Revenues higher than estimates: ABB reported strong growth of 21.5% yoy in its top-line to `1,793cr (`1,475cr), which was higher by 5.7% from our expectation of `1,697cr.
Margins show improvement: After posting dismal margins since last few quarters, the company improved on operational front with a margin improvement of 416bps yoy to 5.7%. We had estimated EBITDA margin of 6.5%. This is partially attributable to the complete exit from rural electrification projects, where the company had incurred high costs during previous quarters. Notably, company also gained in forex variations in the current quarter (`29cr) against high losses reported in the prior year period (`82cr). Consequently EBDITA came in at `102cr which was almost in line with our estimate of `110cr.
Reported PAT in line with our estimates: Strong revenue growth coupled with margin expansion and other income resulted in 8-fold yoy increase in the PAT to `60cr (`7cr) which was in line with our estimate of `62cr.
Overall, the results were broadly in line with our estimates. At CMP of `888, the stock is trading richly at 38.1x and 30.3x its CY2011E and CY2012E earnings estimate. The stock is currently under review.
Exhibit 1: Actual vs Estimates
| (` cr) | Actual | Estimates | Var (%) |
| Revenues | 1,793 | 1,697 | 5.7 |
| EBITDA | 102 | 110 | (7.9) |
| PAT | 60 | 62 | (4.3) |
| EPS | 2.8 | 2.9 | (4.3) |
Exhibit 2: Quarterly Performance
| ( ` cr) | 1QCY11 | 1QCY10 | % chg (yoy) | 4QCY10 | % chg (qoq) | CY10 | CY09 | % chg (yoy) |
| Net Sales | 1,781 | 1,456 | 22.4 | 2,051 | (13.1) | 6,287 | 6,237 | 0.8 |
| Other operating income | 11.7 | 19.4 | (39.4) | 21.4 | (45.0) | 72 | 54 | 33.1 |
| Total income | 1,793 | 1,475 | 21.5 | 2,072 | (13.5) | 6,359 | 6,291 | 1.1 |
| Stock adjustments | (17.0) | 10.6 | | 16.4 | | (9.9) | (43.5) | |
| Raw Material | 1,373 | 1,068 | 28.5 | 1,657 | (17.1) | 4,812 | 4,561 | 5.5 |
| (% of total income) | 76.6 | 72.4 | | | | 75.7 | 72.5 | |
| Employee Cost | 125 | 117 | 6.7 | 126.9 | (1.3) | 490 | 389 | 26.1 |
| (% of total income) | 7.0 | 8.0 | | | | 7.8 | 6.2 | |
| Other Expenses | 213 | 174 | 22.2 | 201 | 5.7 | 817 | 754 | 8.2 |
| (% of total income) | 11.9 | 11.8 | | | 0.0 | 12.8 | 12.0 | |
| Exchange Rate (gains)/loss | (2.9) | 82.3 | (103.5) | 37.5 | (107.8) | 95 | 48 | 98.5 |
| (% of total income) | (0.2) | 5.7 | | | | 1.5 | 0.8 | |
| Total Expenditure | 1,691 | 1,453 | 16.4 | 2,039 | (17) | 6,203 | 5,708 | 8.7 |
| EBITDA | 102 | 22 | 356.1 | 33 | 211 | 156 | 583 | (73.2) |
| (EBITDA %) | 5.7 | 1.5 | 4.2 | 1.6 | 0.0 | 2.5 | 9.3 | |
| Interest | 4 | 4 | 6.3 | 4.8 | (17.5) | 17 | 25 | (31.5) |
| Depreciation | 14 | 12 | 19.7 | 14.8 | (2.9) | 52 | 49 | 6.5 |
| Other Income | 5 | 2 | 144.0 | 2.6 | 75.6 | 13 | 18 | (27.4) |
| PBT | 88 | 8 | 952.1 | 15.6 | 463.1 | 100 | 527 | (81.0) |
| (% of total income) | 4.9 | 0.6 | | | | 1.6 | 8.4 | |
| Total Tax | 28 | 2 | 1,558.8 | 9 | 219.9 | 37 | 173 | (78.6) |
| (% of PBT) | 32.1 | 20.4 | | 56.6 | | 36.9 | 32.8 | |
| Reported PAT | 60 | 7 | 796.7 | 7 | 779.9 | 63 | 355 | (82.2) |
| (% of total income) | 3.3 | 0.5 | 0.0 | 0.3 | | 1.0 | 5.6 | |
| EPS (`) | 2.8 | 0.3 | 797 | 0.3 | 780 | 3.0 | 17 | (82.2) |
Exhibit 3: Key Financials
| Y/E December (` cr) | CY2009 | CY2010 | CY2011 | CY2012 |
| Operating income | 6,237 | 6,287 | 7,602 | 9,294 |
| % chg | (8.8) | 0.8 | 20.9 | 22.3 |
| Net Profit | 355 | 63 | 495 | 622 |
| % chg | (35.2) | (82.2) | 682.4 | 25.6 |
| EBITDA (%) | 8.5 | 1.3 | 9.9 | 10.3 |
| EPS (Rs) | 16.7 | 3.0 | 23.3 | 29.3 |
| P/E (x) | 53.1 | 297.8 | 38.1 | 30.3 |
| P/BV (x) | 7.8 | 7.8 | 6.6 | 5.6 |
| RoE (%) | 15.7 | 2.6 | 18.8 | 20.0 |
| RoCE (%) | 21.2 | 1.3 | 26.1 | 28.3 |
| EV/Sales (x) | 2.9 | 2.9 | 2.4 | 1.9 |
| EV/EBITDA (x) | 34.7 | 217.6 | 24.1 | 18.9 |
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