Record Rs 40,900 crore quarterly inflows and 52% YoY growth
ABB India delivered a textbook example of how strong growth can coexist with weak profitability, posting its highest-ever quarterly order inflow of Rs 40,900 crore in Q4CY25 while watching operating margins collapse 410 basis points year-on-year.
ABB’s Q4CY25 revenue came in at Rs 35,600 crore, up 6% year-on-year and broadly in line with analyst expectations of Rs 35,000 crore. Growth came across all business segments with support from exports. For the full calendar year 2025, sales grew a moderate 8% to Rs 132,000 crore.
The Electrification division, which generates nearly half the revenue, grew 6% to Rs 15,900 crore supported by higher exports from smart power and distribution solutions. Robotics and discrete automation posted Rs 13,400 crore in revenue, also up 6%. Process automation was the laggard at Rs 6,500 crore, up just 4% as higher growth in energy industries and measurement analytics was offset by weakness in process industries.
“While CY25 sales growth was moderate at 8% YoY to Rs 132 billion, ABB is optimistic of a healthy CY26 performance (aim for double digit growth) as aggregate demand across its 18 business looks promising,” Antique Stock Broking noted from management commentary.
Motilal Oswal echoed this optimism. “With the traction seen in emerging areas like renewables, data centers and electronics, the company expects to maintain a similar run rate in inflows from these industries,” the brokerage stated.
The Margin Collapse Nobody Wanted
Operating profit declined 17% year-on-year to Rs 5,500 crore despite 6% revenue growth. EBITDA margin crashed 410 basis points to 15.4%, well below estimates. For the full year CY25, EBIT margin fell 300 basis points to 18.2%.
“The company delivered subpar performance on the profitability front on account of higher import content (due to QCO impact to mitigate risk of lower inventory), adverse revenue mix, higher materials and higher staff costs (new labour code implementation) and forex volatility,” Antique Stock Broking explained.
Quality Control Orders requiring domestic manufacturing certifications have forced ABB to import more materials from Europe to meet compliance timelines, increasing costs. The new labor code implementation added Rs 65 crore in Q4 expenses alone. Forex volatility and adverse product mix—more projects versus products—further compressed margins.
Gross margin contracted 260 basis points to 38.5% in the quarter. Margin weakness hit all segments, with contraction ranging from 200 to 500 basis points across divisions.
“EBITDA margin, adjusted with amount related to labor code as well as currency fluctuations, stood at 15.5%,” Motilal Oswal noted, suggesting the underlying margin profile excluding one-offs was slightly better than headline numbers indicate. Even so, the brokerage acknowledged “EBITDA margin was down YoY mainly due to lower gross margins.”
The Order BookÂ
The margin pain might be tolerable if not for the dramatic improvement in order momentum. ABB’s Q4 net order inflow surged 52% year-on-year to Rs 40,900 crore—the highest quarterly level ever. Base orders grew 27% while large orders jumped on strength from data centers, automotive, buildings, infrastructure, railways and metals.
“Order inflows were up 52% YoY to Rs 41 billion, led by strong growth in base orders followed by large orders from data centers, automotive, buildings & infra, railways, and metals, which lifted the overall order book to Rs 105 billion (+12% YoY),” Motilal Oswal reported.
The order book now stands at Rs 104,700 crore, up 12% year-on-year and representing 0.8 times trailing twelve-month revenue. This provides meaningful visibility for the next 2-3 quarters. “The company is witnessing healthy revival in aggregate demand across its 18 businesses,” Antique Stock Broking stated.
Segment-wise, Electrification saw order inflows surge 43%, Motion jumped 70%, and Process Automation grew 34%. Data centers have emerged as a key growth driver. “ABB has been able to increase the share of data centers in overall order book to 10-11% now and expects similar traction to continue going forward,” Motilal Oswal noted.
When Do Margins Recover?
Brokerages expect margin improvement, but only gradually. “We expect that the impact of QCO-related cost can be seen for just few more quarters, and margins can improve from there on,” Motilal Oswal stated, projecting EBITDA margins of 16.6% for CY26 and 17% for CY27—still well below the 18-19% levels ABB enjoyed in previous years.
Antique Stock Broking was more circumspect, noting “near term pressure to persist” on margins while eventually expecting recovery from improved volumes, select price hikes to pass through raw material costs, and focus on localization and premiumization.
The India-EU trade agreement could provide relief. “ABB is optimistic about opportunities that can emerge after the India-EU trade agreement and the company is in active discussions with players to capitalize on these opportunities,” Motilal Oswal reported from management commentary.
The Valuation Calculus
For now, order momentum is real and promising, but margin recovery will be slow and painful.
Motilal Oswal maintained its Buy rating with a revised target price of Rs 6,600, up from Rs 5,800, citing improving order visibility and expected margin recovery over the next few quarters. Antique Stock Broking held its target at Rs 6,391, up from Rs 5,056, but maintained a more cautious Hold stance despite acknowledging the positive growth outlook.
At the current market price of Rs 5,918, both brokerages see limited upside—12% from Motilal Oswal, 8% from Antique—suggesting the market has already priced in much of the order book improvement without fully accounting for the margin headwinds that won’t disappear quickly.
“In the last one year, two reasons that resulted in de-rating of the stock were weak margins-led earnings cuts and muted order inflows. We believe that the earnings cut cycle seems to be over for ABB and order inflows have started reviving,” Motilal Oswal stated.
