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Margin pressure from QCO compliance and forex
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ABB India Limited — Q2 FY25
ABB India reported Q2 CY2025 revenue of INR 3,175 crore, up 12% YoY, driven by strong base order execution.
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ABB India reported Q2 CY2025 revenue of INR 3,175 crore, up 12% YoY, driven by strong base order execution. However, EBITDA margin contracted due to a one-off provision of INR 39.5 crore in Electrification, higher import costs from QCO compliance, and adverse forex impact of INR 56 crore. Order backlog reached a record INR 10,064 crore, but total orders declined 9% YoY as large orders were absent. Management noted a cautious investment environment with delayed decision-making, though base orders grew 5%. Guidance remains qualitative: margins are expected to recover as QCO issues are resolved and mix improves. Key risk: sustained margin pressure from import dependency and competitive pricing in Motion.
एबीबी इंडिया ने 2025 की दूसरी तिमाही में 3,175 करोड़ रुपये की कमाई की, जो पिछले साल से 12% ज्यादा है। यह मजबूत ऑर्डर पूर्ति के कारण हुआ। लेकिन मुनाफा कम हुआ क्योंकि कंपनी को 39.5 करोड़ रुपये का एक बार का खर्च उठाना पड़ा, आयात लागत बढ़ी और विदेशी मुद्रा में 56 करोड़ रुपये का नुकसान हुआ। ऑर्डर बैकलॉग 10,064 करोड़ रुपये का रिकॉर्ड है, लेकिन कुल ऑर्डर 9% घटे क्योंकि बड़े ऑर्डर नहीं मिले। कंपनी का कहना है कि निवेश का माहौल सतर्क है और फैसले लेने में देरी हो रही है। उम्मीद है कि आयात नियम सुलझने और मिश्रण सुधरने पर मुनाफा वापस आएगा। जोखिम: आयात पर निर्भरता और प्रतिस्पर्धी कीमतों से मुनाफा दबाव में रह सकता है।
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Order Backlog
INR 10,064 crore
+12% YoY
Record backlog, mix of large and small orders, executable over 18-24 months.
Base Orders Growth
5%
+5% YoY
Excluding large orders, base orders grew 5% YoY, driven by tier 2/3 expansion.
Cash Balance
INR 5,054 crore
Flat vs prior quarter
After distributing INR 700 crore dividend; interim dividend of INR 9.77 declared.
Electrification Base Orders Growth
9%
+9% YoY
Excluding large order of INR 148 crore in base quarter, base orders grew 9%.
What Changed vs Last Quarter
NEW
Margin recovery expected as QCO issues resolve
Management expects margins to improve as imported inventory is consumed and localized production ramps up, targeting a return to the 12-15% EBITDA margin band.
NEW
Order conversion pipeline for H2
Management sees a reasonable pipeline of medium-to-large projects in railways, metros, and process automation, expecting conversions in Q3 and Q4.
NEW
QCO compliance to be completed by September 2026
Imported components will be used judiciously over the next 6 months, with full localization targeted by September 2026 for most products.
NEW RISK
Margin pressure from QCO compliance and forex
Higher import content due to QCO compliance and adverse forex movements (euro/CHF) compressed margins; impact may persist for 2-3 quarters.
NEW RISK
Chinese competition in process automation
Management acknowledged Chinese manufacturers are participating in heavy industry projects with aggressive pricing, causing ABB to lose some orders.
NEW RISK
Delayed private capex and large order conversion
Customers are delaying investment decisions due to global uncertainty, leading to a sluggish large-order environment.
NEW RISK
Price realization pressure in Motion business
Increased competition from new entrants (WEG, Nidec) and capacity expansions are pressuring pricing in motors and drives.
RISK GONE
Sluggish large project decisions
Process automation orders weak as customers delay capex decisions due to macro uncertainty; recovery timing uncertain.
RISK GONE
Global trade uncertainty
US-China tariffs and geopolitical tensions could impact export demand and customer confidence.
RISK GONE
Competitive pricing pressure
Increased competition in select product categories is squeezing price realization, though impact is minor so far.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q2 FY24, Q3 FY24
Management expects to handle demand growth with incremental CapEx of ₹200-250 crore annually, leveraging existing land banks and productivity improvements.
Mentioned in Q1 FY24, Q2 FY24, Q4 FY24
Current high margins benefited from past price push and low commodity costs; as markets ease, margins may compress to the guided 12%-15% PAT range.
Mentioned in Q1 FY25, Q2 FY24
Increased competition in select product categories is squeezing price realization, though impact is minor so far.
Mentioned in Q1 FY25, Q3 FY24
US-China tariffs and geopolitical tensions could impact export demand and customer confidence.
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Guidance and risk preview
Management expects margins to improve as imported inventory is consumed and localized production ramps up, targeting a return to the 12-15% EBITDA...
Higher import content due to QCO compliance and adverse forex movements (euro/CHF) compressed margins; impact may persist for 2-3 quarters.
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