ABB Power Q3 CY21 Review - Rich Valuations Limit Upside: Dolat Capital
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Dolat Capital Report
ABB Power Products and Systems India Ltd. reported revenue decline of 9% YoY (-14% vs DART est.) primarily due to execution loss of Rs 640 million on account of supply chain constraints, especially from trade logjams, port delays and equipment shortages.
Despite inflationary cost pressure, APPSIL’s gross margin improved by 344 bps YoY, largely due to improved product mix in favor of exports and services. GM’s uptick is expected to continue further as management is aiming for higher growth from services business.
Order inflows came in strong at ~Rs 10 billion (highest in last seven quarters), up by 31% QoQ/ 10% YoY, despite Rs 730 million of L1 orders being deferred by customers.
We believe APPSIL’s long term structural growth story remains intact and expect earnings CAGR of 41% over CY20-CY23E led by high growth segments (Mobility, Renewables & Data Centers), better sales mix and cost rationalisation.
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