- Valuation Concerns Persist as

ABB

’s Earnings Lag Inflows

.’s shares have gained nearly 8% in the past four sessions, driven by optimism around order inflows and early signs of demand recovery. In its Q4CY25 earnings call, management highlighted improving prospects from emerging tech sectors, government spending, and railway propulsion orders. While order inflows surged, earnings disappointed due to higher raw material costs and labour code impacts. With the stock trading at 67x CY26 earnings estimates, investors are weighing strong inflows against limited earnings visibility and margin challenges. Q4CY25 Performance Highlights - Order inflows: ₹4,100 crore, +52% YoY, boosted by ₹700 crore of large lumpy orders. - Base orders: ₹3,000–3,500 crore quarterly, +27% YoY. - Full-year inflows: ₹14,000 crore, +12% YoY, despite 9M decline of 4%. - Revenue: ₹3,557 crore, +6% YoY. - EBITDA: ₹546 crore, -17% YoY; adjusted decline -7% (labour code impact). - Gross margin: Down 280 bps to 39% for CY25. Segmental Trends - Process automation EBIT: -21% YoY. - Motion EBIT: -15% YoY. - Robotics & discrete automation EBIT: +29% YoY. - Robotics divestment (3% of EBIT) expected by March, limited near-term impact. Order Book & Outlook - Order backlog: ₹10,471 crore, <0.8x CY25 revenue, limiting visibility. - Data centres: Contribute 10–11% of order book, growing rapidly. - Railway propulsion orders expected to drive 16–17% inflow growth in CY26. - Private capex recovery anticipated in CY26 as US tariff overhang eases. Valuation & Risks - Valuation: 67x CY26 earnings estimates (Bloomberg consensus), considered steep. - Risks: High import content due to QCO compliance, margin pressure until September, slower execution of large orders. - Outlook: Sustained inflows from railways, data centres, and government spending could support growth, but margin recovery and earnings visibility remain key investor watchpoints.