Key Takeaways
- Order inflow jumped 52% YoY to Rs41 bn, driven by large‑ticket deals.
- Adjusted EBITDA margin hit 15.5%, beating consensus by 50bps despite a 406bps YoY dip.
- Management sees green‑shoots in core industries and deeper penetration into Tier 3/4 markets.
- Revenue and earnings forecasts for FY26‑27 lifted 5% and 2% respectively.
- Analyst rating downgraded to Reduce, but target price nudged up to Rs5,600.
You missed the hidden surge in ABB India's order book—now’s the moment to act.
Why ABB India's Order Inflow Beats Expectations
ABB India reported a staggering 52% year‑on‑year rise in order inflow, reaching Rs41 bn. The lift came from a 27% surge in base orders and a wave of large contracts that padded the top line. Even though adjusted EBITDA fell by 406 basis points, the margin still landed at 15.5%, outpacing the consensus estimate by 50 basis points. This paradox—lower earnings but stronger order intake—signals a classic “backlog‑driven” growth model where revenue visibility improves ahead of profit realization.
Adjusted EBITDA is a profitability metric that excludes one‑time items, giving investors a cleaner view of operating performance. A dip in the margin often reflects timing mismatches between order receipt and cost absorption, especially in capital‑intensive sectors like industrial automation.
How the Surge Impacts the Indian Industrial Automation Landscape
The Indian automation market is projected to expand at a compound annual growth rate (CAGR) of roughly 12% through 2028, fueled by government initiatives such as Make in India and the push for smart factories. ABB’s diversified exposure across power, robotics, and electrification positions it to capture a larger slice of this growth.
Tier‑3 and Tier‑4 market penetration is a key differentiator. While many multinational peers focus on Tier‑1 metros, ABB’s strategy to embed solutions in smaller cities unlocks untapped demand for reliable power and process control. This geographic diversification reduces concentration risk and creates a steadier revenue stream.
Competitor Landscape: Tata Power, Schneider Electric, and Others
ABB isn’t operating in a vacuum. Tata Power’s subsidiary, Tata Power Solar, is accelerating its grid‑integration projects, while Schneider Electric has deepened its presence in Indian data‑center automation. Both rivals are chasing the same large‑ticket contracts that boosted ABB’s order book.
However, ABB’s backlog now stands roughly 12% higher YoY, suggesting it may be outpacing peers in order conversion efficiency. Tata Power’s recent earnings call hinted at a modest order growth of 18% YoY, and Schneider’s latest guidance points to a flat order book for the quarter. The divergence underscores why analysts are upgrading ABB’s revenue outlook despite a softer earnings margin.
Historical Parallel: What Happened When ABB Saw Similar Growth
Looking back to FY22, ABB India experienced a comparable 48% jump in order inflow after winning a series of renewable‑energy projects. The subsequent twelve months saw a 9% revenue lift and a 4% earnings per share (EPS) improvement, even though the adjusted EBITDA margin dipped temporarily due to higher project‑related costs.
The lesson is clear: a surge in order intake often precedes a lagged earnings upside. Investors who entered on the back‑end of that cycle captured a 22% stock rally over the following 18 months.
Technical Corner: Decoding Adjusted EBITDA and Order Backlog
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) strips out non‑recurring items, giving a clearer picture of operational cash generation. It’s a key metric for capital‑intensive firms where depreciation can obscure true performance.
Order backlog represents the value of contracts signed but not yet delivered. A growing backlog, especially with a higher proportion of large, multi‑year projects, signals future revenue stability and can justify higher valuation multiples.
Investor Playbook: Bull vs Bear Cases
Bull Case: The 52% order inflow surge translates into a robust revenue pipeline. If ABB can maintain margin discipline and improve cost efficiencies, earnings could rebound by FY27, justifying a valuation north of Rs6,000 per share. Further, deeper Tier‑3/4 market penetration offers a defensive moat against macro‑headwinds.
Bear Case: The decline in adjusted EBITDA margin raises concerns about cost overruns or pricing pressure. Delays in project execution or a slowdown in the renewable‑energy sector could choke the backlog, leading to muted earnings growth. A prolonged margin compression could keep the stock stuck below the target price.
Given the mixed signals, a “Reduce” stance balances the upside from order growth against the near‑term earnings softness. Investors should monitor upcoming quarterly results for margin recovery trends and watch for any policy shifts that could impact Tier‑3/4 project funding.