News

ABB India Ltd’s shares have risen over 7% in the past four trading sessions, led by better order inflow prospects and early signs of demand improvement.

In the December quarter (Q4CY25) earnings call, the management said that demand is rebuilding after a slack in early 2025, supported by traction in emerging industries such as data centres and electronics, favourable macro environment led by the government’s capital expenditure, and a gradual pick up in private-sector investments. This bodes well for 2026. The company follows a January-to-December fiscal year.

“We expect large orders in Q1CY26 given wins in railway propulsion orders, and this can lead to 16-17% year-on-year order inflow growth (adjusted for robotics and automation) for 2026,” noted a JM Financial Institutional Securities report. However, the near-term impact on revenue could be lower as the large orders have slower execution timelines (sometimes 3-4 years), the report added. Data centres, an important sub-segment, are growing rapidly, now contributing 10-11% to the total order book.

Overall, Q4CY25 order inflow jumped 52% on-year to ₹4,100 crore even as ABB’s financial performance was disappointing. Inflow got a boost with over ₹700 crore of large orders, which are usually lumpy. However, base orders are still in the ₹3,000-3,500 crore quarterly range, despite growing 27% on-year. Q4 inflow contrasts with an about 4% decline in the first nine months of 2025, taking the full-year figure to over ₹14,000 crore.

Meanwhile, Q4 Ebitda declined 17% on-year to ₹546 crore despite 6% revenue growth to ₹3,557 crore. Adjusted for labour code impact, Ebitda decline was lower at 7%. Earnings were impacted by higher import content to meet quality control orders (QCOs), leading to a notable spike in raw material costs. The impact is expected to remain until September, after which ABB hopes to secure QCO approval for new products. Ebitda is short for earnings before interest, taxes, depreciation, and amortization.

Out of the four major segments, process automation and motion, together contributed almost half of ABB’s revenue, and saw 21% and 15% drop in their Ebit (earnings before interest and taxes). Robotics and discrete automation segment Ebit grew by a strong 29%. The segment’s divestment in line with the Swiss parent’s decision may have a limited impact on ABB’s near-term profits, as robotics forms just about 3% of the total Ebit. The divestment is expected to be completed by March.

Full-year 2025 Ebitda declined by about 11%, weighed down by higher raw material costs, leading to a 280-basis-point drop in gross margin to 39%. “ABB had a good run over 2021-24 with a compound annual growth rate (CAGR) of 21% in revenue and 24% in orderbook (OB). However, the run slowed down in 2025 with revenue and OB growth of 8% and 12%, respectively,” said ICICI Securities.

Against this backdrop, the stock trading at 65 times 2026 earnings estimates, according to Bloomberg consensus, appears steep. Note that despite the strong inflow, the order backlog of ₹10,471 crore translates to less than 0.8 times ABB’s 2025 revenue, providing limited earnings visibility. Besides, the robotics segment accounted for a significant part of Q4 orders, excluding which, inflow growth was 38%. “With the overhang of US tariffs seemingly behind us, we expect private capex to pick up in 2026 versus 2025, leading to better order prospects,” said ICICI’s analysts.

Investors will closely track whether ABB can sustain robust order inflows and maintain higher margins.

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Download the Mint app and read premium stories