 zones, while a rally could extend toward 1,750 and 1,900 zones in the coming weeks.” 83127325ABB India has reported a decent set of numbers in the March quarter across all its segments led by a pickup in economic activity, better order book execution and cost rationalisation initiatives resulting in margin improvement. Despite the second wave of the pandemic, order inflows came in healthy at ₹1,830 crore driven by process automation and robotics businesses. “In the long run, we believe ABB’s resilient business model, healthy global distribution network, diversified business segment and a strong cash position would benefit the company from recovery in economic activity,” said Viral Shah, analyst, Prabhudas Lilladher.Although the management remains cautious in the near term owing to the second wave of Covid-19 in the domestic market and challenges in the global market, it hinted at the early signs of recovery in industries like data centres, renewables, electronics, F&B, and pharmaceuticals. ABB India will continue to focus on order wins and seamless execution across projects while continuing to engage closely with customers, according to the management.ABB’s total order backlog stands at ₹4,300 crore which according to analysts provides revenue visibility for the next few quarters.“The parent’s decentralisation strategy should be beneficial for ABB, as it would lead to increased transfer of products and technologies,” said Jonas Bhutta, analyst, PhillipCapital. “We like ABB’s future-ready business model backed by structural tailwinds of increasing penetration of digitisation and automation but getting to sustainable margins levels would need the parent to either review its policies.”

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