Detailed Narrative
Strong Q2 CY2026 Performance and Half-Year Review
ABB reported a robust Q2 CY2026, with orders growing 50% year-on-year and revenue increasing by 21%. This strong quarterly performance contributed to a half-year (H1 CY2026) order intake of INR 8,600 crores, up 36%, and revenue of INR 6,743 crores, up 13%. Operational EBITA for the half-year stood at 12.8%, reflecting efficient operations despite market challenges🌐.
Robust Order Backlog and Segmental Contributions
The company maintains a significant order backlog of INR 11,900 crores as of June 30, 2026, with management assuring no slow-moving orders. The Electrification segment demonstrated exceptional order growth of 77% year-on-year, contributing INR 4,800-4,900 crores to the backlog. Key market segments driving orders included data centers (15-17%), metals & mining (15%), oil & gas (9%), buildings & infrastructure (8%), and renewables (6%).
Profitability Pressures from Material Costs and Forex Volatility
Despite strong top-line growth, profitability faced headwinds. Material costs rose to 63% in Q2 CY2026, up from 61% in the previous quarter, primarily due to hardening metal prices like copper. Operational EBITA for Q2 was 12.6%, slightly down from 13.6% in the prior quarter. Management highlighted a lag in passing on price increases to the market, exacerbated by continued rupee depreciation and forex volatility.
Strategic Market Focus and Capacity Expansion
ABB is strategically focused on 23 market segments, including emerging industries like renewables and data centers, alongside core industries. To support anticipated growth, the company plans USD 75-80 million in capex over the next 2-3 years, aiming to maintain a 15-20% headroom for increased sales. This investment is particularly geared towards high-growth areas like data centers and renewable power.
Leadership Transition and Future Outlook
A significant leadership transition is underway, with T.K. Sridhar, the current CFO, designated as the Managing Director from January 1, 2027. The search for a new CFO is expected to conclude within the next couple of months to ensure a seamless transition. The company remains optimistic about future growth, driven by government capex, private consumption, and PLI schemes, while acknowledging the need to navigate macro factors like commodity and forex volatility.
Adaptation to Quality Control Orders (QCO) and Localization
Management confirmed that the company has successfully adapted to the requirements of Quality Control Orders (QCO). Clarity from the government, along with some relaxations and extended timelines, has helped. ABB's focus on localization, leveraging its local supplier base and factories, has been crucial in meeting QCO guidelines and is now supporting business growth.