ABB India Ltd shares surged 4.4 per cent after parent ABB Ltd said on Tuesday it would buy back $4 billion shares. The parent company’s buyback offer is seen boosting sentiment for its global subsidiaries including India, say traders.
ABB Ltd holds 75 per cent in ABB India via two units, according to BSE data.
Swiss engineering group ABB today said it would buy back $4 billion shares, offering a sweetener to investors as it set out lower mid-term sales and profit targets in the face of modest economic growth.
The Zurich-based firm's Chief Executive Ulrich Spiesshofer is presenting his new strategy in London exactly one year since taking over from his predecessor Joe Hogan.
Spiesshofer, a former management consultant, has spent the past 12 months scrutinising ABB's businesses and selling off non-core units. He said ABB was passing on the fruits of that "pruning" to shareholders through a share buyback programme.
For the period 2015-2020, ABB said it expects to grow revenues 4-7 per cent per year on a like-for-like basis and is aiming for an operating profit margin corridor of 11 to 16 per cent.
The new goals replace a medium-term annual sales growth target rate of 5.5-8.5 per cent and an operational EBITDA margin target of 13-19 per cent for the 2011-2015 period.