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Informist, Tuesday, Nov. 5, 2024

By Narayana Krishna and Ayush Kumar

HYDERABAD/MUMBAI - After relatively moderate execution in Jul-Sept, engineering services company ABB India Ltd. is now focused on executing its order backlog in the next four quarters, its management said in a post-earnings conference call.

The company missed the Street's expectations for its net profit as well as revenue in Jul-Sept due to lower-than-expected execution of the order book. It reported a 5.2% on-year rise in revenue, the lowest in 14 quarters, to INR 29.12 billion, against analysts' estimates of INR 32.5 billion. The company's net profit for the quarter came in at INR 4.40 billion, up 21.4% from a year ago, but below the Street estimates of INR 4.81 billion. The profit growth in Jul-Sept was slower than the previous two quarters. As of Sept. 30, ABB India reported an order backlog of INR 99.95 billion. It booked new orders worth INR 33.42 billion in Jul-Sept.

Of the total order backlog, 25% were large orders, and it may take time to execute and convert these into revenue, the company's management said. The company has large orders from sectors such as metals, mining, oil and gas, transport, and data centre business. ABB India is into electrification, process automation, motion drive, and data centre segments, providing power distribution and engineering services and solutions.

The company's management is confident of the growth outlook driven by its current order book, and expects to maintain an order book run rate of INR 25 billion to INR 30 billion per quarter. The company said it has enough capacity to drive growth across all its segments. At 1116 IST, shares of ABB India traded at INR 6,960.95 on the National Stock Exchange, down 5.5% from the previous close.  

Answering analysts' questions comparing the company's execution ability and revenue run rate during Jan-June with Jul-Sept, ABB India said the nature of large orders is the only difference and the company is confident of expediting its pace of execution. The management said an uptick in capital expenditure in the private sector along with the public sector is providing enough scope to drive the company's growth going forward. The company said it has enough land bank in hand if further expansion is needed to cater to the growth. 

The order pipeline in the process automation segment is strong, and several large orders from sectors such as mining and oil and gas are expected to add to it going forward, the company said. The robotics segment witnessed slower growth in Jul-Sept, but the company expects this segment to grow faster going forward. 

 
Order visibility for the power distribution segment is also robust, as the company expects large orders from areas such as data centres. There is an overall slowdown in sectors such as steel and cement, but ABB India expects good orders from these sectors. On input costs, ABB India said commodity prices stabilised in Jul-Sept. The company reported a 6.3% year-on-year fall in input costs to INR 14.13 billion.  End

US$1 = INR 84.12

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Namrata Rao

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