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In-line revenue; margins and inflows surprise positively

ABB’s results for the quarter were ahead of our estimates, as the surprise came from better-than-expected EBITDA margins at 17.2% after adjusting the amount related to labor code in exceptional items. Beat on margins resulted in outperformance at adjusted PAT level too. Order inflows also surprised positively at INR41b, which received a boost from strong base order inflows as well as large order inflows during the quarter. Going ahead, we would keenly watch out for management commentary on margins as well as sustainability of order inflows.

* Revenue growth stood at 6% YoY for 4QCY25, largely in line with estimates.

* EBITDA margin stood at 17.2% vs. our est. of 15.4%. EBITDA margin was down YoY, mainly due to a contraction in gross margins on a YoY basis. 4QCY24 was also one of the best quarters for ABB in terms of peak margins. Sequentially, EBITDA margin expansion is mainly led by gross margin expansion as well as lower other expenses as a % of sales.

* Overall PAT came ahead of our estimates. However, PAT declined 9% YoY to INR5b due to higher material costs, forex, and QCO-related imported material usage, which was partly offset through commodity hedging and efficiency gains.

* Segment-wise, the Electrification segment and Process Automation segment revenues came ahead of our estimates, while Robotics and Motion segment revenues were in line. A positive surprise in margins versus our estimates came in both Electrification and Motion segments.

* For CY25, revenue increased 8% YoY. EBITDA/PAT declined 9%/8% YoY, while EBITDA margin in CY25 contracted 290bp YoY to 16%.

* The company’s cash position continues to remain strong at INR58b at the end of CY25.

* The net working capital increase was mainly witnessed in inventories, which are consciously built to cater to the delivery of the backlog as per the agreed schedule.

* The company declared a final dividend of INR29.59/share. The total dividend for CY25 stood at INR39.36/share, including the interim dividend of INR9.77/share.

* Order inflows increased 52% YoY to INR41b, primarily due to a strong development in the base business and additional support from the timing of large orders with key contributions from data centers, automotive, buildings & infra, railways, and metals, which lifted the overall order book to INR105b (+12% YoY).

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