Maintain Neutral on ABB - Motilal Oswal

ABB 4QCY10: significantly below estimates; cutting estimates; maintain Neutral

4QCY10 results are significantly below estimates, with revenues of Rs20.7b (up 10%YoY), above our estimates of Rs18.7b (down 0.7%YoY).

EBITDA margin was at 0.6% vs our estimates of 5%. Net profit stood at Rs68m (down 92% YoY) vs our estimates of Rs650m (down 25% YoY).

Forex loss during 4QCY10 stood at Rs375m. Forex losses are due to commodity hedging (raw materials), they are not exceptionals.

Continued provisioning for losses in the rural electrification jobs taken up in the past have resulted in a EBITDA level loss of Rs1b in CY10.

Order intake during 4QCY10 stood at Rs14b (down 41% YoY). Currently order backlog stands at Rs84b (flat YoY) with book to bill ratio of 1.3x TTM revenues. We are cutting earnings and now expect CY11 EPS at Rs18.5/sh and CY12 at Rs24.7/sh (up 33%). Maintain Neutral with lower price target of Rs594/sh.

Source : Equity Bulls

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