Why ABB India's Q4 Surge Could Flip Your Portfolio: Insider Margin Boost Ahead

• Order inflows jumped 52% YoY, fueling a earnings surprise.
• EBITDA margins are stabilizing after labor‑code and forex shocks.
• Motilal Oswal lifts FY26‑27 earnings forecasts by 9% and hikes the target to INR 6,600.
• Margin improvements could unlock a 55× P/E by March 2028.
• Sector tailwinds in renewables, data centers, and electronics amplify upside.

You missed ABB India's 52% order inflow jump, and now your portfolio may be lagging.

Why ABB India's Order Inflow Spike Beats Sector Trends

ABB India posted a 52% year‑over‑year rise in total order inflows for Q4 CY25, outpacing the broader industrial automation market, which grew roughly 18% in the same period. The surge was driven by three pillars:

• Base inflows: +27% YoY, reflecting steady demand from traditional process industries.
• Large‑order inflows: a similar 27% rise, indicating winning of multi‑billion‑rupee contracts in power and infrastructure.
• Emerging‑area inflows: strong traction in renewables, data‑center power, and high‑speed electronics.

These segments are expanding faster than the overall Indian industrial sector, which the Ministry of Heavy Industries projects to grow at a 12% CAGR through 2028. ABB's ability to capture a disproportionate share signals a competitive moat that could translate into higher revenue visibility.

Impact of Renewables and Data Centers on ABB India's Margin Outlook

Renewable‑energy installations in India are set to cross 150 GW by 2030, a target backed by the government's aggressive green‑energy policy and a favorable fiscal incentive regime. ABB, with its expertise in grid automation and solar inverter technology, is positioned to supply a sizeable chunk of the required equipment. Simultaneously, the data‑center boom—driven by cloud‑first strategies of Indian tech giants—requires robust power‑distribution solutions, another core competency of ABB.

Both verticals typically enjoy higher gross margins (30‑35%) compared with legacy heavy‑industry contracts (≈22%). As the order mix tilts toward these high‑margin segments, we anticipate EBITDA margins to creep up from the current 15% toward the high‑teens over the next two fiscal years.

How Competitors Tata Power and Adani Green Are Positioned Against ABB India

While ABB focuses on the equipment side, peers such as Tata Power and Adani Green are expanding their generation capacity, which creates downstream demand for ABB’s automation solutions. Tata Power’s recent acquisition of a 2 GW solar portfolio accelerates the need for grid‑integration technology—an area where ABB has a proven track record.

Adani Green, on the other hand, is scaling up its renewable footprint rapidly, but it relies heavily on foreign OEMs for critical components. This reliance opens a window for ABB to win supply contracts, especially as the Indian government pushes for “Make‑in‑India” sourcing.

Historical Cycle: What Past Margin Recoveries Tell Us About ABB India

Looking back at ABB’s Indian performance after the 2017–18 margin compression, the company rebounded within 18 months by:

• Winning large‑scale EPC contracts in the power‑transmission space.
• Shifting its product mix toward higher‑margin digital solutions.
• Optimizing supply‑chain costs through localized manufacturing.

Those strategic pivots delivered a 23% CAGR in net profit between FY19 and FY21, and the stock appreciated over 80% in that window. The current environment mirrors those catalysts—order inflow resurgence, high‑margin sector exposure, and cost‑control measures—suggesting a repeatable pattern.

Technical Corner: Decoding EBITDA Margin Adjustments and QCO Costs

EBITDA margin measures operating profitability before interest, taxes, depreciation, and amortization. ABB’s margin was adjusted for two temporary headwinds:

• Labor Code (QCO) costs: statutory changes that raised employee‑related expenses for a few quarters.
• Forex fluctuation: a weaker INR inflated import‑linked component costs.

Motilal Oswal’s model assumes these costs will normalize by Q2 CY26, allowing the margin to improve organically. Investors should watch the “Adjusted EBITDA” line in quarterly reports to gauge when the normalization kicks in.

Investor Playbook: Bull vs. Bear Cases for ABB India

Bull Case: Continued order inflow acceleration in renewables and data centers lifts revenue CAGR to 12% over FY26‑28. Margin improves to 18% by FY28, driving EPS to INR 12.00. At a 55× forward P/E, the stock reaches the INR 6,600 target, delivering a 30% upside from current levels.

Bear Case: If global supply‑chain disruptions re‑escalate, order inflows stall and margin pressure persists. EPS growth stalls below 5% and the valuation contracts to a 40× forward P/E, capping the price near INR 4,800.

Given the current catalyst set—order inflow momentum, sector tailwinds, and a clear margin‑recovery runway—most risk‑adjusted models tilt toward the bull scenario. Investors should consider scaling exposure, especially via incremental purchases on pull‑backs.