ABB Power Product CMP 1772
APPSIL provides product, system, software and service solutions across the entire power value chain. The company’s portfolio includes an extensive range of high-voltage products, transformers, grid automation products, and power quality products and systems.
- ROE and ROCE is around 14% and 19% respectively (Decent)
- P/BV: 8.1x, Face Value: INR 2, Mcap: INR 7.5K Crs
- Forward PE - 50 which is average as per industry benchmark.
- Q1FY21 topline was around INR 1,016 Crs Vs. 811 Crs in Q1FY20 Vs. 1,044 Crs in Q4FY20 therefore up by 25.2% and declined by 2.6% in QoQ.
- FY20 topline was around INR 3,420 Cr Vs. 3,236 Cr in FY19 (Dec ended FY20 Vs. FY19) therefore up by 5.9% in YoY despite Q2FY20 was washed out.
- Q1FY21 bottomline was around INR 39 Cr Vs. 29 Cr in Q1FY20 Vs. 55 Cr in Q4FY20 therefore up by 34.4% in YoY and declined by 29% in QoQ.
- FY20 bottomline was around INR 100 Cr Vs. 165 Cr in FY19 therefore declined by 39.3% in YoY.
- Company is virtually debt free and reduced the signficiantly debt from 348 Cr to 39 Cr now almost 300 Crs paid off.
- Small equity capital is INR 8 Cr which promoters hold around 75% which is very strong and stable, FIIs hold around 4.9%, LIC hold around 4.5% and other DIIs hold around 1.6% in the company.
- Strong order book as of Dec 2020 which was around INR 3,217 Cr and Q1FY21 received new orders worth of INR 849 Cr.
- Operating EBITDA in Q4FY21 was around INR 75.9 Cr Vs. 65.9 Cr in Q4FY20 up by 34% in YoY.
- APPSIL has a strong market position in the power grids equipment and automation solutions segment. The company has an established track record in this space and has also executed various large scale projects in India over the years (as part of ABB India Ltd). Furthermore, APPSIL’s clientele include reputed players across utilities, industries, and transportation and infrastructure sectors, such as Power Grid Corporation of India Ltd, JSW energy etc.
- Renewables (Solar + Wind) 1 GW of cumulative solar orders catered for in Q1-21 with major order from JSW
- Highly diversifed revenue strategy Railways and metro, AI tech in Data Centres 5G Tech. Offering technology for future energy system.
- Electric Mobility: Large scale EV charging.
- Debt free company with strong operating cash flow as of Dec 2020.
- Strong Promoter Hitachi ABB power and hold with 75% stake in the company. APPSIL commenced using Hitachi brand identity for all business purposes and for external communication. Furthermore, the company has access to all of Hitachi’s group-level resources.
- Due to govt orders realization is very weak and its around more than 5 months.
- After govt order restriction on use of Oxygen for industrial purpose. Q2FY21 can be more challenging.
- Profitability is susceptible to downturn in demand and structural issues and volatility in the power sector. Operating profit margin is also single digit and around 8% due to intense competition and bidding based govt projects.
View: Share price high 1860 and now 1770. Share is in bullish zone and next short term target can be 1850/1900 with SL 1650. Any correction will be good opportunity to add for mid to long term.