Up 2x from 52-week low! Here's why Motilal Oswal is bullish on ABB India shares

Shares of ABB India have recovered over 100 per cent from its 52-week low of Rs 3,143.20, hit on April 21, 2023. It ended 2.53 per cent lower at Rs 6527.55 in a volatile session on Tuesday.

However, Motilal Oswal remains positive on the company and has maintained a 'BUY' rating on the counter with a two-year forward price target of Rs 7,500. It expects the company to continue to benefit from improved addressable markets and improve upon its share of high-growth segments.

"ABB has been one of our top picks in the sector and has continuously outperformed on earnings. The stock is expensive on valuations at 74.3X/62.0X on CY25/26E earnings, but has one of the best return on invested capital (RoIC) in the capital goods sector," it said.

The brokerage firm believes there is a scope for margin improvement for ABB, given its advantageous position as one of the top five to six players in its critical markets such as electrification, automation, and data centres.

It noted that ABB’s order inflow for the calendar year 2023 was up by 23% YoY, led by orders from diverse sectors, including data centres, electronics, metros, railways, renewables, automotive, water and wastewater, and power distribution.

Moreover, it added that the company strengthened its presence in metals, mining, cement, pulp, and paper through its energy-efficient and eco-friendly solutions.

"The company’s improved penetration into Tier II and Tier III cities, higher localization efforts, benefits from global feeder factories for exports, and improved product portfolio are helping it expand its presence across 23 market segments. It has been able to double its share of orders from high-growth segments in the last five years."

About ABB India

ABB is a technology company specializing in electrification and automation. The company’s solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and operated.