Ladies and gentlemen, good day, and welcome to ABB India Limited's Q4 , October to December quarter, CY 2025 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded, and any unauthorized recording of this call is strictly prohibited. The recording will be made available on the company's and SEBI's website subsequently. I now hand the conference over to Mr. T.K. Sridhar, Chief Financial Officer of ABB India Limited. Thank you, and over to you, sir.
Thank you, Michelle, for organizing this. Very good, very good morning to all of you. Welcome to the Q4 2025 earnings call, and this is also the full year for ABB. Along with me on the call, I have Sanjeev Sharma, Managing Director of ABB India Limited. I have Kiran and Ganesh, who are from Electrification Division, and also I have Sanjeev Arora leading the Motion. Also we have this time, Balaji, for Process Automation. I think not wasting a minute now, Sanjeev, over to you.
Thank you, Sridhar. Good morning to all of you. Thanks for joining this call. We will give you some business highlights, followed by Sridhar supporting the financial highlights. What we... Do you have a slide before this?
Thanks. That is the end, I think.
Yes, it's, basically.
All right.
India at a glance.
All right.
We've been kind of highlight to you, you know, again, for the people who are joining us for the first time, that ABB Group is a 140-year-old company, which has sustained itself over various industrial cycles. The core reason for that is that it's an innovative company, keeps on rediscovering itself based on how we add productivity and value to our customers. India, in India, ABB is present and manufacturing for over 75 years, and our expertise in the portfolio is on the Electrification and Automation. These are the sweet spots in terms of how the world is developing and how India is developing, in terms of electrifying everything and also automating everything. That's where our portfolio is positioned. We have a substantial footprint.
We operate out of four manufacturing locations spread across the country. We have 28 sales offices to reach out to, and even getting deeper penetration with 750+ partners. We have 45 shop floors, which have distinct product manufacturing, and we are exporting to 30 countries from India. Now, when you look at the business highlights, CY 2025, it has been, you know, a very consistent growth as connected with our previous years. We had the highest ever orders at about INR 14,115 crore, which was 8% growth. If you look at CAGR growth, from 2021 onwards, it has been 16%.
Our backlog is at its strongest at INR 10,471 crore, which has grown by 12%. If you look at the CAGR for last five years, is 41%. Our revenue grew by 8% to INR 13,200 crore. CAGR of five years is 17%. PBT at this in 2025 was INR 2,230 crore, with a margin at 16.9%. If you see our CAGR, it has been 39%. Profit after tax is INR 1,669 crore. If you look into the EPS, it grew by 33% CAGR over last five years, and currently at INR 78.78. The final dividend declared and approved by board is at INR 29.59 per share.
Return on capital employed is 21%, which is, which is something we feel good about in terms of how we manage our businesses, which are 18 businesses operating in 23 market segments. Next slide, please. If we focus on Q4 , CY 2025, financial performance, we had a growth of 52% order growth in this in this particular quarter, and 27% base business growth in this quarter. This is something we are very encouraged after a few quarters prior to it, which were not as strong because the market was taking a breath over, which after five years of strong growth. Now, we have some good signs in last quarter, and we'll continue to see the market building up in the quarter we are presently and also going forward.
At the same time, when you join us quarter-to-quarter in 2026, you will be able to observe how the market and how the market goes on top of it. If you really look at the innovation and investments we are doing, we are continuing to expand our portfolio in different business divisions. We added a new line for energy - efficient drives, and also we had a launch of next generation machinery drives. When we do these kind of, you know, introduction in the market, one is we do localization, and also it opens up new market segments, and also it gives much more deeper penetration into the existing customer base. That's where you can see our businesses continue to compound growth year-over-year.
On sustainability side, we were very proud that ABB India is only the fourth company in India to receive AWS Gold Certification for water stewardship with stakeholders for Nelamangala facility. This shows that we are very conscious of our role in sustainability and practice. As a management team, we do it because it's the right thing to do in a country like India and also in the locations we are present. Our ESG initiatives are covering 51% of our suppliers, and we continue to receive different recognition, and our latest was from GRIHA for Sustainability Excellence and National Stock Exchange's ESG Leader Rating. Next slide, please. Strong order momentum across more segments was visible. Namely, you know, the top of those charts were transport, building and infrastructure, discrete process automation or other process industries, renewables and data centers.
With this, we have an order backlog of INR 10,471. You can see that the market segment where we have momentum, these are the sweet spot industries for the country. They have a long runway ahead of us in terms of the growth. We, and I think our customers like our products, they like our technology, and they also have good relation and deeper relationship with our businesses. We are very confident we continue to grow as these market segments and country grows. If you see the kind of breadth of wins that we get in the market, it gives you the diversity of the customers and diversity of our portfolio. It plays out.
Like, for example, we gave rectifier solutions for reliable, stable, ultra high DC power for a large infrastructure and manufacturing major. We supplied low voltage gear for a data center major, so that's because, you know that in data center, most of the computing power, a lot of energy connected to it, and our low voltage gear and the medium voltage gear behind it enables it, backed up by our UPS systems. Also on the utility side, when you have the air conditioning and cooling being done, our motors and drives, they participate in a significant there. Propulsion systems for Indian Railways. That's another area where in government of India has long plans, and we see a long runway for us there.
Of course, electric powertrain solutions for metals and major metals major, wherein we combine drives and motor capabilities to give a solution which is most optimum and helps in save a lot of energy for our customers. Same thing in the ethylene cracker in a petrochemical project, we had a local scope integration and also robotics for a newly formed automotive company of an established industrial major for an auto major. This is something with the established players as well as new players, they are reposing a lot of confidence on us. We supply them the robotic solution.
One of the important recipes for us to grow is to have a continuous customer engagement with the existing customers and also uncovered customer, undiscovered geographies, and that has been our drumbeat over the last many years, and that continues to expand us in multiple new market segments, deeper penetration in geographies, and also new applications which were not available in the country. Now with the entrepreneurs bringing in a lot of value add into the country, we continue to grow the market. Most customers should be aware of our products and solution, but we make sure they are very comfortable with our offerings, and they appreciate what we can do for them. As we have been mentioning to you, next slide, please. These are the 23 diverse market segments we, we indicate to you every time.
Emerging industries, in our case, are renewables, electronics, data centers, infrastructure and transport, and the core industries. These are the places wherein a lot of activity is taking place, and we find that we have a very good suite of industries to play for our journey forward. We are very long on India, and we stay very consistent with what we supply to these customers. Whether a particular market segment is up or it is down for a period, our ability to serve them stays unchanged. We serve the segments which are up or down. We don't chase up segment and neglect. That's the reason we have a very consistent relationship as well as loyalty from our customers across these segments. Next one. India-Europe Trade Agreement, FTA, has been signed.
Of course, there are a lot of projections, what can happen and what will, it will mean. It will take some maybe six months or so. I met some people over the weekend who were involved in these kinds of agreements, more mainly from EU side, so they are very upbeat about it, and they believe it will take another five, six months before this gets ratified, and then, you know, we will start seeing the benefits of it. These are some projected benefits, but I would say one should wait and watch. Whenever such FTAs happen, it has it becomes a two-way street, and more confidence gets developed on the both sides, and that is always a net positive for India.
In my opinion, I think it will be net positive for ABB India, in terms of our ability to deploy more portfolios, serve industries better, and also integrate back our supply chains back into the EU, wherein we have a very large manufacturing and technology base. Let's wait and see. It's a positive impact that we should factor for future, and we have factored it for future. Next one, Indian Union budget, 2026, 2027. I think we do believe there is a lot for emerging industries, which is our focus. There's a lot for infrastructure and transport, and there's a lot for core industries. This is something which will play out as we go forward. It may take. It doesn't just play out quarter- to- quarter, it plays out in quarter, one year, two years, three years.
That's something we are very positive about, because this is something which is forming the industry and the market in front of us. We have good confidence to invest in our capacities as well as our capabilities to serve these markets that will expand in front of us. When it comes to sustainability in practice, we are very proud of the achievements our team has achieved across all our locations. And our kind of a focus, wherein you can see that we have reduced our GHG emission by 87%, zero waste to landfill. We four units have achieved it, four locations. Water positive units, four locations have achieved it, and water recyclability is at, you know, 44%. ABB India is the fourth company in India, as I mentioned, which received the AWS Gold Certification.
Those of you who happen to visit us anytime, I think you'll be able to experience it firsthand what it means. This is not we do for PowerPoints, we do it because it's the right thing to do, and you can, and our customers experience it when they come here. Most of our customers really value this because they themselves are trying to implement in their locations, and they have a very deep dialogue with us apart from our products and solutions, how we, we can co-partner to make sure that the sustainability initiatives are not only in ABB, but they are also with the customers and also with our suppliers. We are also very proud that our products itself contribute.
When the client implement these products in their plants and machinery, it reduces the energy consumption, which has a direct and indirect impact on the GHG emission of our customers. We are quite happy about the overall focus we have in this area. Our CSR initiatives are across education and skilling, diversity and inclusion, and communities and environment. We have very clearly defined impact zones where our presence is felt, and our central team, as well as our locational team in Nashik, Faridabad, Vadodara, Nelamangala, in Peenya. They find projects nearby and also far flung area to make a big impact in this. We have been spending 100% of our CSR allocation in last 10 years, and we continue to make sure it works.
Since our margins have expanded over a period of time, our CSR spend also has expanded over a period of time. Factors that we are watching out for 2026, I think there are more positives which are domestically held. One is a economic power that we are unleashing at the India level. Green energy and sustainability is a very strong momentum in the country. Urbanization and smart infrastructure again, has a good momentum. Consumerism and lifestyle upgrade with the premiumization is something which is very visible even for our portfolio. We are not compared, our customers don't compare us with the relatively lower brands and the cheaper products. They are always looking for us when they really want a reliable, available, serviceable solution. That shows that there's a confidence in ABB products and offering.
This is not only limited to Tier 1 cities, we see a very sustained demand in Tier 2 and Tier 3 cities, wherein the aspirational entrepreneurs, as well as aspirational class, really demands best of the products. Automation and AI, there again, a lot of work being done, and our customers can experience a lot of services which are based on AI and machine learning solutions. We have a suite of products which are being used across the country, in the automation division. The downside, which all of us know, and I think nobody is spared across the globe, is about the global uncertainty. Again, if you really look into the history of time, that never goes away. It keeps coming back one way or the other.
All what we have to do is to learn how to deal with it. having seen certain cycles in our lifetimes, I think we are well prepared to deal with the, we have experienced Forex fluctuations, volatile commodity fluctuation, some kind of cross-border topic, we have seen those cycles, and we know how to adjust whenever that gets elevated. With this, I thank you for listening to me, and I'll hand it over to T.K. Sridhar, to provide you more financial highlights, and later we'll come back for questions. Thank you.
Thank you, Sanjeev. I think this summary was really important for us, to understand how the markets are playing out and what are the factors which are going to drive, sort of what we need to watch out for. On this, I think, I go to the next slide, which is a summary for Q4 2025. A strong quarter in terms of orders. Base orders are up 27%, and we also had the benefit of large orders, which was there, and that's why we should see 52%. These were these orders, which were something which, which were delayed in the last two quarters.
I remember the two quarterly calls where we were mentioning that the decisions have been delayed, and it's something which is not which is not written down, and this is something which is proving that. Order backlog cleared INR 10,400 crore of order backlog, good visibility for the future revenues 70%. I mean, out of this INR 10,400, 30%-35% is large orders, which get executed over a period of time, not in the next year itself. Then we have the base orders, which will form the rest of it, which will get executed over the next few quarters, as we see. Revenues, 6%, INR 3,557 crore.
I think, it was a good catch up after we had and good festival period in between in October and November, I think we could still meet the 6% of what we see. Profitability, we got 13.4% and EBITDA 16.2% and PAT at 12.2%, and we have a cash balance of INR 5,694 crore. Profitability, I think, we know that, we are higher on the material cost at this point of time. We are at 61% compared to 58% in regards to what we were earlier. I think, the broadly, the reasons are same.
I think first of all, we consciously took a decision in the beginning of this year to use important material to address the QCO concerns and the total strategic decisions. That has proved to be beneficial for us and that you could see that because of this reliability, we are also able to have a good base order growth because customers believe that we will be able to we will stay resilient in these circumstances as well. That's something which has definitely a reason to push up the material cost. Also we have the Forex and the copper and metal prices, which are going up at this point of time.
So that has probably led to the higher material costs, and the, and the mix of orders, a mix of orders between projects, products, and services as well. I think all this put together has basically caused this material cost to increase. We should also understand, 2023 and 2024 were those periods where demand was higher than supply, because it's an execution of the pent-up demand of the COVID period, and that gave us a leverage to have a price nor malization in the market. That's something which is now getting stabilized, and therefore, we have this scenario as what is playing on the material cost.
like there is a good part of that, there has been no one-off cost in terms of any surprises on the material cost. This is something that we believe this should be the right level, that's what we see. Cash, of course, it has been pretty clear. The next is EBITDA margin, so we are at 15%. I think we will slowly move into the commentary on EBITDA margins going forward as well. Profit before tax is 16% compared to the levels what we were last year to what we are today. Of course, PAT and EPS, we alluded upon in Sanjeev's discussion. The next slide is around structural analysis of P&L. I definitely told about material costs. I will not repeat upon it.
The personal expenses include an INR 65 crore impact of labor costs, and, that's something which we thought, should be taken in the other, not as an exceptional item, but as in part of the, normal expenses, because, we believe that, it's a part of the, normal division, what happens to personal expenses, and we believe that it's better to be conservative than take it as item, to show a better, profitability per se. Otherwise, I think, there are no other surprises. There have been, we, of course, got an advantage, because of the mark-to-market, gain on account of, commodity, derivatives, which had to be done. If you look on exactly, two quarters before, we were hit by the exchange rate at that point of time.
On overall basis for the year, I think we are quite normal in the end of INR 23.7 crore gain, which is just 12% of total cost. Yeah. Just alluding to a bit of more on the wise details. Electrification, the frontrunner on the growth, 43% up compared to the previous year. Of course, they had an good order from data center as well in this particular quarter, which helped up of the ladder. Of course, the other thing is the base orders stood up to gain that particular fraction. Revenues is 6% growth, strong order backlog, INR 3,300 crore roughly, and a profitability of 21.4%.
Of course, it's something which will also have to do with the QCO in the profitability and the impact of the Forex. Motion mobility order from the transportation sector really helps over here again. While on Motion, I would like to clarify that does not include the Titagarh order, which was announced in the month of February, that is something which will form part of the Q1 2026 performance. We are up 25% on the orders, 7% on the revenues, and strong order backlog of INR 4,200, they also have large orders of railways, which will get executed over a period of time. Their profitability constant at 16.5%. Automation, they were a bit subdued in the last few quarters.
In this quarter, those orders which were delayed, as what Balaji was mentioning earlier as well, that the opportunity pipeline is there, but what is happening is the decision on the orders sometimes get delayed, and that's something which got decided in this quarter, and therefore we could see a good growth of 34% on the orders. This, this has means there's a good backlog which gets capable of execution in the coming quarters. Strong margins, I would say, for PBIT at 14.7%, and that's probably from because services is what we see. Robotics, I think, they also grew definitely higher, INR 570 crore for the quarter. It also had in one time a large order from the automotive sector. Revenue slightly lesser, 5%.
Backlog, of course, very strong compared to what it was in the few, in the last few years because of the large orders what they got, and profitability definitely higher. Last slide, I think this is something which we show constantly to understand how do we operate. EL is almost 43% of the total order book, total revenues. What we have, 35% from Motion, 18% and 5% of PA and Robotics to mention. Products, we are definitely high on the products, we are 79% this year is products business. That's because probably, Process Automation was slightly lower in revenues, and that is one of the reasons for this.
Channels to market, OEMs and EPCs are definitely among the end users are definitely the four market channels we have. Channel to market, they are performing in line with what we expect and the businesses which we are doing. Geographically, 11%, 10% of exports because we see domestic growing faster, and that's, and also we had a bit of a global uncertainty topics to deal with initially. I think 10% on a higher base of 2024 on exports and 90% domestic is definitely a stronger performance to say. This is, this is basically the insights on all the financial insights. Probably this cover is 10 minutes per se, so I think we can start to take the questions, that is, with the remaining for us today.
Thank you very much.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Renu Baid Tugalia from IIFL Capital. Please go ahead.
Yeah. Hi, good morning, team, congratulations for the strong results. My first question is, Sanjeev, if you look at the order flows, excluding the automotive large order in RO, your broad comments still have been fairly positive on the ordering environment, as we look for CY 2026. Given that metro order also you've announced for January, how should we look at the ordering for momentum heading towards the next calendar year? In general, what are your views on the broad investment sentiment? Have they improved, or they're still same, they're expected to accelerate over the next year? That's the first question. Second, our margins for last year were, for annualized basis, were about 16%, excluding the impact of the new labor code.
Now that incrementally, demand outlook and volumes are looking better, how should we look at the margin environment for the next 12-15 months? Can we expect margins to improve? Have they bottomed out, or they're likely to be range-bound the way they have been, for the last three to four quarters? Hi.
I can take the first part. Thank you, Renu. Thanks for the question. Second part, Sridhar, you can look into future and give an answer. As far as demand outlook is concerned, it definitely looks positive, as confirmed by the business leaders who are running different businesses. When we look into the aggregate demand outlook for ABB India, what it really means is, how is the demand outlook for each of the 18 businesses? We are the sum total aggregate, sum total of all the businesses. Right now, we feel that there is a demand building up after a breather in early quarters of 2025. At the same time, it is never a good idea to declare a victory or declare a trend with one quarter results.
We shall, you know, continue to watch how the Q1 , Q2 , Q3 , Q4 builds. I think that will show very clear indications of the, how sustainable and how resilient the markets are. As we look into our customer engagements and also the market segment engagement, it seems to be moving in the right direction in our view.
Hilda?
This could be the key end markets which are driving this?
If you go into our chart, wherein you see, you have a spread of emerging market infrastructure as well as the core industries. Emerging market segments are going really very strong. Also the middle segment, which is infrastructure, there again, we have good traction. Core industries, which were kind of, I would say muted in past, but that forms over 52% of our volumes. We are seeing good green shoots and good signs there. There are good mix of orders coming from the core industry, especially metals, as well as, you know, in the chemical, oil and gas and other market segment in the core segment. That we are seeing investment profile increasing in the core segment as well.
That segment, though it is low growth for last many quarters, given that it is 52% of our volume, if that moves, it moves us quite well. So it's a combination effect of all the three core areas that we focus on, Hilda.
Thank you. Yeah, sure.
Thank you. Thank you, Sanjeev. Renu, to follow on your question for the on margin, thing is that-
Excuse me, sir, you are not audible right now. We can't hear you. Yeah, we lost you, Sridhar. Please hold the line, ma'am. Management is reconnecting now. Sir, can you hear us?
Yeah, we could hear you, but in between we dropped. I think.
Yes, sir.
We just again reconnected.
Yes, sir. Please proceed. We couldn't hear anything what you said, Sridhar.
Yeah, thank you.
You may have to start again.
I will do that, you know, not a problem. We, we were talking about margins. I think, the profitability and especially on PBT, over the 5-year period, we have a good traction of PBT, at PBT level. Today, 2025, we closed it at 16.9%, give and take another 0.5% for the labor code impact. Literally we're talking of 17.5. Last year we were 20.5, no doubt about it, and I think that gap is more to the attributable to the reasons which are not under the company's control, which is of Forex and commodity prices, and also the increasing stabilizing of price in the market.
Therefore, the premium what we could normally get on account of demand supply situation is something which was not possible in 2025, and also as we had QCO. Now going forward, how does this basically pan out? I think I go back to the slide which Sanjeev said as to what is happening and what is going to be the play in the market. I think there are, there is a bit of an good view that the markets are going to revive and with the private CapEx, which is expected to happen out in the Q4, I mean, 2026, thanks to the budgets and also the rating impacts, which are giving a bit of a positive sign at this point of time.
Having said that, I think what will remain as and risks to manage is, of course, Forex and metal prices, right? Our ability to respond to the market with a balanced view between how much price increase we should to do and how much we should absorb depends on total market situation as such. Having said that, I think a trajectory in at the back level, we're talking of between 12%-15% still feels good, right? I think, I believe that, if we have volumes sitting in more than what we are doing today at 6%, 7%, probably that should give us an extra mileage to manage and do a margin accretion.
Sure. Do you think there'll be a positive tail impact from rating change for motors from IE2 to IE3 standards towards the second half of the year?
Sanjeev Arora is with us. Sanjeev, did you get the question, on the IE2, and IE3?
See, if I may, get that right, then you can please correct me. I think you are talking about that if, it moves from IE2 to IE3, the minimum efficiency levels, for India, what would be the impact?
Yes.
Am I right? Did I-
Yes.
Get the question right? Okay.
Yes.
I think thank you. Very, very good question, and thanks for that. I think it is high time that we mature towards IE3 and IE4 efficiency levels. If it happens, welcome move. Because now if we talk about India growing, not only domestically but also exports, all the majors, what you talk internationally, they have all the countries, they have moved to IE4 as the minimum efficiency. If we have to grow on export, our machinery has to have that kind of a motors with that efficiency levels. I think that's 1. Second part is that this will not only help in, you know, improving our exports, but also the sustainability and the energy efficiency theme, which is core to ABB's, I would say, one of the pillars of operations.
With this, we can save a lot of electrical energy, which can be utilized for further expansions. I think just to mention that more than 50% of our own production has already moved to IE3 and IE4, and we have been pioneering this efficiency theme in India, and also have brought IE5 technology, which is again, induction technology, free from permanent magnets, already introduced, and customers are accepting them, accepting that with open arms. That's my take. I hope I've been able to give you the other answer. Renu, just to sort of round it up, right?
We are a INR 13,000 crore company, out of which motors is one portion out of it, and out of that, IE3, IE5 are the fragment of it, right? The entire company is just not driven by motors, but it has 18 divisions, right, which contribute to the entire form, volumes of the company, and therefore it is then, sort of an product of all these, 18 divisions working together. Can we move to the next slide? Next question, please.
Sure. Thank you.
Thank you, Renu.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to only one per participant. Should you have a follow-up question, please rejoin the queue. We'll take the next question from the line of Atul Tiwari from JP Morgan. Please go ahead.
Yes, thanks a lot. Sir, would it be possible to throw some light on what proportion of your cost of goods is imported from EU as of now, and what is the weighted average tariffs that you pay on that?
I think it's a very operational question, right? Most of our imports are from EU, because all of the other factories are from EU, right? I think that being the case, if we, if we are 10% on exports in terms of revenues, we are almost 20% on imports, right? I think we are still exposed to imports and net importer as such. I think that's basically what it is.
Okay. Just any color on weighted average tariff that you pay as of now?
I think that's different on different products, depends upon the classification, what we have. I think this is something which is quite, I would say, sensitive information to disclose at this point.
Okay, sir. Just QCO impact, has it continued in this quarter? I mean, based on the news flows, we gather that government has kind of rolled back most of the QCO orders, or is that a wrong impression?
Okay, let me give one answer, one bit of the answer. Other thing, I will pass it on to Kiran to supplement that. In 2025, this is a strategic decision, as what I mentioned, to stock our material, to cater to our customers with firm imports, right? That imported material will get consumed over the next two quarters, right? Therefore, we will have a bit of a higher material cost, which we foreseen at this point of time. Now, coming to the next part of the question, which is, how is the QCO playing out? Kiran, over to you.
Thanks, Sridhar. Thanks, Atul, for this question, because it's a very important topic. We have been discussing this particular topic from the past one year. There is nothing called a rollback of a QCO. Just to make it quite understandable, it's actually the timelines which have been enhanced for testing. That's that's the crux of the story, where the government has very clearly indicated that QCO for sure is going to be implemented, no doubt in that. The first phase is already in flow, and most of the companies, even the peers and us, have already tested our products and solutions as per QCO norms, whatever is the policy, and we have already got it done.
For the second phase of implementation, the government has given some more time, due to the availability of labs which are required, and that is where all of, all the manufacturers, including ABB, are following this particular process and, following the policy of the government. It's only the question of timelines, it's not the question of rollback.
Okay, sir. Thank you. Thank you.
Thank you.
Thank you.
Thank you, sir. A reminder to all the participants to kindly limit their questions to only one. We'll take the next question from the line of Umesh Raut from Nomura India. Please go ahead.
Yeah. Hi, sir. Thank you so much for this opportunity. My first question is pertaining to-
Mr. Raut, I'm sorry to interrupt you, sir. Please use your handset.
Is it fine now?
Yes, sir. Please proceed.
Yeah. My first question pertaining to 23 diverse markets slide that we mentioned, where if I look at the breakup now, on a quarter-on-quarter basis, certain industries have moved towards lower or modest midterm outlook segment, especially larger sectors like auto and food and beverages. I think, despite that, we are mentioning our outlook as being more of optimistic in near term. Second, within these three segments, if you can help us with the contribution from emerging industries and infrastructure and transport. I think in opening comment, you have mentioned core industries contributing about 52% to total volumes for the company.
I will give some light on the contribution. I go back to what our composition is. 10% is exports, 90% is domestic, and this 90% of our revenues come from all these 23 market segments. Out of this 90%, I think 52%, as what Sanjay was mentioning, is from the core sectors. The balance, 25%, 23% is between emerging sectors and the auto segment. I mean, That's a broad split. It is 23, 25, and that's how.
Just to let you know, I think your analysis is right. The life is not as linear as we mentioned. What happens is, when these segments, which are so-called emerging, they become a larger size, rate of growth, the percentage rate of growth normalizes. They move there, but at the same time, the size of the industry has become larger. Also with our strategy and our portfolio expansion, we go for higher penetration. We also go for more customer coverage. Then what happens is, that also correlates to the net growth rather than a linear, linearity with the way the segment is moving. Yeah.
Just to follow up on this, if you can...
I'm sorry, sir. Mr. Rao, I would request you to kindly rejoin the queue for follow-ups, please. We have others who are waiting over there.
Okay. Sure.
I'm sorry, sir. Thank you. We'll take the next question from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yeah, good morning, sir. Thanks for the opportunity. My question is, can you help us understand the order prospects for the data centers? Are you seeing larger prospects compared to lesser than at the beginning of CY 2025?
We have Ganesh Kothavade, our ELDS leader, as well as Kiran on the call. I'll hand it over to Ganesh. How do you see data center market building up going forward?
Yeah, thanks for this question. Myself, Ganesh Kothavade, I'm responsible for distribution solution business of ABB India, and as a, it's a very emerging segment to the electrical industry, and we really see a very strong current which is coming from the data center. There are not only the hyperscalers who are putting up the data centers, but there are a lot of big Indian houses. They also have a very big plan to put up the data centers in India. Apart from the big hyperscale data centers, there are many data centers which we see in the pipeline, which is coming from the colos also. In an overall, we are very optimistic and see a very, very strong demand and inquiry pipeline, which is coming from the data centers.
Thank you, Ganesh. You know, Ganesh supplies directly into data center or to the people who are building those data centers. Kiran's portfolio, that also has a good exposure to data center, but that's typically dealt by our integrators and channel partners. How's that building it up for Kiran, for the products and the solutions our panel builders transfer?
Thank you, Sanjeev. Very important question, Mohit, and very interesting and emerging market as well at this point of time for us. You're seeing the AI summit happening, and you know that the data center is going to pick up because of this AI summit as well. A lot of limelight and a lot of interest being shown by the consumer as well. When it comes to the system integrator part or even for example, for even the direct suppliers, I think both hyperscale and co-locations are seeing a very big trend in terms of the capacity being utilized at this point of time. At the same time, new capacity is coming out, and we are seeing megawatt capacities now and going towards gigawatt capacities as well in the future.
It's quite a very interesting topic at this point of time, and the system integrators are really leveraging this for the opportunities what are available in the market. We believe that this is a great opportunity for all of us to get into it and give the right solutions. You also saw in the opening comment made by Sanjeev, that we have also secured a very large low voltage switchgear order for one of the largest of the data centers in India.
The way to see ABB portfolio is that when we say we are focused on hyperscale and the mid-scale data center, that is our direct supplies into them. What Kiran deals with is the all data centers, because they are connected locally to where our panel builder and our channel partners work. Basically, we can now cater to the complete bandwidth of the data centers. Wherein in the low end of the data centers, we have more low voltage solutions and some medium voltage solutions going, but in the mid-size as in the hyperscale, we have a portfolio that flows into it.
Of course, not to mention the UPS, which is a very kind of product which is very much liked by the data centers because it's a fault-tolerant UPS, wherein it can be kind of serviced online while it is working with 100 kilowatt modules. There are very good design advantages our portfolio has when we deal with the data center segment and the, in the different market segments within data centers. Yeah.
Thanks.
Yeah, Sanjeev, I would just like to add one more point.
Yes, Ganesh, please go ahead.
Yeah. Because in the recent budget, this tax holiday up to 2047, is also going to make India market very attractive to put up the data center for those companies.
And just to-
Absolutely. Thanks, thanks for pointing that out as well.
Thank you.
Thank you.
Thank you, sir. We'll take the next question from the line of Amit Mahawar from UBS Securities. Please go ahead.
Hey, Sanjeev. Hi. I just have one question on the pace of ordering, both base and large.
We concluded CY 2025 with a reasonable growth of 13% base orders. We hardly had large orders and, you know, you know, until the last part of December. Do you think 2026, you know, as a year, you know, is a year where you will have not only data centers, I can see INR 15 billion-INR 16 billion in the order book now from data centers, that's a large number for you. But also from, you know, metals, we have two, three other segments where the large order cannot perform significantly in the 2026 period. Also in base orders, it's been two years that the channel partners have been very, very conservative, which, cyclically looks better now that for exporters in India, the trade, the tariff barrier concern is behind. The budget was supportive.
Private segment for all the companies that report numbers has been going up. Do you think 2026 is a year of very significant shift in the ordering run rate, the last we saw was three, four years ago? Any comment on both base and large orders with some colors. Thank you.
Since the large orders typically come from our process automation division and also some of the ETO orders in ELDS, robotics, and many others. Let me give this opportunity to Balaji. Balaji, how do you see the process automation or automation market at this point in time? How do you see the project pipeline developing in the energy and the process industry side?
Yeah. Thank you, Sanjeev. You know, from a context of 2023, yes, I'd stated that the markets are quite muted until the first half of the year, and then we started some movements, and that resulted in order conversions, you know, as well. 2026, I would say that the momentum is there. There are definitely movements. I think from an specific to, say, in energy industries that deals with oil and gas, power, specialty chemicals and pharmaceuticals, we see some very good opportunities in power, especially power generation, which has been quite low for past few years. We have a good pipeline of opportunities in in power generation. Refining is still strong.
There are good opportunities in refining. In both these cases, we have greenfield opportunities, which means these are new projects starting up from ground. We also have a good amount of opportunities in the repair and modernization, which is an ongoing activity, so that should cover the base year of from the from the repair and modernization, and the large orders coming in from all opportunities available in the greenfield. Similarly, in the process industries, that deals with metal, mineral, mining, these heavy industries, what we also see is there are quite a good of opportunities for the for the big-ticket items.
We shall continue to stay close to the customer and see how much we can convert during this year. Overall, I would say a positive outlook as things stand as today.
Thank you, Balaji.
Thank you. Thank you.
Thank you.
We can continue.
The next yes, sir. The next question is from the line of Samir Thakur from Ambit Capital. Please go ahead.
Hi. Thanks. Just to follow up on data centers. What is the data center exposure in sales and backlog? Have you seen any acceleration in interactions in data center market? A bit clear on that, if it is.
Data centers actually, you know, you get some large orders, it becomes large in the pipeline. In the 2025, we got a few compared to the previous years. I think in the backlog, which we have of INR 10,404, so I think roughly 10%-11% would be data center orders.
Okay, thanks. Can I just squeeze in one more? Just, what's happening in the price for different divisions? Do you mean-
What's happening for the?
I mean, the prices in different divisions. Just can comment on the pricing.
Well, customers always demand lower prices. That's the reality of life. What we do is we continue to localize, make sure our portfolio is at the right cost level and meet the customer's requests. At the same time, premiumization of the portfolio is taking place, so we have a good overall effect. It's a, always a balancing act. And on the pricing side, but for one or two particular products, we don't see as such, any critical pressures at this point in time.
Okay, thank you. That was all.
Yes, thank you.
Thank you. The next question is from the line of Subhadip Mitra from Nuvama. Please go ahead.
Good morning, and thank you for the opportunity. This is just a clarification on, I think, one of the early answers that you gave, I think, to Renu's question. I believe you mentioned 12%-15% as the sustainable growth number. I'm not sure whether you mentioned that as the sustainable margin or the sustainable top-line growth number. Also, on this QCO impact, you know, once the imported stock of materials is done, where do you see the sustainable margin stabilizing? Thanks.
Let me answer one question. When I talked about 12%-15%, I told about the PAT margin. That's where I said that that's something which should be the corridor in which we should move. Knowing well that we have QCO issues, which will have to be handled for the next two quarters, that's what we see, because that's the material what we have had. Also the orders what we will execute in the next, you know, four months to four quarters. That's what we see, right? That's what it is. Now, coming to the growth of revenues, right?
The growth of revenues at this point of time, if you look at our overall revenues, I think we have been growing at ABB two at 8% at this point of time. I think if you studied, I was mentioning that the 10,000 growth order backlog definitely has the presence of large orders, which has got executed for the next couple of years to come. That being the case, we need to really book orders in the market during 2026 for revenues in 2026, right? That remains the our ability to book orders and execute them. I think we will have to make sure that we are able to. Our target is always to have double-digit growth on the revenues as well.
Let's see how it proceeds, how the markets proceed, how the orders get finalized. Thank you.
Thank you. The next question is from the line of Harshit Patel from Aquarius Securities. Please go ahead.
Thank you very much for the opportunity. My question is on the process automation order. This segment does not get pace with the other two large segments in the last two to three years. You have also highlighted the delayed decision-making by the customers, and we have seen that correcting in the last quarter as well. While the orders in the fourth were strong, our order book is almost at the same level, which was there in 2022. Do you think we would have lost some market share in the two to three years, or we have performed in line with the CapEx environment in this industry, and it was just a factor of the delayed decision-making? Just your thinking and the outlook on this.
We have performed in line with how the segment is developing. What we find is that there are opportunities in the marketplace. We are very selective what kind of projects we do. We always go after high quality and somewhere where the value added by us is appreciated by the customers, because we have a lot of domain expertise and specialization in the automation area. If you really go back, I don't know how far, how long you've been following this particular market segment, it's a cyclic area. If you go back 20 years, you will find that there is a lot of cycles that come and go.
Typically, if you have a cycle, which is a down cycle, what we do is we continue to maintain the quality of our support to customers, so which shows up in the OpEx orders as well as the CapEx orders and also the brownfield expansions. We stay engaged with the customers because we are the long-term partners for them. Yes, last quarter we did see expansion, and as Balaji mentioned, that we are seeing now the pipeline building up nicely, and we hope that we can get a fair share of that in the coming quarters.
Understood, sir. Thank you and all the best.
Thank you.
Thank you.
The next question is from the line of Mohit Pandey from Citigroup. Please go ahead.
Yeah. Good morning, sir, and congrats on a good quarter. Sir, just wanted to get more color on competitive intensity in the market. Last two quarters, you have, you indicated Chinese competition as well, and we, understand some of your European competitors are setting up incremental capacities in India. In light of that, just wanted to hear your thoughts around, yeah, please.
We, on the competitive intensity, I think, at this point of time, is largely domestic of the established players. As far as the Chinese players are concerned, I think the last quarter, what we talked about was if the industrial goods imports are open, we'll have to wait and watch and see what impact that can come. We haven't seen any, any direct impact yet, but we do see in certain large projects wherein one or two customers, when they're executing large projects, they may prefer equipment out of China. I think we have seen that in the past, but that was almost, in my memory, nine months to one year ago. It's not a kind of a very repetitive phenomena as yet in the marketplace.
As far as the European competitors are concerned, I think most of the known European competitors we have, they are already present in the market. Of course, you'll have relative ex- as the market expands, you will also continue to see the expansion of the competitors. You can see that we are a global company. We face all these competitors in different markets at a, at a global or regional or the domestic level. We know how to, how to kind of respond to such competitors, and our focus to stay number one or number two in the areas we operate, stays there, and we continue to do what it is take, what it takes to manage the competitive intensity.
I think going forward, I think if the market landscape changes, we continue to adapt accordingly, but we haven't seen anything new, other than the existing competitive intensity offered by the established players.
Understood, sir. Thank you so much, and wish you all the best.
Thank you.
Thank you.
Let's move to the next, last one, probably.
Sure, sir. Thank you. Ladies and gentlemen, this will be the last question for today, which comes from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, sir. Congratulations on a great quarter. First question is on the data center portfolio. If you can help us understand what is the parent, what parent is servicing globally, what percentage of that will be servicing from India? We also understand that parent has developed some very power efficient solutions like SSTs and solid state drives and transformers, or is developing the solution. When do we expect that kind of product to come into India? Because, when these hyperscalers come into India in a big way, so it will mirror the global data center supply chain, so which may benefit us. I just want to understand that, the contribution, how much can it go from here on?
Thanks for this question. You're right, our global-
I'm sorry to interrupt you, sir. You're not audible right now.
Yes, sir, we cannot hear you.
All right. I think there was a bit of a break. Let's begin.
Yes, sir. Please continue.
Our global, global management has highlighted the importance of data center for ABB, given our strong footprint of electrification. You know, data center is nothing but computing the power you require, that's a core. In order to support that computing power, you need to have a lot of power infrastructure that supports that computing power. We come into play on the supplying the power at the low voltage level and the medium voltage level to the data centers, and also the utilities which do the cooling of the data centers, which consume high efficient motors, as well as drives to support that part, part of, part of utility. That's what our footprint is.
Here, hyperscalers especially, they are experimenting a lot and researching a lot together with us in terms of how to make sure not only create higher availability and reliability of the data centers as the size and the intensity of the power increases, but also how that can be optimized. Within that optimum scenario, a lot of new technologies are developed and being experimented. As far as India is concerned, whenever any customer demands as per their design criteria, any of ABB technology is seamlessly available. It is not a question whether we have to get that technology in, in India, it automatically and seamlessly flows to us. It basically depends upon how the demand is forming and what the customer aspirations are in the during the design phase. We keep introducing those ideas to the domestic data center players.
Some of them, and most of them are listening to it very carefully, and hopefully that should come part of their design criteria in future.
Sure, sir. Thank you.
Thank you.
Thank you.
Thank you, sir. As that was the last question for today, I would now like to hand the conference over to Mr. T.K. Sridhar for closing comments. Thank you, and over to you, sir.
Thank you, Michelle, for moderating the call. All the people on the call, thank you very much for the interest which you have shown, and always your support and clarifications help us go a long way in giving more data and more relevant data, so your decisions are better off. Thanks to the management who was a part of this particular call and inspirations there too. Thank you very much. We meet again in the next quarter call.
Thank you, members of the management. On behalf of ABB India Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.