ABB India Limited: Constructing India

“We continue to see strong growth across most business areas in short-cycle business and that shows the width of business across Tier-1, Tier-2, Tier-3, and even Tier-4 cities. I think that’s something which is really the game and that’s where it contributes to the short-cycle business because there is an overall growth in different market segments. Our services for our installed base were up 37% on the orders and revenues were up by 33%. That shows that customers are investing in improving reliability, availability, maintainability, and serviceability of their assets. And on the continued momentum, we see this in the automotive and electronics side because these are the sectors which are expanding. Automotive on their own, plus the EV segment in automotive is contributing to even faster growth. And also the value chain; whether it’s in the batteries or many others, we see a lot of absorption of ABB technology there. And electronics as one segment, I think, is going to expand on an exponential basis as we go forward and a lot of our products and technology find their way there.”

– Mr. Sanjeev Sharma, Country Managing Director, ABB India on Q4FY23 Results

Stock Data
Ticker	ABB
Exchange	NSE
Industry	POWER EQUIPMENT

Price Performance
Last 5 Days	+1.69%
YTD	+63.55%
Last 12 Months	+85.35%

*As of 05.07.2023

Company Description:

ABB India Ltd is the Indian subsidiary of ABB Group, a multinational conglomerate headquartered in Zurich, Switzerland. ABB India Ltd primarily operates in the field of power and automation technologies. The company provides a wide range of products, systems, solutions, and services for various industries, including utilities, industries, transportation, and infrastructure.

Here are some key areas in which ABB India Ltd operates:

• Power Grids: ABB India Ltd offers solutions for power transmission and distribution, including high-voltage products, transformers, switchgear, substations, and grid automation systems. They help in the efficient and reliable management of electricity transmission and distribution networks.

• Electrification: ABB India provides products and solutions for electrical installations in buildings, industries, and infrastructure projects. This includes low-voltage products, wiring accessories, circuit breakers, control devices, and home automation systems.

• Industrial Automation: ABB India offers automation products and solutions for industries such as oil and gas, chemicals, metals, mining, and process industries. Their offerings include programmable logic controllers (PLCs), robotics, motion control systems, industrial drives, and process control systems.

• Robotics and Discrete Automation: ABB is a leading provider of industrial robots and robotic automation solutions. ABB India provides a range of industrial robots, robot controllers, software, and related services for industries to improve productivity, efficiency, and flexibility in manufacturing processes.

• Motion: ABB India supplies motors, drives, and mechanical power transmission products for various applications, including pumps, fans, compressors, conveyors, and hoists. They focus on energy-efficient solutions for motion control.

Financial Results:

• ABB India Ltd reported Revenues for Q4FY23 of ₹2,411.00 Crores up from ₹1,968.00 Crore year on year, a rise of 22.51%.

• Total Expenses for Q4FY23 of ₹2,155.00 Crores up from ₹1,807.00 Crores year on year, rise of 19.26%.

• Consolidated Net Profit of ₹245.00 Crores down 34.32% from  ₹373.00 Crores in the same quarter of the previous year.

• The Earnings per Share is ₹11.56, down 34.36% from ₹17.61 in the same quarter of the previous year.

Key Strengths:

• Established Presence: ABB India has a long-standing presence in the Indian market and has built a strong reputation for its quality products, reliable solutions, and excellent customer service. The company’s established brand image and customer trust provide a solid foundation for its future prospects.

• Diverse Portfolio: ABB India offers a diverse portfolio of products, systems, and solutions across multiple industries. This diversity allows the company to cater to various customer needs and positions it well to benefit from the growth and development of different sectors in the Indian economy.

• Focus on Digitalization and Automation: ABB India is actively embracing digitalization and automation trends. The company is investing in technologies like the Industrial Internet of Things (IIoT), artificial intelligence (AI), and advanced analytics to enhance its offerings. This focus on digitalization and automation aligns with the increasing demand for smart and connected solutions in industries.

• Government Initiatives and Infrastructure Development: The Indian government has been actively promoting initiatives such as “Make in India” and investing in infrastructure development. ABB India stands to benefit from these initiatives as it provides products and solutions for industries and infrastructure projects, including power transmission and distribution, transportation, and smart cities.

• Renewable Energy Growth: With the global shift towards clean energy sources, including solar and wind power, ABB India is well-positioned to capitalize on the growing demand for renewable energy solutions. The company offers products and systems for solar inverters, wind power converters, and energy storage solutions, enabling the integration of renewable energy into the grid.

• Focus on Sustainability: ABB India emphasizes sustainability in its operations and solutions. The company is committed to offering energy-efficient and environmentally friendly technologies that help customers reduce their carbon footprint and improve overall sustainability. This focus aligns with the increasing emphasis on sustainability and environmental regulations.

Key Challenges:

• Project Delays and Payment Cycles: ABB India’s business involves large-scale projects that often face delays in approvals, clearances, and implementation. These delays can affect revenue recognition and cash flows. Additionally, extended payment cycles or delayed payments from customers can impact the company’s working capital and financial performance.

• Regulatory Environment: The regulatory environment in India can present challenges for ABB India. Changes in government policies, regulations, and compliance requirements, particularly in areas such as energy, environment, and labor, can impact operations, project timelines, and costs. Adapting to and complying with evolving regulations is crucial for the company.

• Project Execution Risks: ABB India’s projects involve complex engineering, procurement, and construction processes. Execution risks, including cost overruns, delays, quality issues, and safety concerns, can impact project profitability and customer satisfaction. Effective project management and risk mitigation strategies are essential to mitigate these challenges.