ABB India Ltd. expects to sustain margins of up to 15% in FY26 as the effect of backlog conversion, seen in December 2024, starts to phase out in the coming quarters. Speaking to NDTV Profit, the company's management said that ABB India benefitted heavily from a good pricing mechanism over the last couple of years, driving margins to 19.5% in the December 2024 quarter.
ABB India, which follows the calendar year to report its financial results, posted a sharp 56% year-on-year rise in its net profit for the quarter ending December 2024. Net profit stood at Rs 528.41 crore in Q3, up from Rs 338.68 crore in the year-ago period. Revenues jumped 22% YoY to Rs 3,364.93 crore. ABB India expanded margins to 19.5% in the December quarter from 15% in the year-ago period.
Commenting on the outlook for margins, the company's Chief Financial Officer, TK Sridhar, said that the sharp rise seen in the December 2024 quarter was driven by the execution of backlogs.
"The margin expansion this particular year is a result of a very seamless execution of what has happened on the backlog. Therefore, we got the advantage of better capacity utilisation and also because we had good volumes to deal with," he said.
According to Sridhar, ABB India's efforts to go into tier-2 and tier-3 cities as well as expanding the market base helped it clock better margins.
On the road ahead, Sridhar said, "We benefitted from a good pricing mechanism over the last couple of years. This should start to ease out, and we should look at something that is in the range of 12 to 15% at the PAT level.”
Commenting on the company's strong revenue growth in the December 2024 quarter, Sanjeev Sharma, Country Head and Managing Director of ABB India, attributed the surge to solid execution across divisions.
"Good execution by our 18 divisions is the reason you see the conversion of our backlog into revenues with a 22% growth," he said.
ABB India Ltd. ended Wednesday's session nearly flat, down by 0.37% at Rs 5,123 apiece on the NSE in comparison to the benchmark Nifty 50's dip of 0.05% to 22,932.9 points.
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