A B B — Q1 FY26 earnings call

Call held 4 Aug 2025

Management summary

ABB India Limited reported a strong Q2 CY2025 with record revenues of INR 3,175 crores, up 12% YoY, and a robust order backlog of INR 10,064 crores. However, profitability saw a dip to 13% EBITDA margin due to one-off costs, higher import content driven by QCO guidelines, and FOREX volatility. Management noted a softening in large orders and increased competition, but remains cautiously optimistic about H2 CY2025, driven by government capex and emerging market segments.

Highlights

  • Revenue of INR 3,175 crores, up 12% YoY, marking an all-time high for Q2 in the last five years.

  • Order backlog reached INR 10,064 crores, providing strong revenue visibility for the next 18-24 months.

  • Base orders grew by 5% this quarter, demonstrating continued underlying demand.

  • Interim dividend of INR 9.77 per equity share declared, maintaining consistency with previous years.

  • Cash balance stood at INR 5,054 crores post-dividend distribution.

Concerns

  • EBITDA margin at 13% was lower than the previous quarter, impacted by one-off costs and FOREX volatility.

  • Profitability was affected by QCO guidelines necessitating higher import content and a one-off cost of INR 39.5 crores in the Electrification segment.

  • Large orders were 'missing' this quarter, and some decisions were postponed, leading to a 'breather' in market growth trajectory.

  • Increased competition from Chinese imports, particularly in heavy industry and Process Automation, is leading to price pressure.

Key financials

2 periods

Headline

  • Revenue
    ₹3,175 Cr
    YoY +12%
  • EBITDA Margin
    13%
  • Cash Balance
    ₹5,054 Cr
  • Interim Dividend per Share
    ₹9.77
  • One-off Cost (Electrification)
    ₹39.5 Cr
  • Base Orders Growth
    5%

Q2 CY2024

  • Profitability
    21%

What they filed

Q1 FY27: revenue up 21.1%, net profit up 2.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,912 3,365 3,010 2,940 3,311 +14%3,423 +2%3,184 +6%3,559 +21%
EBITDA540 657 560 401 500 −7%527 −20%408 −27%447 +11%
Net profit440 528 475 352 409 −7%433 −18%1,784 +276%362 +3%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentOrdersRevenues
Electrification₹1,400 Cr₹1,379 Cr
Robotics₹120 Cr₹236 Cr
Process Automation——

Order book

high confidence

Total value

₹10,064 Cr

as of 2025-06-30 quantified

Execution

executable over next 18-24 months

Composition

Mix 2 contract types
  • Large Orders 50%
  • Product Orders 50%

Share of order book by contract type

Pipeline

deal pipeline tcv

Reasonable pipeline for large and medium-sized projects

Cancellations & deferrals

  • deferred: Large orders from last year were missing in the last quarter.
  • deferred: A couple of decisions in Process Automation were postponed for the last two quarters.
The order backlog is solid and provides good visibility, though large orders were missing this quarter, and some decisions were postponed.

Source: Prepared remarks

Capital allocation

high confidence
  • Dividend ₹9.77/share (interim)
    Our cash balance stands at INR 5,500 crores and Board of Directors have declared an interim dividend of INR 9.77 per equity share of face value of INR 2.
  • Liquidity Cash ₹5,054 Cr Cash balance of INR 5,054 crores is after declaring and distributing a dividend of INR 700 crores.
    So, cash balance at INR 5,054 crores, this is after also declaring and distributing the dividend of INR 700 crores, which we did in the month of May after the AGM, so we still also have the Board has approved interim dividend, which will also happen in the next few weeks to come.

Guidance & targets

Sustainability

  • GHG Emission Reduction Sustainability · from 2019 base · High confidence 87.5%
    On the sustainability front, if you take 2019 as our base, we have reduced our GHG emission by 87.5%.

    — Sanjeev Sharma

  • Zero Waste to Landfill Campuses Sustainability · this year · High confidence 4
    Our target is that four of our campuses will become zero waste to landfill. Already three are achieved.

    — Sanjeev Sharma

  • Water Recyclability Target Sustainability · High confidence 50%
    water recyclability target is 50%. We have already achieved 41%.

    — Sanjeev Sharma

Market Growth

  • Pharma Industry Size Market Growth · by 2030 · High confidence $130 billion
    pharma industry shall reach $130 billion by 2030, a CAGR of 12%.

    — Sanjeev Sharma

Profitability

  • EBITDA Margin Band Profitability · future · Medium confidence 12-15%
    So, the earlier sort of a band which we had given 12% to15% is something which we need to work out to be there.

    — T. K. Sridhar

What to watch in Q2 FY26

Resolution of QCO impact on profitability

Next couple of quarters
Current Profitability impacted by QCO-driven import content and one-off costs.
Target Improved profitability and reduced impact from QCO guidelines.

Why it matters

This is a key factor that suppressed margins this quarter, and its resolution is crucial for margin recovery.

are we out of the QCO? Answer to that is no. We still have to deal with it in the next couple of quarters to come as well and be ready for 2026.

Risks & concerns

  • Profitability pressure from QCO guidelines, import content, and FOREX volatility

    high

    QCO guidelines led to higher import content, impacting margins. FOREX volatility (currency appreciated >10%) also caused a 4.6% swing in material costs.

    Management acknowledged, actively working on mitigation strategies including judicious mix of imported vs localized content and shoring up manufacturing revenues

  • Softening in large orders and market readjustment

    medium

    Large orders were missing this quarter, and the market is taking a 'breather' and readjusting its growth trajectory.

    Management acknowledged, believes it's momentary and will return to forward trajectory

  • Increased competition from Chinese manufacturers and price pressure

    medium

    Chinese players are entering the market with 'unrealistic' prices, particularly in heavy industry and Process Automation, leading to competitive scenarios.

    Analyst acknowledged, stated they will not participate in orders where prices are 'way out of fundamental expectation' to protect profitability

  • Uncertainty in global and domestic private CAPEX

    medium

    Global and domestic uncertainties are making private CAPEX decisions more cautious, impacting large project orders.

    Management acknowledged, noted that people become more cautious in committing capital during uncertain times

Q&A highlights

6 direct
Outlook for H2 CY2025 and private CAPEX momentum Partial
second-half, yes, it will take time for it to come back, but I think, if I put a mid-term, which is, say, next year onwards, hoping that everything falls in place, I think we should start getting the momentum back in the marketplace.

Addresses investor concerns about the current moderation and provides a timeline for potential recovery, highlighting dependence on government capex and emerging segments.

Asked by Renu Baid

Impact of QCO guidelines and FOREX volatility on profitability Direct
in the next six months, we will have a mix which we have to do judiciously in order to ensure that we have a balance consumption between imported and the localized and also the revenue mix in terms of how we do more of manufacturing revenues and service revenues to shore up the margins.

Explains the reasons for current margin pressure and outlines management's strategy to mitigate these impacts in the near term.

Asked by Renu Baid

Impact of US tariffs on exports from India Direct
90% of our business is domestic, right, so that is where we get it. And most of our products we have quite high localized content... not exporting a very high volume into the U.S. at the moment.

Clarifies that the company's largely domestic focus and high localization minimize the direct impact of US tariffs on its operations.

Asked by Mohit

Nature of profitability hit in Electrification segment and mitigation Direct
it is a kind of a typical project topic, we have been executing a project, wherein certain corrections had to be done into the installed equipment. So, that is where the hit comes... we have already corrected those, what you call, anomalies that we detected.

Provides specific context for the one-off cost and reassures that the issue has been addressed, indicating it was not a systemic problem.

Asked by Mohit

Increased competition in the motors business and its effect on price realization Direct
competition is way of life... when there is an extraordinary performance by a company, which was us, there are always competitors who get more interested... we will have that push of increasing the price level to the market.

Acknowledges heightened competition but expresses confidence in the company's strategy of local footprint and technology leadership to maintain pricing power.

Asked by Bhavin Vithlani

Impact of Chinese imports and unrealistic pricing in heavy industry Direct
we do see participation from the Chinese manufacturers in the marketplace... I think the buyer is taking benefit of that sentiment, but I think that is not the price where we will participate just to keep the order and the revenue books going.

Highlights a significant competitive threat from Chinese players offering aggressive pricing, and management's disciplined approach to not chase unprofitable orders.

Asked by Atul Tiwari

Status of the prospects pipeline (reduced or delayed) Partial
(G. Balaji) 'just picking up that is been a general sort of a delay in decision making'; (Sanjeev Arora) 'not reducing and it is a matter of just time that we get into our books'; (Ganesh Kothawade) 'base enquiry is still strong, so it has not reduced. Some of the large enquiries... is getting delayed.

Confirms that while the pipeline remains strong, decision-making delays, particularly for large projects, are impacting order conversion timelines across segments.

Asked by Parikshit Kandpal

Distinction between base orders and large systems orders and their hit rates Direct
base orders are a pure function of flow in the market, like how well we channelize ourselves... large orders, yes, that is a pure hit rate... we had a couple of opportunities we let go because of the Chinese competition wherein the price which was put on table of customer was way out of normal trend.

Provides clarity on the different dynamics and sales strategies for base orders (channel-driven) versus large, cyclic project orders (pure hit rate, susceptible to competitive pricing).

Asked by Aditya Mongia

2 min read 6 chapters

Detailed narrative

Q2 CY2025 Performance Overview

ABB India Limited reported an all-time high Q2 revenue of INR 3,175 crores, reflecting a 12% year-on-year expansion. The company maintained a robust order backlog of INR 10,064 crores, providing strong revenue visibility for the next 18 to 24 months. Despite this, EBITDA margin for the quarter stood at 13%, which was lower than the previous quarter and the 21% recorded in the same quarter last year, primarily due to specific one-off impacts.

Profitability Challenges and Mitigation

The decline in profitability was attributed to several factors, including the need to import materials due to QCO guidelines, a one-off cost of INR 39.5 crores in the Electrification segment, and adverse FOREX volatility where the currency appreciated over 10%, leading to a 4.6% swing in material costs. Management indicated that they are implementing a 'judicious mix' of imported and localized content and focusing on increasing manufacturing and service revenues to shore up margins in the coming six months.

Market Dynamics and Outlook

Management observed that the market is currently taking a 'breather' and readjusting its growth trajectory, with large orders being 'missing' in the last quarter. While base orders grew by 5%, there's a general delay in decision-making for larger projects, particularly in private CAPEX, due to global uncertainties. However, the company remains 'cautiously optimistic,' anticipating a pick-up in government CAPEX and growth from emerging segments like energy transition, digitalization, and data centers.

Segmental Performance Highlights

The Electrification segment saw roughly INR 1,400 crores in orders, with base orders growing 9% QoQ, and revenues of INR 1,379 crores, though impacted by import content issues. Motion's base orders remained intact, but large orders were missing, and price realization faced headwinds. Process Automation experienced a slight decline in order backlog (12%) and subdued revenue of INR 500 crores due to postponed decisions. Robotics reported roughly INR 120 crores in orders and an all-time high revenue of INR 236 crores, driven by increasing adoption in manufacturing.

Competition and Pricing Strategy

The company acknowledged increased competition, particularly from Chinese manufacturers offering 'unrealistic' prices in heavy industry and Process Automation. Management stated a disciplined approach, choosing not to participate in orders where pricing is 'way out of fundamental expectation' to protect profitability. They emphasized leveraging their local footprint, technology leadership, and value-added offerings to compete effectively and maintain market share.

Shareholder Value and Sustainability Initiatives

Over the last 30 years, ABB India has delivered significant shareholder value, with total returns of 8,500%, a 6,745% increase in share price, and 68x growth in market capitalization. The company declared an interim dividend of INR 9.77 per equity share. On the sustainability front, ABB has reduced GHG emissions by 87.5% (from 2019 base), achieved zero waste to landfill at 3 out of 4 campuses, and is nearing its 50% water recyclability target, currently at 41%.

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