ABB India order backlog and data centre demand support long-term earnings growth

Investment View and Valuation

In its August 3, 2026 result update, ICICI Direct Research, a division of ICICI Securities, maintained its BUY view on ABB India. The investment thesis is supported by the company’s record order backlog, accelerating Electrification demand and the long-term opportunity from AI-led data centres, electrification, automation, grid modernisation and industrial capex.

ICICI Direct expects ABB India’s revenue and PAT to grow at CAGRs of 19.4 per cent and 14.3 per cent, respectively, over CY25-CY28E. The broker values the company at 75 times CY28E EPS to arrive at a target price of Rs 8,835, implying 17 per cent upside from the report’s CMP of Rs 7,560.

Q2CY26 Financial Performance

ABB India reported Q2CY26 revenue growth of 21.0 per cent year on year to Rs 3,559 crore. EBITDA increased 11.4 per cent to Rs 447 crore, while the EBITDA margin declined 108 basis points year on year to 12.6 per cent. Margin pressure reflected higher commodity, freight and energy costs, foreign-exchange volatility and an adverse revenue mix.

PAT rose 8.0 per cent year on year to Rs 370 crore. ABB India also announced a special dividend of Rs 90 per share following the Robotics divestment.

Segment Performance

Segment performance was led by Electrification, where revenue rose 30.9 per cent year on year to Rs 1,804 crore. Its EBIT margin was 14.8 per cent, compared with 16.1 per cent a year earlier.

Motion revenue increased 16.6 per cent to Rs 1,269 crore, with EBIT margin declining to 12.0 per cent from 16.4 per cent. Automation revenue grew 6.5 per cent to Rs 524 crore and EBIT margin moderated to 14.6 per cent from 17.2 per cent. Lower segment margins reflected commodity inflation and an unfavourable mix.

Record Order Inflow and Backlog

Q2CY26 order inflow surged 49.6 per cent year on year to a record Rs 4,363 crore, taking the order backlog to Rs 11,898 crore, up 22.2 per cent year on year. Management stated that there were no slow-moving or non-performing orders in the backlog.

Around 40 per cent of the backlog is expected to be executed during the next two quarters, while the remaining balance extends into CY27. Order inflows were diversified across the following sectors:

• Data centres: 15-17 per cent
• Metals and mining: 15 per cent
• Oil and gas: 9 per cent
• Buildings and infrastructure: 8 per cent
• Renewables: 6 per cent

Business Segment Order Momentum

Management highlighted strong momentum in Electrification, where order inflow grew 77 per cent year on year and the order book stood at about Rs 4,800-4,900 crore. Motion order inflow increased 26 per cent, supported by railways, metro, food and beverage and industrial motors, although railway projects have longer execution cycles.

Process Automation order inflow rose 24 per cent, driven by energy, marine and ports and process industries. About 30 per cent of Process Automation revenue comes from the higher-margin service business.

Capacity Expansion and Margin Priorities

ABB India has commissioned its sixth manufacturing facility at Nelamangala and is investing in localisation, capacity expansion and new product development. This includes switchgear, breakers and distribution equipment for data centres.

Management aims to retain 15-20 per cent manufacturing headroom, which it believes can support 10-15 per cent annual incremental sales growth. The company has implemented two public price increases, but expects the benefits to accrue gradually.

Management is prioritising protection of current profitability rather than guiding for mid-teen EBITA margins in the near term.

Key Risks and Headwinds

• A slowdown in order-inflow growth.
• Lower-than-expected profit margins.
• Elevated commodity prices.
• Rupee depreciation.
• Geopolitical uncertainty.
• Supply-chain disruption.