ASEA BROWN BOVERI LIMITED

An Update

April 16,  2002

INTRODUCTION

ABB India is one company that has done the act of change management most swiftly.  In its latest annual report for the year ended 2001, some interesting measures and preparations become evident.  We have updated the same in this report.

Development and Impact 

Financial year 2001 performance boosted by exports.  During FY 2001, as a result of various initiatives taken by the company, orders received for physical exports were higher by 150 per cent and revenues were up 85 per cent.  Major orders booked during the year included 3 sub-station order for 230/66/20 kv from Syria valuing Rs 78.1 crores.  There has been a significant growth in export of High voltage apparatus. A dedicated cell has been recently formed to monitor and realize export opportunities from South Asian countries. 

The total export revenues of Rs 230 crores were for higher than Rs 68 crores for the FY 2000.  We expect export revenues to remain in a growth situation  in FY 2002 as well. 

Well Chalked out growth areas  

 ABB India’s growth strategy would be focused on following: 

1.   Volume increase in standard products by increasing market share and introduction of new products.

2.   Continued thrust to exports and services

3.   Broadening of industrial IT offering

4.   Competitive cost structure

Business Segment wise Analysis

Table showing Division wise highlights in FY 2001

                                                                                                                        (Rs. In Crores)

Financials    

                                                                                                               (Rs in Crs)

The notable thing in the report of FY 2001 is about the segment wise presentation of revenues, PBIT and Capital employed.  It is clear that utilities, power technology and automation products are the drivers at ABB India, more exports revenues would also help improve profits.  There have been some one time debits also such as Bad debts, provision for diminution in value of investment etc.

Valuations        

At the CMP of Rs. 260, ABB quotes at a P/E of 17 times of FY 2001 earnings.   Given an expected growth in earnings of about 20-25 per cent for FY 2002, it is quoting at a forward P/E of 12.5-13 times.  We see events  like sale of Air handing equipment unit, greater investments and activity in Indian power sector etc enabling ABB to do better.  Any weakness in price would be a good opportunity for investors. 

Technicals 

Last Price:  258  

13 day EMA : 261 

50 day EMA :253 

200 day EMA : 235 

The scrip is quoting below the 13 day EMA levels of 261, thus it requires to move past the 261 levels to turn short term bullish.  The scrip has a support at 252 on the lower side , while the resistance is at 289 for the short term on the upper side. The MACD indicator has taken rest at the equilibrium levels and moving parellel in the positive territory. While the parabolic SAR is in the sell mode.  

Disclaimer: