ABB India’s railway tech revolution & sustainable solutions spark analysts’ bullish outlook

ABB is over a century-old Swedish-Swiss multinational and a leading global technology company that energises the transformation of society and industry to achieve a more productive and sustainable future. The company is connecting software to its electrification, robotics, automation, and motion portfolio by pushing the boundaries of technology to drive performance to new levels. With a history of excellence, the company is enabling a resource-efficient future. ABB has 4 verticals and within these, there are 18 organised divisions in 23 different market segments giving the company the underlying resilience in its business model. The cyclicity of one segment gets compensated by the other segment giving a sustainable benefit to the company. Railway infrastructure in India is expected to attract around $715 billion over the next decade largely based on the electrification of the railway network, adding freight corridors, and bringing new Trains that require high-speed. An upgrade is taking place in the Indian rail infrastructure segment both in the freight movement as well as the passenger movement space with more modern, comfortable, and high-tech technology going into the system. ABB India is also exposed to the Indian Metro network segment with a significant presence in over 15 cities.

Currently, the company is implementing Metro projects in seven cities of 640 km distance. There is no doubt that the key drivers of the ABB India business portfolio are the passenger and the freight traffic segment with the Indian railway infrastructure development undertaken by ABB for the modernisation of 1275 railway stations, dedicated freight corridors, the argumentation of high-speed trains, Gati Shakti cargo terminal and Vande Bharat trains. ABB technology is being accepted by most of the market segments due to the quality and price which the company is offering. The Service business value is showing a good uptick in the automotive and electronic sector along with a high demand for integrated solutions in mining, metal, oil, and paint companies. The Indian company has a very strong global portfolio in the transport propulsion technology solution segment. Recently, it has entered into an agreement with Titagarh Rail Systems wherein the latter would purchase ABB propulsion systems, including traction converters, auxiliary converters, traction motors and TCMS software. It has a strong order backlog and sound visibility of future revenue with total revenue received during the current quarter of over Rs 3000 crores

. The company has posted a 79% rise in its Net Profit to Rs 362 crores for the September 2023 quarter on a total increased income at Rs 2846 crores. Growth is quite encouraging and and showing an upward trend in the Services segment with revenue at 16% compared to 12% for the earlier quarter. From a geographical dimension point of view, ABB has a 90% domestic presence market while exports is only at 10%. Thrust is being given to new segments such as data centre, electronics, automotive and the food and beverage sector wherein the company expects a reasonable revenue stream in the future. ABB India has a very strong clear ESG strategy overseas and in India with a 5R approach, viz., waste intensity reduction, waste to energy recovery, and training awareness for its customers and suppliers. A few examples are the total ban on the use of single plastic, reduced usage of packaging labels, and waste recycling. The company is leading the way in sustainable and responsible resource consumption in manufacturing after achieving water positivity ratings and Mission to Zero status for its factory in Nashik. The Nashik factory manufactures medium voltage switch gears and other equipment to provide efficient power solutions and by introducing a host of ESG measures, ABB India has achieved this unique feat in the country. Analysts are quite bullish on the Indian stock market and expect the Nifty to hit 22000 levels in the next few months. Fund managers and railway infrastructure analysts are also quite bullish on the ABB India stock and expect it to do very well on the bourses in the medium to long-term time frame.