ABB India expects strong demand from data centres and other emerging segments to support growth, but elevated input costs, forex volatility and geopolitical uncertainty are likely to keep pressure on margins in the near term. As CFO TK Sridhar explained to CNBC-TV18, "The next level of expansions will primarily be driven by the volumes. So it will be volume-led growth, and for margin-led growth to take place, it will take some more time." The company reported standalone net profit of ₹362.3 crore for Q2CY26, up 3% from ₹352 crore in the same period last year, while revenue reached ₹3,559 crore, marking the highest-ever second-quarter revenue. However, EBITDA margin declined to 13% from 14% year-on-year, reflecting the current margin pressure challenges.
ABB's Q2CY26 results demonstrated outperformance on revenue and PAT, while EBITDA margin performance remained weak. As reported by Motilal Oswal, order inflows remained strong at ₹44 billion, representing a 50% year-on-year increase, which took the order book to ₹119 billion, up 22% YoY. This growth was primarily driven by sharp expansion across the electrification segment, particularly from data centers and other areas. The strong order momentum should support revenue growth ahead, but rising raw material and currency costs continue to squeeze profitability. According to CFO Sridhar, ABB India's order inflows grew 50% in the quarter, compared with an 81% increase reported by the global ABB Group, with the gap largely attributed to strategic opportunities booked directly by the parent group.
Despite strong order inflows, margin performance continues to remain weak for the company due to raw material and forex volatility. According to CFO Sridhar, margin pressure was largely due to higher material costs, particularly commodities, along with foreign exchange volatility. The company reported EBITDA of ₹447.1 crore, up 11.4% year-on-year, but EBITDA margin declined to 13% from 14% a year earlier. As Sridhar explained, "We are confident that if the volatility sort of settles down, we will be in the right position to go ahead." The company wants to return to its earlier margin levels of 12-13% of EBITDA, but timing depends on how quickly external factors ease. Geopolitical uncertainty remains outside the company's control, but ABB India's diversified operations and resilience should help navigate the current environment.
Data centers continue to be a key growth segment for ABB India, accounting for around 15-17% of its order book. Managing Director Sanjeev Sharma highlighted that demand from the segment remained robust and the company had invested in the required portfolio and capacity to cater to future growth. As Sharma explained, data center projects typically have faster decision-making and delivery cycles, with orders potentially converting into revenue within five to six months. For customers standardizing with ABB, conversion could be even quicker. The company expects strong demand from the data center market segment in the future, leveraging its early capture of this opportunity and high resilience in this market segment.
ABB India plans to continue investing ₹300-350 crore annually in organic capacity expansion. The company aims to operate its capacities at around 85-90%, leaving 10-15% headroom for organic expansion when required. This strategy has helped ensure continuous supply to customers amid strong demand. CFO Sridhar emphasized that maintaining spare capacity has been crucial for customer service. The company also plans to continue its announced capacity investments over the next two to three years to construct and make itself future-ready. This approach has helped ABB India navigate current market challenges while positioning for future growth opportunities.
