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We downgrade ABB India to REDUCE from Add, while increasing our TP by ~6% to Rs5,600 from Rs5,300. Q4CY25 results were broadly in line with our estimates, supported by steady execution across segments. While adjusted EBITDA declined by 406bps YoY, it was ahead of our estimates by 50bps, at 15.5%. Overall order inflow grew 52% YoY to Rs41bn, on the back of 27% YoY growth in the base order and inflow of large orders during the quarter. The management indicated green shoots in core industries and expects order inflow to pick up going ahead. Also, it believes base orders will see sustained growth, bolstered by ABB’s diversified end-market exposure and increasing penetration into tier 3/4 markets. We raise CY26-27E revenue/earnings by 5%/2% on average, factoring in the order-inflow and backlog (+12% YoY

Q4CY25 results summary

ABB’s Q4CY25 numbers were in line with estimates, but the company surprised positively on the margin and order-inflow fronts. Revenue rose 5.7% YoY to Rs35.6bn, backed by performance in the Electrification (+6.3% YoY), Motion (+7.4% YoY), and Industrial automation (+3.9% YoY) segments. The Robotics division de-grow 3.6% YoY, although it contributes less than ~4% of total sales. Adj EBITDA margin contracted by 406bps YoY to 15.5%, impacted by a 260bps decline in gross margin to 38.5%, due to pricing normalization, product mix change, and QCO imports. Reported PAT declined 18% YoY to Rs4.4bn in Q4CY25, with CY25 PAT at Rs17.6bn (-6% YoY).

Key monitorable – Pick-up in order inflow

Order inflow grew 52% YoY (Base order: +27% YoY) to Rs41bn in Q4CY25, driven by inflows across all segments. This led to an order backlog of Rs105bn (book-to-bill: 0.8x). Going ahead, base orders are expected to remain healthy, supported by ABB’s diversified portfolio of 18 divisions catering to ~23 end-market segments, along with deeper penetration into tier 2-3 cities and rising incremental demand from the tier 4-5 markets. The ABB management has given a strong outlook for emerging industries like renewables, electronics, and data centers. Currently, 10-11% of the backlog is attributable to DC orders.

We downgrade to REDUCE from Add, while raising our TP to Rs5,600

ABB remains a strong play on 1) increasing traction in energy-efficient categories plus resilient business model, 2) focus on high-growth areas, such as data centers, rail and metro, renewables, and electronics, and 3) deepening penetration in existing and emerging markets. With early signs of improving order inflows (+27% YoY growth in the base order in Q4CY25) and pricing bottoming out, we are optimistic about the company’s growth ahead. The stock is currently trading at premium valuations, with CY26/27E P/E of 66x/58x, factoring in 13% earnings CAGR over CY25-27E. We downgrade ABB India to REDUCE from Add, and raise our TP by 5.7% to Rs5,600 (55x Dec-27 EPS).

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