ABB India hits record high as UBS raises target price, reiterates buy

ABB shares: ABB India soared as much as 7 per cent to hit record high of Rs 6,341 per share buoyed by a wave of investor optimism following a bullish report from international brokerage UBS.

UBS raised the target price on ABB India, citing expectations of continued margin expansion despite recent upgrades. The brokerage highlighted ABB's robust growth prospects in electrification and mobility sectors, driven by an expanding product suite and a strategic focus on capturing long-term market opportunities.

According to UBS analysts, ABB's low and medium-voltage product offerings are witnessing traction, both domestically and internationally, positioning the company favourably amid global competition. The report stressed on ABB's concerted efforts in expanding its capacity to meet the growing demand in the mobility segment, including semi high-speed rail, conventional rail, and metro systems.

UBS revised its earnings forecast for ABB India, projecting a 12 to 14 per cent increase in profit after tax (PAT) for 2024 and 2025. Furthermore, the brokerage raised the target price-to-earnings (PE) ratio to 75 times, reflecting confidence in ABB's ability to expand its market share and sustain profitability. The new price target of Rs 7,550 per share represents a significant upside potential from the current levels.

Commenting on the company's growth trajectory, UBS analysts pointed out distinctive factors setting ABB apart from its peers. While acknowledging the competitive landscape with companies like Siemens and Schneider, UBS reinforced ABB's potential to ramp up its low and medium-voltage electrification portfolio, positioning it as a key player in the emerging infrastructure scale-up.

Despite near-term concerns over short-cycle order fatigue, particularly in the motion division, UBS remained optimistic about ABB's prospects for scaling up new order growth. The brokerage highlighted ABB's strategic focus on motion and low/medium-voltage electrification product expansion as key drivers for margin improvement.

UBS reiterated its buy call on ABB India, stressing on the company's early-stage transition towards structurally higher quality growth. With a diverse revenue stream, greater customer reach, and a cash-generative business model, ABB India is set for sustained earnings acceleration, according to UBS analysts.

UBS has raised ABB’s target price to Rs 7,550 from its previous target of Rs 5,380.