A B B — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

ABB India reported a resilient Q1 CY25 with 3% YoY growth in revenue and PAT, and a robust 16.4% operational EBITDA margin. The order backlog grew 11% to ₹9,958 crores, driven by 10% base order growth and strong export performance. While macro uncertainties led to some project delays, particularly in Process Automation, the company remains optimistic about long-term growth and continues to focus on localization and portfolio expansion.

Highlights

  • Revenue expanded by 3% year-on-year, demonstrating resilience in a volatile market.

  • Profit after tax also grew by 3% year-on-year, supported by operating leverages and price realization.

  • Operational EBITDA margin stood strong at 16.4%, indicating healthy underlying profitability.

  • Order backlog increased by 11% year-on-year to ₹9,958 crores, providing good revenue visibility for upcoming quarters.

  • Base orders grew by 10%, complemented by a large order of ₹200 crores, showing broad-based demand.

Concerns

  • Overall order inflow growth was 4% YoY, which is lower than the company's historical double-digit growth trend.

  • Process Automation segment experienced sluggishness and delayed decision-making from customers due to market volatility and macro uncertainties.

  • Revenue for Q1 2025 was ₹3,160 crores, a sequential decline compared to Q4 2024 revenues of ₹3,300-3,400 crores, attributed to lower operating leverage.

Key financials

  1. Revenue ₹3,160 Cr +3%YoY
  2. Profit After Tax (PAT) Growth — +3%YoY
  3. Profit Before Tax (PBT) Margin 20%
  4. Operational EBITDA Margin 16.4%
  5. Material Cost % of Revenue 58.3%
  6. Cash Balance ₹4,700 Cr

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

  • Electrification
    ₹1,600 Cr Orders (minimum)₹1,300 Cr Revenue (current trend)25.7% Profitability
  • Motion
    ₹1,200 Cr Orders₹1,100 Cr Revenue22% Profitability

Order book

high confidence

Total value

₹9,958 Cr

as of 2025-03-31 quantified

11% YoY

Execution

two-thirds of it will get executed in the coming quarters, and the balance will go to the year after.

Composition

Mix 3 offering types
  • Products 73%
  • Projects 13%
  • Services 14%

Share of order book by offering type

Order backlog provides good visibility for future revenues, with two-thirds expected to be executed in the coming quarters.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Capacity expansion for units with growing volumes in Process Automation, Electrification, and Motion segments.
    Yes, since you asked, so we will have capacity expansion, especially in the units which are relatively small in the business. So now they are coming of age. So we have to put them into the larger units because their volumes have grown, and they are demanding much more space. So there are some in Process Automation. We also see the same in the electrification on back of growth as well as on back of expanded portfolio which needs to be localized. We also see something similar in motion.
  • Liquidity Cash ₹4,700 Cr The company's cash balance is robust, and management is considering options for its utilization, including organic growth and inorganic opportunities.
    So cash balance, Rs. 4,700 crores. Our collections were able to keep speed with the revenues and also the overall collectability. We did not find any drastic liquidity issues in the market as what we go forward. So, that's something which we think we will continue to focus on, and we will definitely go forward to have different options to how to use this cash.

Guidance & targets

Profitability

  • PAT Margins Profitability · current point of time · High confidence 12% to 15%
    No, we have been saying that 12% to 15% is where we are talking at the PAT margins at this point of time.

    — Sanjeev Sharma

Service

  • Service Mix Percentage Service · future · Medium confidence 15%

    From 12% to 13% today

    Service is almost every time between 12% to 13%, but ideally our aim is to get to 15%

    — Sanjeev Sharma

Order Growth

  • Overall Order Growth Order Growth · future · Low confidence double-digit growth
    But our intent has always been to be aiming for double-digit growth, right, and then be in line with what the market could sort of decide as a result of these particular macro factors which is beyond our control, right.

    — Sanjeev Sharma

What to watch in Q1 FY26

Process Automation Order Recovery

next quarter
Current Sluggish with delayed decisions
Target Improved order inflows and decision-making

Why it matters

Recovery in this segment is linked to broader CAPEX cycles and is a key indicator of market confidence.

But as far as our base business is concerned, that continues to be robust. But it is to be acknowledged that as per the large projects are concerned in the market, they are there, but they are sluggish in decision making, at least in the first quarter. And we will see how the 2nd Quarter goes for us and 3rd Quarter plays out.

Risks & concerns

  • Macroeconomic and geopolitical uncertainties leading to delayed CAPEX decisions

    medium

    Global trade uncertainty, domestic economic strain, and geopolitical events are causing customers to delay investment decisions, particularly in large projects.

    Management acknowledged

  • Increased competitive intensity in certain product categories

    low

    While overall margins are stable, some minor product categories are experiencing price pressures due to higher competition.

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Impact of macro uncertainties on order execution and annual growth outlook Partial
So there, many projects which were on pipeline are still on the pipeline, but because of the uncertainties which are floating across the world and also domestically, certain customers held back the decisions. And we do believe those projects are still in the pipeline and those decisions will improve. So, that's what it is. So, it's very difficult. We have just finished the first quarter briefing. So, it's difficult to say what happens at end of the year.

Analyst questioned if the current order sluggishness would impact the company's ability to maintain double-digit revenue growth for the year, to which management acknowledged delays in large projects due to macro factors but deferred a definitive full-year outlook.

Asked by Renu Baid Pugalia

Localization efforts and portfolio expansion in high-growth segments Direct
So, one angle is we continue to expand our portfolio, and then we continue to localize it so that it becomes more attractive price point to have voice to the customers. And as the economy is growing, it continues to kind of become more sophisticated. So, more and more ABB sophisticated products keep coming and we can now localize and spread it in the market.

Analyst inquired about the rapid growth of the 'others' product segment and ABB's localization strategy. Management provided detailed examples across Electrification and Motion, highlighting how portfolio expansion and local manufacturing drive market penetration and acceptance.

Asked by Renu Baid Pugalia

Recovery timeline for Process Automation segment Partial
But when it comes to large projects, they are cyclic in nature, and it all depends upon how the private CAPEX and the government CAPEX is forming in the marketplace. So, I would say indirectly if we watch these market segments and see the CAPEX formation there and the government CAPEX release, that should have a direct correlation with when the recovery in the process automation businesses will come.

Analyst asked about the negative growth in Process Automation over the last three quarters. Management attributed it to the cyclical nature of large CAPEX projects and linked recovery to broader private and government CAPEX cycles, without giving a specific timeline.

Asked by Mahesh Bendre

Interpretation of high/moderate/low growth segments Direct
I would say calendar year basis is a reasonable way to look at it. ... So, we have a bit of a matrix and more granularity to it which we track. But yes, to your question, to your answer, yearly adjustment is more relevant for it rather than quarterly adjustment.

Analyst sought clarification on how to interpret the company's segment growth chart, particularly regarding quarter-on-quarter shifts. Management clarified that a yearly adjustment is more relevant for these long-term market segments than quarterly changes.

Asked by Subramaniam Yadav

Market share and penetration of IE3/IE4 motors Evasive
So, Mohit, actually it is a very good question. I am also interested in those numbers, but today Sanjeev Arora is not here. He is travelling. He is responsible for that business. We may not be able to give that answer immediately plus we typically don't go to that granularity of information because it's very sensitive to business.

Analyst asked for specific market share data for IE3/IE4 motors, which management declined to provide, citing business sensitivity and the absence of the relevant business head.

Asked by Mohit Kumar

Impact of Siemens Gamesa acquisition on ABB India Partial
Okay, that is a global acquisition, what has happened. In India, we have not great footprint about it. So, we are buying only some inventories and capital equipment as what we informed the stock exchange in the last quarter. So, they are very much, they are players in the wind and renewable players. We need to find out how it works out going forward. ... We should allow it sometime before we can be more specific about it.

Analyst inquired about the benefits and revenue contribution of the Siemens Gamesa acquisition for ABB India. Management indicated it's a global acquisition with limited immediate footprint or specific revenue impact for India, requiring more time for clarity.

Asked by Mohit Kumar

Sources of imports and foreign exchange usage Direct
So, technically what happens is in the projects division, it is slightly lesser on a direct import basis because they do more of projects, but they also draw from the motion and electrification wherever needed, who import, right? So, definitely, I would say in terms of imports could be pretty higher in robotics because they depend quite a lot on the imports from outside countries because the ecosystem for robotics in the country is yet to be developed as what is needed. ... 70% of the imports will come only from these two segments [EL and MO] and the balance 25%-30% come from robotics.

Analyst asked for a breakdown of segments contributing to the company's significant foreign exchange usage for imports. Management provided a clear split, noting higher imports in Robotics due to an undeveloped local ecosystem and significant contributions from Electrification and Motion.

Asked by Jonas Bhutta

Capacity expansion plans and strategy Direct
Yes, since you asked, so we will have capacity expansion, especially in the units which are relatively small in the business. So now they are coming of age. So we have to put them into the larger units because their volumes have grown, and they are demanding much more space. ... Amit, as you alluded to, definitely before we go through with our CAPEX plans, we are very measured in that to understand what capacities which we have, which we could first leverage upon and what are the other options available. And then it's a well thought-through decision before we start to invest in organic and inorganic options.

Analyst inquired about specific capacity additions planned for CY25/CY26. Management confirmed plans for expansion across Process Automation, Electrification, and Motion to accommodate growing volumes, emphasizing a measured and strategic approach to CAPEX.

Asked by Amit Mahavar

2 min read 6 chapters

Detailed narrative

Q1 CY25 Financial Performance Overview

ABB India reported a 3% year-on-year increase in both revenues and profit after tax for Q1 CY25. Revenues reached ₹3,160 crores, while the operational EBITDA margin remained robust at 16.4%. The company maintained a profit before tax margin of 20%, benefiting from a favorable mix of operating leverages and price realization. A positive foreign exchange impact of approximately ₹20 crores also contributed to the financial performance.

Order Book and Backlog Dynamics

Overall orders expanded by 4% year-on-year, with base orders growing by a healthy 10%. The order backlog increased by 11% year-on-year, reaching ₹9,958 crores, providing significant revenue visibility for the coming quarters, with two-thirds expected to be executed soon. Export orders demonstrated strong momentum, growing by 40% year-on-year, reflecting the company's expanding global reach from its Indian base.

Segmental Performance and Strategic Focus

The Electrification and Motion segments continue to dominate, accounting for 74-75% of the business. Electrification recorded minimum orders of ₹1,600 crores and a profitability of 25.7%, while Motion achieved ₹1,200 crores in orders and 22% profitability. The company's offerings are composed of 73% products, 13% projects, and 14% services. ABB is actively expanding its portfolio and localizing production, particularly in areas like energy management solutions, modular switches (LIORA), and GIS facilities, to cater to growing demand in Tier-2 and Tier-3 cities.

Macroeconomic Headwinds and Process Automation Sluggishness

Management acknowledged that macro uncertainties, including global trade volatility and geopolitical events, led to a cautious approach from customers, resulting in delayed decision-making for large projects. This particularly impacted the Process Automation segment, which saw sluggishness in Q1. While base business remains robust, the recovery of large projects is expected to correlate with the broader CAPEX cycle and improved market confidence.

Capital Allocation and Future Growth

The company maintains a healthy cash balance of ₹4,700 crores. Management indicated a focus on organic capacity expansion across Process Automation, Electrification, and Motion segments to meet growing volumes. While inorganic opportunities are being explored, the company emphasizes a measured approach, prioritizing value creation and waiting for the right opportunities. Increased dividends were also highlighted as a means of rewarding shareholders.

Margin Drivers and Import Profile

Profitability is driven by a combination of order margins, productivity improvements, supply chain management, and localization efforts. While some competitive intensity was noted in minor product categories, overall PAT margins are targeted to remain within the 12-15% range. Regarding imports, approximately 70% are attributed to the Electrification and Motion segments, with another 25-30% coming from Robotics, where the local ecosystem for components is still developing.

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