A B B — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

ABB India reported a mixed quarter with robust 14% revenue growth and healthy 13% base order growth, though overall order growth was negative due to a high prior-year base. Profitability saw a 7% YoY decline in PAT and a 20% YoY decline in PBT margin, primarily impacted by material costs, unfavorable product mix, and the new Quality Control Orders (QCO). The company maintains a strong order backlog of ₹9,895 crores and a healthy cash position, but anticipates QCO-related challenges to continue for the next 3-4 quarters.

Highlights

  • Revenue grew 14% YoY, indicating strong execution and market demand.

  • Base orders grew 13% YoY, reflecting healthy underlying demand despite an overall order decline.

  • Order backlog of ₹9,895 crores provides good revenue visibility for the coming quarters.

  • Maintained a strong cash position of ₹4,500 crores, supporting strategic inventory build-up.

  • Introduced IE5 ultra-premium efficiency LV motors, expanding the product portfolio with advanced technology.

Concerns

  • Overall order growth was -3% YoY, primarily due to a high base from large contracts in the prior year.

  • Profitability (PBT) declined 20% YoY to 16.4% and PAT declined 7% YoY, impacted by material costs, unfavorable revenue mix, intensified competition, QCO, and FOREX volatility.

  • The impact of Quality Control Orders (QCO) leading to higher import costs and FOREX volatility is expected to persist for 3-4 quarters.

  • Backlogs in the Electrification division are down 2%, as execution pace outstripped order intake for the quarter.

Key financials

  1. Revenue Growth 14% +14%YoY
  2. Overall Order Growth -3% -3%YoY
  3. Base Order Growth 13% +13%YoY
  4. PBT Margin 16.4% -20%YoY
  5. PAT Growth -7% -7%YoY

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.

Order book

high confidence

Total value

₹9,895 Cr

as of 2025-09-30 quantified

-3% YoY

Execution

executed over the next quarters, 70% smaller orders on a month-to-month basis, Motion's large system orders over 12-18 months

Composition

Mix 2 contract types
  • Large Orders 30%
  • Smaller Orders 70%

Share of order book by contract type

Order backlog is healthy and provides good visibility for future revenues, with a mix of short-cycle base orders and longer-term large projects.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Robotics Business Divestment · Announced

    To find its own footing and growth path, following a good offer from SoftBank globally.

    Decision in India is fully dependent on the Board's evaluation and next processes; listing is unlikely, but a separate valuation will be decided.

    Robotics. ABB globally announced the divestment of robotics, so we still have, the decision in India is fully dependent on the Board's evaluation and the next set of processes which will happen, which is at this point of time not decided. ... As far as India assets are concerned, these assets will be evaluated by the Board, Independent Directors included. And we will follow the due process of evaluating it. ... listing is unlikely, but a separate valuation will be decided and then you will follow the due course process.
  • Liquidity Cash ₹4,500 Cr Strategic inventory stocking was done to ensure customer serviceability despite QCO obligations, which impacted the cash balance slightly.
    And the cash balance, Rs. 4,500 crores. Of course, we could have done slightly better over here. We have stocked up strategically inventory to make sure that we are not bound by any QCO obligations which could come up as a surprise or a delay in certification.

Guidance & targets

Sustainability

  • Water Positive Units Sustainability · by end of 2025 · High confidence 4 units
    And our target is four units. We have already achieved three. And one unit remaining is under certification at the moment. Most likely by end of the year we will achieve the target.

    — Sanjeev Sharma

  • Water Recyclability Sustainability · by end of 2025 · High confidence 50%
    And water recyclability is at 44%. And our target is 50% for this year.

    — Sanjeev Sharma

Operational

  • QCO Impact Duration Operational · next 3-4 quarters · High confidence 3-4 quarters
    It could continue as what I said to another three to four quarters is what I mentioned.

    — T. K. Sridhar

Growth

  • Overall Growth Growth · ongoing · Medium confidence double-digit corridor
    So, our always ambition is to be in the double-digit corridor as what Sanjeev was mentioning earlier.

    — T. K. Sridhar

What to watch in Q3 FY26

Water Positive Units Achievement

by end of 2025
Current 3 out of 4 units achieved, 1 under certification
Target 4 units achieved

Why it matters

Achievement of sustainability targets reflects operational efficiency and commitment to environmental goals.

And our target is four units. We have already achieved three. And one unit remaining is under certification at the moment. Most likely by end of the year we will achieve the target.

Risks & concerns

  • Quality Control Order (QCO) impact

    high

    QCOs mandate BIS certification for local products, leading to delays, higher import costs, and FOREX volatility, expected to last 3-4 quarters.

    Management acknowledged

  • Trade uncertainty around India

    medium

    Trade uncertainty is playing out around India, posing a headwind for 2025 outlook.

    Management acknowledged

  • Prolonged geopolitical tensions

    medium

    Geopolitical tensions haven't subsided and need to be navigated.

    Management acknowledged

  • Global financial market volatility and FOREX fluctuations

    medium

    Volatility in global financial markets and FOREX is a challenge to navigate.

    Management acknowledged

  • Intensified competition and inability to command price premium

    medium

    Competition has intensified in several segments, and the ability to command a price premium (1-1.5%) has diminished post-COVID.

    Management acknowledged

  • Sluggishness in CAPEX formation and expansion projects

    medium

    The market is experiencing sluggishness in CAPEX formation and expansion projects, leading to delayed decisions on orders.

    Management acknowledged

  • Unclear impact of Chinese imports

    medium

    A potential thaw in India-China relations could lead to uncontrolled Chinese imports, impacting price realization in the market.

    Management acknowledged

Q&A highlights

3 direct
Profitability and Margin Outlook Direct
So, I think that is already answered. So, I don't want to repeat it again because that is the same thing. So, now the question is, and as rightly, even in the last calls which we had said, so we are at the lower end of the percentage is what we want to operate in.

Analyst questioned if current lower margins are the new normal, and management reiterated their target operating band and attributed current pressures to multiple factors.

Asked by Sumit Kishore

CAPEX Cycle and Base Order Sustainability Partial
At this point in time for last few quarters now there is sluggishness in the market in terms of CAPEX formation as well as expansion projects. They are at a good level, but they are not in a very strong expansionary mode. ... this is a cycle which comes as a correction after a strong growth. Whether it takes one quarter, two quarters that our perspective is this is going to come back.

Analyst sought clarity on the persistence of base order growth and the CAPEX cycle, with management acknowledging current sluggishness but expressing confidence in a future rebound.

Asked by Sumit Kishore

NVIDIA Partnership and India Market Partial
So, at this point of time, I don't have the complete details of this particular deal. I know as much as you know in terms of intent of ABB Express with NVIDIA. But as a principle, if there is no geographical restrictions or obligation of those technologies, all technologies ABB develops, they are naturally available to our customers here in India.

Analyst inquired about the availability and market impact of new AI data center solutions from the NVIDIA partnership, to which management provided a general principle without specific details.

Asked by Renu Baid

Impact and Duration of Quality Control Orders (QCO) Direct
So, therefore all the products have to be, whatever we manufacture including the subcomponents have to go through the testing and certification of these particular institutes. And it takes a lot of time because the number of labs are less... So, to address this because there is going to be definitely a lot of time which will be taken to get our product certified... we have no other option but to import material to serve our commitments to the customers... It could continue as what I said to another three to four quarters is what I mentioned.

Analyst challenged the counter-intuitive effect of QCOs leading to higher imports, and management confirmed the issue, explaining the operational challenges and expected duration of the impact.

Asked by Atul Tiwari

Robotics Business Divestment and Shareholder Compensation Direct
As far as India assets are concerned, these assets will be evaluated by the Board, Independent Directors included. And we will follow the due process of evaluating it. After the valuations are done like we have done in the past and the local Board is satisfied, based on that valuation, separation of this asset will be done into a new company. But then this is something is not given. This is subject to ABB India Limited's Board approval.

Analyst sought clarification on the process and implications for Indian shareholders following the global divestment of the robotics business, with management outlining the Board-led valuation process.

Asked by Lavina Quadros

Process Industries Demand and Chinese Imports Partial
Now when it comes to the major expansion, the greenfield expansions, in certain market segments, we definitely see there is a greenfield expansion, but it is not widespread. ... At the same time, one has to also keep in mind, this is something which I cannot say as confirmation. But in the news media, there is a clear mention that between India and China now there is a thaw of relationship, and more and more businesses are opening up. So, it is unclear what will be the impact of Chinese imports in the country.

Analyst questioned the demand pipeline for process industries, and management highlighted the mixed picture of greenfield expansions and the uncertainty surrounding Chinese imports.

Asked by Samir Thakur

CY2026 Revenue Growth Outlook Partial
So, I think if you net that out, I think rest of the book to bill orders as well as in the EL and MO will continue to push the revenues upwards. And as far as the PA is concerned, it goes through the cycle. ... So, our always ambition is to be in the double-digit corridor as what Sanjeev was mentioning earlier.

Analyst probed the feasibility of achieving 10-12% revenue growth in CY2026 given current segment dynamics, with management expressing confidence in double-digit growth driven by EL and MO.

Asked by Amit Mahawar

3 min read 7 chapters

Detailed narrative

Q3 CY2025 Financial Performance Overview

ABB India reported a 14% year-on-year revenue growth for Q3 CY2025, driven by healthy base order growth of 13%. However, the overall order growth for the quarter was -3% due to a high base from large contracts in the previous year. The company's PBT margin stood at 16.4%, a decline from 20.5% in the prior year, and PAT saw a 7% year-on-year decrease, despite a 16% quarter-on-quarter increase in profitability.

Profitability Drivers and Headwinds

The decline in profitability was attributed to several factors, including material cost impacts, an unfavorable revenue mix, and intensified competition in certain segments. The introduction of new technologies and the impact of Quality Control Orders (QCO) and FOREX volatility also contributed to margin pressures. Management noted a 3% gap in profitability compared to previous quarters in Electrification, primarily due to these factors.

Order Backlog and Execution Visibility

The company maintains a robust order backlog of ₹9,895 crores, providing good revenue visibility for the coming quarters. Approximately 30% of this backlog comprises large orders, while 70% consists of smaller orders with a faster execution cycle. Despite a 2% reduction in Electrification backlogs due to faster execution than intake, the overall backlog is considered clean with no slow-moving orders.

Impact of Quality Control Orders (QCO)

The recently mandated QCOs, requiring BIS certification for locally manufactured products, have led to operational challenges. Due to limited testing capacity and certification delays, ABB India is compelled to use imported components, resulting in higher costs and exposure to FOREX volatility. This impact is expected to persist for the next 3-4 quarters, and the company is working to navigate these challenges while ensuring customer serviceability.

Segmental Performance and Market Dynamics

The Electrification and Motion divisions saw good base order growth, with Motion's backlog at ₹4,100 crores, executable over 12-18 months. Process Automation experienced stagnant order intakes and revenues at ₹600 crores, with falling backlogs due to delayed decisions on large expansions. Robotics recorded a good order intake of ₹203 crores, driven by automotive, electronics, and general industry segments. The company is seeing strong opportunities in renewables, rail, and colocation data centers, while hyperscale data centers showed some sluggishness.

Sustainability and CSR Initiatives

ABB India is on track with its sustainability targets, having achieved 87.05% GHG emission reduction against an 87% target and four zero-waste-to-landfill units. The company has achieved three out of four target water-positive units, with the last one under certification, and aims for 50% water recyclability by year-end 2025 (currently 44%). The company consistently spends 100% of its CSR allocation, focusing on education, skilling, diversity, and environmental initiatives.

Strategic Outlook and Capital Allocation

Management acknowledges current market sluggishness in CAPEX formation as a cyclical correction but expects a rebound. The company maintains a strong cash position of ₹4,500 crores, partly used for strategic inventory build-up. Globally, ABB is exploring large inorganic options, and similar bolt-on opportunities are being pursued in India to complement existing portfolios and enter new market segments. The divestment of the robotics business in India is subject to Board evaluation and a separate valuation process.

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