Shares of ABB India jumped over 7 percent to scale a fresh high of Rs 7,791.50 on the National Stock Exchange (NSE) on May 13, after the company's March quarter earnings beat Street expectations.

Analysts remained bullish on the stock as the electrification and automation major reported an 82 percent year-on-year rise in its net profit at Rs 467 crore on higher revenue.

The engineering company's total income rose 29 percent YoY to Rs 3,080 crore, up 29 percent year-on-year, the company, which follows a January-December financial year, said on May 10.

According to Nomura, ABB India's EBITDA margin at 18.3 percent during the March quarter came in as a positive surprise, mainly due to the execution of higher margin orders and efficient capacity utilization in the electrification segment, and pricing advantage in select products and a favorable job mix in the Motion segment.

The international brokerage noted that ABB has undergone a structural change in the past three years with a margin trajectory of 14-15 percent, led by strong industry tailwinds, enhanced penetration, and localization.

"We believe these levers are sustainable and premiumization will support growth. Subsequently, we anticipate revenue, EBITDA, PAT CAGR of 18, 21, and 22 percent over CY23-26, respectively," Nomura said.

Analysts at Nomura maintained their 'Neutral' rating on ABB stock due to expensive valuations with a sum-of-the-parts (SOTP)-based target price of Rs 6,660. "We look forward to the commentary on the sustainability of strong margins at the conference call scheduled later in the day," they said.

Motilal Oswal sees further scope for margin improvement for ABB. The company is benefiting well from its advantageous position as one of the top five to six players in its critical segments, such as electrification, automation, and data centers, it noted.

"With ABB being a preferred choice as a quality player with full control over the value chain, it is benefiting from improved product mix, higher services share, better operating leverage, IT fee, and group management fee," the brokerage said.

Motilal Oswal analysts expect the net impact of the pass-on of lower RM prices and improved product pricing to be favorable for margins. They raised their margin estimates to 17.4, 17.3, and 16.6 percent for CY24, CY25, and CY26, respectively to factor in the performance in the March quarter and the favorable demand scenario for ABB.

"The company has one of the best RoIC (return on invested capital) in the capital goods sector and will continue to benefit from an improved addressable market and will improve its share of high-growth segments," said Motilal Oswal in its post-earnings report as it maintained a 'buy' call on the stock with a raised target price of Rs 8,500 from Rs 7,500 earlier.

Jefferies has also maintained a 'buy' rating on the stock and hiked the target price to Rs 8,845 per share from Rs 6,250 earlier. The brokerage believes renewables is a moderate-growth area as compared to high-growth earlier. It expects ABB's order flows to pick up further after elections in the second half of CY24.

At 9:51 am, ABB shares were trading 7.2 percent higher at Rs 7,700 apiece on NSE. In the last year, the stock has doubled investors' money, rising around 100 percent. In comparison, the benchmark Nifty 50 gained around 19 percent during this period.