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Abb Reasearch Paper

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Submitted By ashwn91
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ABB India Ltd
Performance Highlights
(Rs in Crores) CY11 CY10 %change
Revenue 7,721.23 6,638.16 16.32
Gross Profit 393.67 186.87 110.67
PAT 184.54 63.23 191.86

ABB India has bounced back with promising numbers with net profit jumping to about 191%. The Gross Profit has increased and this has been mainly due to the improvement in power system business.
Performance
RATING: SELL
The Net sales of ABB has increased to about 10% and it has registered a EBITDA Margin of 5.6% in this quarter. It has registered a loss in the power automation segment. There is cost overrun in two of the projects. Power crisis in India has also affected the Industry as a whole. Many Orders have been received in low voltage segment of products
Considering slow down in industrial capex and pricing pressure in the industry which is impacting margins, ABB can be recommended as a SELL
Industry Analysis
Electrical Equipment Industry is one of the vital sectors for the contribution of each and every economy.
In the current scenario, frequent outages due to the widening gap between the demand and supply of power in the state have now started affecting the electrical equipment manufacturing units. So the demand has been sluggish throughout. The Indian electrical equipment industry has reported a decelerated growth to 6.6% in 2011-12 as compared to 11.3% and 13.7% in 2009-10 and 2010-11, respectively, according to data compiled by the Indian Electrical and Electronics Manufacturers’ Association (IEEMA).
Sluggish growth in the power sector and the escalating imports of electrical equipment is significantly impacting the commercial viability of the domestic electrical equipment industry and will have severe long term consequences. All three segments of the power sector—generation, transmission and distribution are facing several challenges which need to be addressed expeditiously.

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