ABB

This MNC capital goods company posted a good set of numbers though lower than estimates. The revenue for the second quarter ended June 30, 2014 was Rs.1,794 crores compared to Rs.1,730 crore (YoY) and this 4% rise was mainly from short cycle business. The company maintains its policy of cash over revenue. Net profit for the quarter rose 20% at Rs.48 crore led by high focus on continuous localization, cost optimization and striking the right balance of risks and returns. 

The company received orders worth Rs.2,019 crore during this Q2, up 15% (YoY). Once again the focus on short cycle orders have been supported by increase in large orders.It’s order backlog stood at Rs. 8,083 crore v/s Rs.8260 crore (YoY). The good part is that there is optimism now about things starting to improve and momentum in power sector is expected to go up, which will be beneficial for ABB. It has ended H1CY14 with a net profit at Rs.99 crore compared to Rs.179 crore profit for CY13 – this means it needs to post at least Rs.40 crore net profit over next two quarters to reach 2013 levels. But it is expected to surpass and that means, it is sure to end current year on a much higher note. The stock enjoys high investor fancy due to its Swiss parentage; as such MNCs quote at a much higher PE. The company, like the others in the sector is a victim of circumstances but fundamentally, remains solid.