ABB India’s clean-up act takes a toll on its December quarter margins
ABB India Ltd’s stock, which had a volatile trajectory in 2019, is now close to its 52-week low with investors seemingly tired waiting for the fruits of restructuring.
It is more than a year since the capital goods company’s Swiss-Swedish parent exited the low-margin and low-growth power grids business at the global level. On home ground, the power grids business was beleaguered with weak ordering, weak profit margins and huge working capital needs, all of which took a toll on its profitability. In July, the parent firm even exited the solar business.
Yet, ABB India continues to spring unpleasant surprises. After it raised hopes of improvement in profitability in the last three consecutive quarters, the December quarter (Q4 CY19) performance came as a bolt from the blue.
