Multibagger stock ABB India slumps 14% in one month. What’s next for this stock?

Multibagger stock: ABB India share price in the last one month has slumped 14%. According to technical analysts, the ABB India share price has entered a short-term corrective phase in the last few days. The immediate support is placed around ₹7,500–7,459, which will be a crucial level to watch for any pullback move. On Thursday's session, ABB India share price slumped over 6%, the stock opened at ₹8,185.05 apiece on the BSE. Over the span of four years, the stock has gained about 758%. However, brokerage UBS Securities India Private Ltd said in its analysis that valuation upside seemed limited following a robust run.

Raising the target price to ₹9,100, brokerage UBS Securities India downgradedthe stock rating from 'Buy' to 'Neutral'. According to the brokerage's research, they lower the company to Neutral and roll forward results with a reduced price objective, all while maintaining their consensus-leading expectations on better margins.

ABB India needs to maintain a quarterly order intake run rate of between ₹40 billion to ₹48 billion based on its updated order forecasts for 2024 and 2025, which suggests a higher percentage of mobility and higher inflows from process automation.

"We expect the continuation of strong structural and cyclical drivers in the conventional and emerging segments (new mobility, data centre, renewables, production linked incentive (PLI) led segments ), which should keep both investor interest and the valuation premium alive. However, at 75x 2026E-EPS (1SD above the historical average) we think the stock appears to be pricing in 30% plus earnings growth compounding. As further valuation re-rating seems unlikely, we downgrade the stock to Neutral and with price target of ₹9,100 (vs ₹8,830 earlier).

What will lead the brokerage to upgrade to Buy again and how do does it see peers?

According to the brokerage's review, they would turn bullish again for two reasons: 1) ABB's quarterly order run-rate above ₹38 billion, mostly from mobility (such as metro and semi-high-speed rail) or greater base order growth, which resulted in superior profits growth; 2) Strong margins in the electrification emerging portfolio drove ABB's margins beyond expectations.

“We view ABB as the best exposure to emerging infrastructure and niche products across conventional and new segments. CG Power has the highest exports scale-up and inorganic opportunities as it expands its TAM. The SIEM energy business (capacity expansion and exports) and the SI segment have upside potential, while the industrial business is likely to remain stable,” the brokerage said in its report.

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