A company making waves recently for steady growth has caught the market’s attention. Are you wondering who we are talking about?
We are talking about ABB India, which has emerged as a stock market favorite, with its shares soaring ~450% over the past five years. This growth has caught the attention of investors, and for good reason. The company’s market capitalization of Rs 151 billion (10-05-2024) reflected its Compound Annual Growth Rate (CAGR) of ~40.7%. But how did this company grow so much in the last few years? Here’s how.
Five factors supporting ABB India’s growth
Innovative Strategy
The company’s success can be attributed to its innovative strategy focusing on fast-moving industrial goods (FMIG). This approach is similar to the fast-moving consumer goods (FMCG) sector but tailored for the industrial market. ABB India’s strategy revolves around a product-led business model that promises quick turnaround times and minimal negative working capital requirements.
A negative working capital requirement means the company’s current liabilities exceed its assets. This is often seen as a positive sign in industries like FMCG and can benefit companies with quick sales cycles and pay their suppliers on longer credit terms.
Financial Highlights
ABB India’s financial performance has been stellar, with the EBITDA growing by 11.8% between 2022 and 2023. The company’s Return on Equity (ROE) has consistently been above 20%, indicating efficient management and profitable allocation of shareholders’ funds. The debt-to-equity ratio is comfortable 0, suggesting a strong balance sheet with low leverage.
| Year | EBITDA (Cr) | Pecentage Change |
| 2023 | 52.60 | 11.8 |
| 2022 | 47.06 | -24.5 |
| 2021 | 62.36 | 1.7 |
| 2020 | 61.33 | 49.7 |
| 2019 | 40.96 | – |
Product Portfolio
ABB India’s FMIG portfolio is a comprehensive array of essential industrial components that serve as the building blocks for modern infrastructure. The portfolio includes:
- Switches: The company has manufactured over 1 million of over 10 types of switches, including pressure and toggle switches.
- Circuit Breakers: There is a wide range of different models of circuit breakers that ensure safety and reliability in electrical systems. They are estimated to be worth 250 million USD in India.
- Flowmeters: 45 Precision flowmeters are used in more than 10 industries, including water treatment and chemical processing.
- Soft Starters: Soft starters that have reduced energy consumption by up to 10% in heavy machinery.
- The company also provides products and services like Drives, Lighting Solutions, Isolators, and Relays.
These products are crucial for engineering, procurement, and construction projects, reflecting the company’s commitment to meeting the demands of the industrial sector. The FMIG portfolio has been instrumental in 100s of major projects across India, showcasing ABB India’s pivotal role in the nation’s industrial development.
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A Glimpse into the Factory
The ABB India factory in Nashik, Maharashtra, is a modern engineering and design marvel. It spans over 49,000 square meters, employs over 1,000 skilled workers, and utilizes state-of-the-art robotics and automation technology to enhance productivity.
ABB India’s Plans
ABB India has plans to capitalize on the growing demand for industrial automation and smart technologies. The company aims to increase its FMIG offerings by 50% in the next two years, targeting a revenue milestone of Rs 150 billion. With the government’s push towards ‘Make in India’ and infrastructure development, ABB India is well-positioned to continue its growth momentum and deliver value to its stakeholders.
The success story of ABB India shows the importance of strategic innovation and a deep understanding of market demands. In the past year alone, the company has filed more than 100 patents, demonstrating its unwavering dedication to research and development. As ABB India continues to prosper, it sets an example for other companies in the industry to emulate and strive towards.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQs
What has been the growth rate of ABB India’s shares over the past five years?
ABB India’s shares have grown nearly 450% over the past five years, and the company’s market capitalization has increased to Rs 151 billion (10-05-2024).
What is the Compound Annual Growth Rate (CAGR) of ABB India?
ABB India has demonstrated a robust CAGR of approximately 40.7%, reflecting its strong performance and investor confidence.
How does ABB India’s innovative strategy contribute to its success?
The company’s success is largely due to its focus on fast-moving industrial goods (FMIG), similar to the FMCG sector but tailored for the industrial market. This strategy has led to quick turnaround times and minimal negative working capital requirements.
What are the financial highlights of ABB India?
ABB India has shown stellar financial performance, with EBITDA growing by 11.8% between 2022 and 2023. The company’s Return on Equity (ROE) has been consistently above 20%, maintaining a comfortable debt-to-equity ratio of 0.
What does ABB India’s product portfolio include?
The FMIG portfolio includes switches, circuit breakers, flowmeters, soft starters, drives, motors, lighting solutions, isolators, and relays.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.