ABB India Limited , a leading technology company, has reported a 14% year-on-year revenue growth in the third quarter, despite facing margin pressures and market challenges. The company's performance reflects a mixed bag of growth in base orders and declining overall orders due to the absence of large contracts.

Key Financial Highlights

• Revenue growth: 14% year-on-year
• Base order growth: 13% year-on-year
• Overall orders: Declined 3% due to absence of large contracts
• Order backlog: Maintained at Rs. 9,895.00 crores
• Profitability: Declined 7% year-on-year, but improved 16% quarter-on-quarter

Market Dynamics and Challenges

ABB India faced several challenges during the quarter, including:

1. Margin pressures from Quality Control Order (QCO) compliance requirements
2. Increased competition in various market segments
3. Forex volatility impacting profitability
4. Delayed decision-making on large projects and expansions

Segment Performance

Electrification

• Continued growth in base orders
• Revenue growth across all divisions
• Margin impact due to mix changes, competition, and QCO compliance

Motion

• Strong order intake with good base order growth
• 9% execution growth
• Margin pressures similar to Electrification segment

Process Automation

• Stagnant order intake due to delayed decisions on larger expansions
• Consistent profitability maintained
• Less impacted by QCO due to multiple vendor sourcing options

Robotics

• Good order intake of Rs. 203.00 crores
• Stronger backlog
• Profitability muted due to lower service revenues

Market Outlook

ABB India remains cautiously optimistic about future growth prospects:

• Renewable energy sector, including battery energy storage systems (BESS) and green hydrogen, shows promise
• Rail and metro sectors continue to expand
• Data center market sees growth, particularly in colocation centers
• Revival in cement, steel, and oil & gas sectors

Strategic Focus

1. Continued expansion of portfolio with premium products
2. Focus on sustainability initiatives
3. Exploring inorganic growth opportunities globally and locally
4. Navigating QCO compliance challenges while maintaining customer serviceability

Conclusion

While ABB India faces short-term challenges due to market dynamics and regulatory requirements, the company's diverse portfolio and focus on emerging sectors position it well for future growth. The management remains committed to navigating these challenges while capitalizing on opportunities in high-growth segments.

Note: All financial figures are in Indian Rupees (INR).

ABB India Limited , a leading technology company specializing in electrification and automation, has released its financial results for the third quarter and nine months ended September 30, revealing a mixed performance with revenue growth but a decline in profitability.

Revenue Growth Amid Challenging Environment

For the quarter ended September 30, ABB India reported a total revenue from operations of ₹3,310.72 crore, marking a significant increase of 13.7% compared to ₹2,912.16 crore in the same quarter last year. This growth was primarily driven by strong execution of the company's order backlog.

Profit Margins Under Pressure

Despite the revenue growth, the company's profitability faced headwinds. Profit after tax for Q3 stood at ₹409.04 crore, down from ₹440.45 crore in the same quarter of the previous year, representing a 7.1% year-on-year decline. The company attributed this decrease to rising material costs, mainly due to revenue mix and reliance on imports to support delivery commitments in the wake of Quality Control Order (QCO) compliance.

Nine-Month Performance

For the nine months ended September 30, ABB India's revenue from operations reached ₹9,645.72 crore, up from ₹8,823.38 crore in the corresponding period of the previous year. However, profit for the nine-month period declined to ₹1,235.41 crore from ₹1,343.23 crore in the previous year.

Segment-wise Performance

ABB India's performance varied across its business segments:

The Robotics & Discrete Automation segment showed the highest growth, while Process Automation remained relatively flat.

Order Book and Future Outlook

ABB India maintained a strong order backlog of ₹9,895 crore as of September 30, providing good revenue visibility for the coming quarters. The company reported that base orders were up 13% year-on-year, although overall orders decreased by 3% due to the timing of large orders.

Management Commentary

Sanjeev Sharma, Managing Director of ABB India, commented on the results: "We have had another quarter where we continue to build our overall performance. Base order growth and revenue expansion led the way in driving momentum during the quarter. I am proud of the team that continues to nurture our wide portfolio to serve customers in 23 market segments and continue to weather all cyclical swings in a year that has been cautious on the customers' side."

Sustainability Initiatives

ABB India reported progress on its sustainability targets, with year-to-date greenhouse gas emission reduction (from a 2019 baseline) down by 87.05%. Additionally, all Motion factories have been certified as zero waste to landfill.

Conclusion

While ABB India demonstrates strong revenue growth and a robust order book, the company faces challenges in maintaining profit margins due to rising material costs and market dynamics. The company's diverse portfolio and focus on sustainability may provide resilience as it navigates the evolving industrial landscape in India.

Investors and stakeholders will be watching closely to see how ABB India addresses these challenges and capitalizes on growth opportunities in the coming quarters.