ABB

’s Record Orders Overshadowed by Margin Erosion

reported record order inflows of ₹4,280 crore (+25% YoY) in Q1CY26, its highest‑ever quarterly figure. However, margins disappointed, with EBITDA margin falling 576bps to 12.8%, hurt by input cost inflation, rupee depreciation, and rising competition. The stock has corrected sharply, down 10% in two sessions and 20% from its April peak, as investors focus on profitability pressures. Financial Highlights (Q1CY26) Order inflows: ₹4,280 crore (+25% YoY; second consecutive quarter of >25% growth). Base orders: ₹3,519 crore (+9% YoY). Large orders: ₹760 crore vs ₹210 crore last year, driven by data centres and railways. Order book: ₹11,100 crore (0.9× trailing 12‑month revenue). Revenue: ₹3,200 crore (+6% YoY). EBITDA: down 27% YoY; margin 12.8% (–576bps). Segmental trends: Electrification +15%, Motion +6%, Automation –15%. Operational Context Margin pressures: Input costs, rupee depreciation (high import mix), and intensified competition. Price hikes: Two rounds implemented, but benefits expected with a lag. War impact: West Asia conflict led to delivery deferrals and higher costs. Capex plan: $75 million (~₹7,100 crore) for renewables, metro rail, data centres, and R&D; aims to strengthen services (currently ~12% of revenue). Analyst Commentary Nomura cut CY26 EPS estimate by 6%; ICICI Securities by 11%. Margin recovery expected over 2–3 quarters, aided by price hikes and tapering quality control order (QCO) impact. Nuvama: Sustained order inflows >₹3,800–4,000 crore and margin recovery crucial to achieve PAT margin guidance of 12–15%. Conclusion ABB India’s Q1CY26 results highlight a strong order pipeline but weak margins, with profitability under pressure from costs and competition. Execution of large orders, capex expansion, and margin recovery will be key to sustaining earnings growth. At ~72× forward P/E, valuations remain elevated, making margin stabilization critical for investor confidence.