ABB India Targets 12-15% Profit Margin In 2025 Led By Strong Order Pipeline

Engineering and technology major ABB India is navigating a temporary slowdown in its large-scale industrial projects segment, according to the company’s Managing Director (MD), Sanjeev Sharma. 

However, the company is confident of maintaining PAT margins within the guided range of 12% to 15% in CY25, provided revenue off-take remains strong and external factors like Quality Control Orders (QCOs) do not pose significant challenges, as per CFO TK Sridhar.

"We had provided a range of 12 to 15%. Our endeavour has always been to maintain predictability within this band. This is where we expect to end the year, provided we have good revenue growth and do not face negative impacts from items such as QCOs or other similar factors,” the CFO said during a conversation with NDTV Profit on Monday. 

Sharma highlighted a record-high order backlog of over Rs 10,000 crore and a robust domestic market that accounts for 90% of its business. He noted that the company’s portfolio, comprising made-to-order (MTO), made-to-stock (MTS) and engineer-to-order (ETO) products, continues to perform strongly.

However, the systems order segment is experiencing a cyclic slowdown. The systems order segment deals with heavy industry solutions.

"When it comes to systems orders, which generally deal with large capex and heavy industry solutions, that's where we are seeing a bit of a cyclic nature," Sharma explained.

This is due to customers delaying decisions because of the uncertainty surrounding trade tariffs imposed by US President Donald Trump. 

“90% of our books are domestic. Only 10% are exports and only a very minor part of them is connected with the North American market. We don't see direct impact in terms of our exports with the tariff situation, but we do have customers whose products go to the European and American markets,” the MD said.

Sharma described the uncertainty on tariffs as a “temporary phenomenon”.

ABB India is sitting on a record order backlog of over Rs 10,000 crore, ensuring "certainty of cost absorption in the coming quarters”. 

Sharma highlighted the robust demand in India’s tier-1, tier-2 and tier-3 markets, particularly in infrastructure, real estate and data centres.

“I think the heavy industry, there's a bit of a muting there in terms of how much capex formation is there, but then again, it's a cyclic in nature. So, if I look into the short to medium term, I'm not very concerned,” the MD said.

In the second quarter of CY25, the company reported a 20.7% decline in net profit at Rs 351.7 crore compared to Rs 443.5 crore in the year-ago quarter. Its Ebitda (earnings before interest, taxes, depreciation, and amortisation) dropped 27% year-on-year to Rs 441 crore, while the Ebitda margin reduced to 13% from 19.2% a year ago.

However, the company’s revenue increased 12.2% YoY to Rs 3,175.4 crore compared to ₹2,831 crore in the year-ago period. The company follows the January-December cycle for financial reporting.

Shares of ABB India closed 5.34% lower at Rs 5,100 apiece on the NSE, while the benchmark Nifty50 ended 0.64% higher at 24,722.75.