Reduce ABB India Ltd For Target Rs 6,400 By Emkay Global Financial Services Ltd
ABB, in its CY25 annual report, highlighted its focus on high-growth segments, strategic expansion into new geographies, deeper penetration across Tier II and Tier III markets, alongside continued capex in capacity creation, supply chain, technology innovation, and partner development. Key growth areas include renewables, data centers, buildings, and rail, while emerging sectors such as semiconductors, green hydrogen, and battery energy storage systems present new opportunities. It introduced rare earth-free metal IE5 large and mid-range motors in India—a part of its Rs1.4bn capex to expand and modernize LV motors manufacturing capacity. The company has delivered revenue/PAT CAGR of 18%/58% over the last five years. Order inflow growth witnessed 19% CAGR over the same period, with moderation in CY23/24. With the company’s continued focus on high-growth segments, we expect inflows and execution to ramp up after a few quarters. FCF remained healthy at ~Rs10bn for the year. We maintain Reduce with a revised TP of Rs6,400 (from Rs5,875), valued at 60x March 28E.
Electrification and motion are likely to drive near- to medium-term growth
ABB India’s order book grew by 12% YoY to Rs105bn at the end of CY25, mainly led by electrification and motion segments. The process automation segment continues to face headwinds, driven by moderation in capex across few end markets. Geopolitical tension remains a key concern, which may impact supply chain in the near term; however, the company is confident of sailing through, supported by dual?sourced critical components, increased localization, strategic inventory for long?lead items, and expanded supplier development. Renewables, data centers, buildings, and rail remain key growth drivers, while emerging sectors including semiconductors, green hydrogen, and battery energy storage systems present new opportunities.
Strategically building and expanding product portfolio
Over the years, ABB has continued to expand its manufacturing and automation capabilities in India, citing a favorable demand environment. In 2026, the company introduced rare earth-free metal IE5 large and mid-range motors in India—a part of its Rs1.4bn capex to expand and modernize LV motors manufacturing capacity. It also commissioned a new automated line for energy-efficient variable speed drives at Peenya, lifting local capacity by ~25%. Looking at the strong demand, ABB India has announced a capex plan of ~USD75mn for CY26, aimed at expanding its manufacturing capacity and R&D capability for electrification and automation solutions.
Strong cash balance ABB’s balance
sheet remains robust, with net cash balance of Rs56.9bn at the end of CY25, supported by healthy annual average FCF generation of Rs10-11bn over the last three years. The recently announced divestment of the robotics business (5% of sales) is likely to generate cash flows of Rs15.6bn, further boosting the cash balance. Return ratios continue to be healthy at RoE/RoCE of 23%/30% for CY25.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354
