ABB India , a major player in the industrial technology sector, is navigating through a temporary slowdown in its large-scale industrial projects segment while maintaining an optimistic outlook for the future. The company has set its sights on achieving profit margins between 12-15% in 2025, despite current challenges in the market.

Record Order Backlog Amid Domestic Focus

ABB India reported a significant milestone with its order backlog exceeding Rs 10,000 crore, highlighting the company's strong market position. Notably, 90% of the business is derived from the domestic market, underscoring ABB India's deep roots and substantial presence within the country.

Cyclical Challenges in Systems Order Segment

Managing Director Sanjeev Sharma shed light on the current situation, noting that the systems order segment, which handles heavy industry solutions, is experiencing cyclical challenges. These difficulties are primarily attributed to customer delays, stemming from uncertainty surrounding trade tariffs. This segment's performance has a notable impact on the company's overall financial results.

Q2 Financial Performance

The effects of these challenges were evident in ABB India's second-quarter financial results:

Despite the decline in net profit and EBITDA, the company managed to grow its revenue, indicating resilience in certain business areas.

Market Opportunities and Future Outlook

ABB India remains optimistic about demand in various market tiers:

• Strong demand observed in tier-1, tier-2, and tier-3 markets
• Particular growth noted in infrastructure, real estate, and data centers

These sectors present significant opportunities for ABB India to leverage its expertise and potentially offset challenges in other segments.

Stock Market Reaction

Investors responded to the news with caution, as ABB India's shares closed 5.34% lower at Rs 5,100.00 on the day of the announcement.

As ABB India navigates through this period of sectoral challenges, the company's strong order backlog and focus on maintaining healthy profit margins suggest a strategic approach to long-term stability and growth in the competitive industrial technology landscape.

ABB India , a leading technology company, reported mixed results for the second quarter, with revenue growth offset by margin pressure and declining profits. The company faced operational challenges as costs surged across various segments.

Revenue Growth Meets Expectations

ABB India's revenue grew by 12% to ₹3,175.00 crore in the quarter, aligning with market expectations. This growth demonstrates the company's ability to maintain its top-line performance despite challenging market conditions.

Margin Pressure and Profit Decline

Despite the revenue growth, ABB India experienced significant pressure on its profitability:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell by 24% to ₹414.90 crore, missing market estimates of ₹582.00 crore.
• EBITDA margin declined sharply by over six percentage points, dropping to 13% from 19.2% in the previous year.
• Net profit decreased by 21% year-on-year.

Cost Pressures

The company faced substantial cost pressures across various operational areas:

These rising costs significantly impacted the company's profitability during the quarter.

Order Inflow and Order Book

ABB India's order inflow showed a decline:

• Order inflow dropped by 12% to ₹3,036.00 crore.
• Sequentially, order inflow fell by 19%.

However, the company's order book showed some positive signs:

• The order book crossed the ₹10,000.00 crore mark.
• Annual growth in the order book was 6%.
• Sequential growth from March was 1%.

Strategic Move: Robotics Division Evaluation

The board of ABB India has approved the appointment of valuers to evaluate the Robotics division. This evaluation is aimed at potentially incorporating the division into a wholly-owned subsidiary. It's important to note that no decision regarding divestment has been made at this stage.

Stock Performance

ABB India's stock reacted to the mixed results:

• Shares closed 2.3% lower at ₹5,384.00.
• Over the past month, the stock has declined by 8.1%.

The market's reaction reflects the challenges faced by the company, particularly in terms of profitability and margin pressure, despite the revenue growth.

ABB India's mixed performance in the second quarter highlights the complex business environment it operates in, with revenue growth being offset by significant cost pressures and operational challenges. The company's ability to navigate these headwinds and improve profitability will likely be a key focus for investors in the coming quarters.