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Weaker-than-expected performance

* ABB India’s 1QCY25 performance was weaker than our expectations; Order inflow growth came as a positive surprise.

* EBITDA margin stood at 18.4% vs. our estimate of 18.6%. Gross margin during the quarter declined 200bp QoQ and 170bp YoY.

* The revenue miss was primarily led by a decline in revenue from process automation segment, which saw a 19% YoY decline in revenue. Motion/electrification segment revenue grew 8%/5% YoY. Robotics and discrete automation revenue grew by 37% YoY. Motion and Robotics both put together grew by 11% YoY.

* PBIT margin remained strong in Electrification segment (at 24.7% in 1QCY25 vs. 23.7% in 1QCY24) and Motion segment (21.9% in 1QCY25 vs. 21.4% in 1QCY24). Process automation PBIT margin declined sequentially to 16.4% in 1QCY25 from 19.2% in 4QCY24 and remained flat YoY vs. 16.3% in 1QCY24. PBIT margin also declined in robotics and discrete automation to 13.2% in 1QCY25 from 15.4% in 1QCY24. Motion and Robotics both put together had PBIT margin of 20.8% in 1QCY25.

* Order inflows were strong during the quarter at INR37.5b, up 4% YoY and 39% QoQ and were driven by orders from railways, data centre, electronics, energy, tyres and water treatment. Base orders formed INR35.5b and large orders contributed INR2b to overall order inflow. This resulted in order book moving up to INR99.5b. ABB has mentioned that the long-term levers and outlook remain more positive. The government’s focus on emerging segments of renewable energy, green hydrogen, electronics, nuclear energy, battery storage and AI infrastructure augurs well for ABB India’s multi-segment portfolio.

* The company’s cash position remains robust at INR57.5b at the end of 1QCY25.

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