Geojit Financial Services has downgraded ABB India to REDUCE rating with a target price of ₹6,694 in its research report dated August 25, 2026. The brokerage cited concerns over margin recovery and rich valuations as key factors for the downgrade, stating that downgraded earnings and a rich entry point leave little room for further re-rating. This represents a significant shift from previous analyst sentiment toward the industrial equipment manufacturer.
Despite the downgrade, ABB India delivered robust financial results in Q2CY26, with revenue from operations rising 21.0% YoY to ₹3,559 crore. The growth was driven by price management, volume growth, and strong demand from buildings, data centre, renewable, and metal and mining sectors. Electrification products' revenue surged 30.9% YoY to ₹1,804 crore, led by higher volume, effective price management and strong demand from data centres. However, EBITDA margin contracted 110bps YoY to 13.7% due to higher cost of sales (+28.1% YoY), while adjusted PAT grew 8.0% YoY to ₹370 crore with PAT margin declining 125bps to 10.4%.
The company demonstrated strong order momentum with orders increasing 50% YoY to ₹4,363 crore and order backlog rising 22% YoY to ₹11,898 crore, supported by strong demand from electrification and motion segments. Despite this operational strength, ABB India shares are experiencing significant market pressure, declining 5.64% to ₹4.77 during recent trading sessions. The stock is currently trading at ₹7,412.00 with a P/E ratio of 101.91 and P/B ratio of 16.81, reflecting broader market sentiment and investor concerns about the company's near-term prospects.
As reported by Moneycontrol, margin recovery remains a key concern for ABB India's earnings upgrades, with the company's ability to improve profit margins being crucial in determining whether analysts can upgrade their earnings estimates. The latest Q2 results show margin pressure with EBITDA margin contracting 110bps YoY to 13.7% due to higher cost of sales, highlighting the ongoing challenges in achieving sustainable margin improvements. This margin improvement remains essential for the company to demonstrate consistent profitability growth beyond its current operational performance.
According to Geojit Financial Services, rich valuations present another challenge for ABB India's stock performance, with the current market pricing reflecting investor expectations about the company's growth prospects and profitability levels. The brokerage has cut margin estimates and downgraded to REDUCE rating based on 64x CY27E adjusted EPS multiple, given that downgraded earnings and rich entry point leave little room for further re-rating. Despite the downgrade, the combination of strong order momentum and execution capabilities positions ABB India well for continued growth, though the company's ability to achieve margin recovery and address valuation concerns will be critical factors in determining future analyst sentiment.
