Earnings Outlook
ABB India Q2 net profit seen dn on EBITDA and margin fall
This story was originally published at 14:44 IST on 25 October 2025
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By Rajesh Gajra
NEW DELHI - Strong execution of orders from major segments will help the top line growth of engineering and capital goods company ABB India Ltd. in the September quarter, but the bottom line will decline due to a fall in operating profit and contraction in margin, according to analysts. The revenue growth will be supported by order execution in the electrification and motion segments, the two largest segments the company operates in.
However, competitive pressure in the motion segment and the effect of quality control guidelines for electrical appliances in the electrification segment are expected to lead to a fall in the operating profit of the company in the September quarter. The company's management had said in an analyst conference call after the June quarter earnings that it had to use more costly quality-compliant imported components during the June quarter. Although these tough compliance requirements were relaxed in July, the company "will have to use these imported components to supply in order to gain time and also liquidate...inventories", which were high at the end of the June quarter.
ABB India is seen posting a net profit of INR 4 billion for the September quarter, down 9% on year but up 14% on quarter, according to the average of estimates by nine brokerages. These estimates range from a low of INR 3.6 billion by brokerage Prabhudas Lilladher to a high of INR 4.4 billion by Nomura Equity Research.
Analysts expect the revenue of the company to rise 11% on year and 1.5% on quarter to INR 32.2 billion. The lowest revenue estimate is INR 31.2 billion by brokerage Prabhudas Lilladher, while the highest is INR 33.4 billion by Motilal Oswal Financial Services.
ABB India is likely to post revenue growth of 11% on year "with the electrification segment driving growth. The business, excluding electrification, may report flat yoy (year on year) levels," Kotak Securities said in a report. A pickup in order execution will help ABB India post 11% on-year growth in its revenue, Nomura said. The brokerage said the company received an order worth INR 1.7 billion for the supply of wind turbine convertors in the reporting quarter, but expects the ordering momentum to be moderate.
Strong order execution in electrification and motion segments will drive revenue growth of 15% on year for ABB India, "aided by tailwinds in data centers, renewables and railways," brokerage Motilal Oswal said. The company's management had earlier said its base orders had shown good growth and the company saw a strong pipeline "when it comes to the data centers, renewables, building, and infrastructure."
ABB's electrification segment had a revenue share of 41% and earnings before interest and tax share of 44% in 2024 (Jan-Dec), data from the company's latest annual report show. The revenue share was 35% for the motion segment, 21% for the process automation segment, and 3% for the robotics and discrete automation division, according to the annual report.
ABB's operating profit and margin are likely to be hit due to the effect of regulatory guidelines and competitive pressures in the two largest segments of electrification and motion. Its earnings before interest, tax, depreciation, and amortisation is expected to decline 0.7% on year at INR 4.8 billion.
Foreign exchange volatility, pricing pressure in the motion segment, and higher-cost imports resulting from the impact of the government's quality control guidelines are likely to cause ABB India's margins to contract by around 430 basis points on year to 14.3% in the September quarter, according to brokerage Motilal Oswal. The brokerage expects the company's EBITDA to fall 11% on year for the same reasons.
ABB India is expected to post an EBITDA decline of 4% on year and an EBITDA margin contraction of 255 basis points on year, "on account of lower gross margins due to weaker pricing power amid high competitive intensity," Nomura said. The effects of quality control guidelines will continue for the company's electrification segment, Kotak Securities said. The brokerage, which estimates margin contraction of around 300 basis points on years, expects competitive pressures to continue in the company's motion segment.
The bottom line of the company is expected to decline in line with the expected poor EBITDA performance. The company will detail its earnings on Nov. 6. Investors will watch out for management commentary on localisation levels in manufacturing, order inflow improvement, and outlook on exports, according to brokerage Motilal Oswal. The prospects of large orders, commentary on pricing power, and competitive intensity in motors market will be a few key things to watch out for, Nomura said.
On Friday, shares of the company closed at INR 5,181 on the National Stock Exchange. The stock is up 1.7% from the announcement of the company's June quarter earnings. Of the 12 brokerage reports on the company available with Informist, six have a 'buy' call on the stock at an average target price of INR 6,199, three have a 'hold' recommendation, and three have a 'sell' call at an average target price of INR 5,033.
In the trailing quarter, ABB India had reported a net profit of INR 3.5 billion, down 21% on year despite 12% growth in revenue at INR 31.8 billion.
Following are the September quarter earnings estimates for ABB India from nine broking firms in descending order of estimate of net profit:
Broking firm | Net sales | Net profit | EBITDA |
| (In INR million) | ||
Nomura Equity Research | 32,395 | 4,369 | 5,183 |
HDFC Securities Ltd | 32,600 | 4,300 | 5,000 |
Kotak Securities Ltd | 32,354 | 4,189 | 4,993 |
YES Securities (India) Ltd | 32,063 | 4,125 | 4,939 |
Emkay Global Financial Services Ltd | 31,269 | 4,040 | 4,781 |
Motilal Oswal Financial Services Ltd | 33,412 | 3,949 | 4,778 |
Nuvama Wealth Management Ltd | 32,000 | 3,800 | 4,480 |
Elara Securities (India) Pvt Ltd | 32,623 | 3,718 | 4,376 |
Prabhudas Lilladher Pvt Ltd | 31,224 | 3,581 | 4,184 |
Average | 32,216 | 4,008 | 4,746 |
End
Edited by Avishek Dutta
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