ABB - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListFundamental Rating: 4.2
📊 Financial Overview: ABB India showcases robust financial health with a ROCE of 38.6% and ROE of 28.8%, indicating superior capital efficiency. The company is virtually debt-free with a debt-to-equity ratio of 0.01. Despite a 20.5% drop in quarterly PAT, it still posted ₹352 Cr profit, reflecting resilience. EPS stands at ₹84.7, supporting strong earnings quality.
💰 Valuation Metrics: The stock trades at a P/E of 61.5, above the industry average of 51.3, suggesting premium valuation. Its P/B ratio is ~15.3 (₹5,216 / ₹340), and the PEG ratio of 0.97 implies fair valuation relative to growth. Dividend yield is modest at 0.84%, typical for growth-oriented industrials.
🏢 Business Model & Competitive Edge: ABB India operates across electrification, motion, automation, and robotics. Its diversified industrial exposure and global parentage offer scale, innovation, and credibility. Recent expansion of its Bengaluru plant to boost local production of variable speed drives enhances its competitive positioning
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📉 Entry Zone: A favorable entry zone lies between ₹4,700–₹5,000, near the 52-week low and below DMA 50 and DMA 200, offering a better margin of safety.
📈 Long-Term Holding Guidance: ABB India is a strong long-term hold for investors seeking exposure to industrial automation and electrification. Accumulate on dips and monitor quarterly earnings and order book trends.
✅ Positive
- Exceptional ROCE (38.6%) and ROE (28.8%) reflect strong operational efficiency
- Debt-to-equity ratio of 0.01 ensures financial resilience
- Strong EPS of ₹84.7 supports earnings quality
- Recent plant expansion boosts local production and delivery efficiency
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⚠️ Limitation
- High P/E ratio (61.5) vs industry average (51.3)
- P/B ratio of ~15.3 indicates premium valuation
- Quarterly PAT dropped 20.5%, signaling short-term pressure
- FII holdings declined by 0.96%
📉 Company Negative News
- Quarterly profit fell from ₹474 Cr to ₹352 Cr
- Stock down ~34% from 52-week high of ₹7,960
📈 Company Positive News
- Expanded Bengaluru plant to increase local output of variable speed drives by 25%
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- Improved delivery timelines and customization capabilities for industrial clients
🏦 Industry
- Industrial automation and electrification sectors are growing with infrastructure and manufacturing demand
- Government push for Make in India and clean energy supports ABB’s portfolio
- Global supply chain diversification favors local production
🧾 Conclusion
ABB India is a fundamentally strong industrial player with excellent return metrics and minimal debt. While currently trading at a premium, it remains a solid long-term investment. Consider accumulating below ₹5,000 for better value. Watch for earnings recovery and strategic expansions.
Sources
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