First Read: India Industrial & Infrastructure "Global themes pricing in ..."

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First Read: India Industrial & Infrastructure "Global themes pricing in ..."

Valuation Method and Risk Statement

We believe sector risks that could affect India’s industrial and infrastructure companies

include: 1) a slower-than-expected recovery in overall GDP growth, leading to sluggish capex

and, in turn, a weak recovery in India's investment cycle; 2) delays in asset monetisation

leading to government spending cuts on urban infrastructure; 3) a slower ramp-up in high-

growth urban infrastructure segments, such as transportation and renewable energy; and 4)

a sharp increase in crude oil prices, which could reduce the government's flexibility to step up

public investment.

We value ABB on a 12-month forward PE basis. Upside risk includes faster order inflow

growth driven by better ordering in mobility and base order growth and faster margin uptick.

Downside risk includes a slowdown in broader economy driving lower order inflow growth

and lower margins.

We value CG Power based on SOTP methodology. The key risks to our rating are slower-than-

expected growth in industrial automation spending and low-voltage intensive urban

infrastructure spending. Lower offtake for export markets after a recent parent mandate and

any potential reduction in TAM offerings could pose downside risk to our growth

assumptions. Sustained global supply chain shortages and inflation could impact execution

and OPM scale-up.

We value Siemens on a PE multiple. We believe the key risks are: 1) a slower-than-expected

pickup in new urban infrastructure creation (such as rail upgrades, data centres and

renewable energy-based transmission) leading to weaker demand for low-voltage products;

2) slower growth in industrial automation spending; 3) unforeseen M&A undertaken by the