ABB India Maintains 'Buy' Rating: Target Price Set at Rs 6523 by Prabhudas Lilladher

ABB India Reports Soft Quarterly Performance Amid Elevated Input Costs

ABB India, a leading industrial equipment and automation company, has reported a soft quarterly performance, driven by decent revenue growth of 6% year-over-year (YoY) in its ExRobotics segment. However, the company's EBITDA margin contracted by 576 basis points to 12.8% due to elevated input costs.

The performance was supported by healthy order inflows and execution across electrification, motion, and data centre-related businesses, partly offset by softness in the Process Automation segment. The company witnessed a robust growth in order inflows of approximately 25% YoY, which drove a significant order backlog of over INR110 billion. This growth was driven by strong traction across data centres, railways, renewables, utilities, and infrastructure segments.

Data Centres Emerge as Key Growth Driver

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Data centres continue to emerge as a key structural growth driver for ABB India, contributing approximately 10-12% of the current backlog. The company has strong opportunities across Medium Voltage (MV)/Low Voltage (LV) systems, substations, uninterruptible power supplies (UPS), drives, and automation solutions. While margins remain under pressure in the near term due to elevated copper/aluminium prices, forex volatility, and competitive intensity, revenue growth is expected to remain in double digits supported by healthy execution momentum and strong enquiry pipelines.

Capex to Strengthen ABB India's Positioning

The company has announced a capex of approximately US$75 million towards manufacturing expansion, localisation, and R&D. This investment is expected to strengthen ABB India's positioning in electrification, exports, and data centre-related opportunities over the medium term.

Outlook and Rating

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The stock currently trades at a Price-to-Earnings (P/E) ratio of 77.9x and 65.3x on CY26 and CY27 estimates, respectively. We roll forward to Jun'28 estimates and downgrade our rating to 'Hold' from 'Accumulate'. This decision is based on the rally in the stock price, valuing the stock at a P/E ratio of 56x Jun'28 estimates (56x Mar'28 estimates earlier). Our target price for the stock is INR6,523 (INR6,319 earlier).

Recommendation

We recommend a 'Hold' rating for ABB India, based on the current market valuation and expected growth prospects.