“The next phase of expansion will largely hinge on volumes. Thus, growth will be volume-led, while margin-driven growth will require additional time,” said Sridhar.
ABB India reported a standalone net profit of ₹362.3 crore for the second quarter of the 2026 calendar year, a 3% increase from ₹352 crore during the same period last year.
The company achieved its highest-ever revenue for a second quarter at ₹3,559 crore, with first-half revenue climbing to ₹6,743 crore. Both periods demonstrated double-digit growth year-on-year.
At the operating level, EBITDA rose by 11.4% year-on-year to ₹447.1 crore, although the EBITDA margin dipped to 13% from 14% a year earlier.
Sridhar expressed confidence in the improvement of margins once market volatility stabilizes, while demand across all business segments remains strong.
Commodity and forex volatility impact margins
Sridhar indicated that margin pressures are primarily driven by rising material costs, particularly in commodities, coupled with foreign exchange volatility.
He mentioned that ABB India is aiming to return to previous margin levels, but the timeline will depend on how quickly these external factors are resolved.
“We are optimistic that settling down of volatility will allow us to move forward,” he stated.
Sridhar acknowledged that geopolitical uncertainties are beyond the company’s control, but noted that ABB India’s diverse operations and resilience should enable it to navigate the current landscape.
ABB India order inflows surge by 50%
Order inflows for ABB India increased by 50% in the quarter, contrasting with an 81% growth reported by the global ABB Group.
Managing Director and Country Head Sanjeev Sharma noted that the disparity is primarily because some products and projects are booked directly by the parent group rather than through the Indian subsidiary.
ABB boasts a wide-ranging global product portfolio, with some products localized in India and sold directly through ABB India, while others enter the Indian market via the group’s global offerings.
“This gap has been narrowing over time, and I believe it will continue to do so. However, it won’t be insignificant in the coming years,” Sharma asserted.
Sridhar highlighted that around 30 percentage points of the discrepancy between the group’s order growth and ABB India’s growth stemmed from two strategic opportunities booked at the group level.
One was an order under an overarching global contract with an Indian customer, while the second pertained to the marine and ports sector. ABB India is building expertise in this area, with the group currently handling major systems while the Indian branch manages services, installation, and commissioning.
Strong demand in data centers
Data centers continue to be a significant growth segment for ABB India, representing approximately 15-17% of its order book.
Sharma stated that demand from this segment remains robust, and the company has invested in the necessary portfolio and capacity to support future growth.
“We anticipate strong order books from the data center segment moving forward,” he remarked.
He added that data center projects typically experience faster decision-making and delivery cycles, with orders converting to revenue in five to six months, and even quicker for customers who have standardized their systems with ABB.
ABB India plans ₹300-350 crore in annual capex
ABB India intends to maintain an annual investment of ₹300-350 crore for organic capacity expansion, as stated by Sridhar.
The goal is to run capacities at around 85-90%, allowing 10-15% headroom for organic expansion when needed. The company also plans to pursue its previously announced capacity investments over the next two to three years.
Sridhar noted that having spare capacity has enabled the company to ensure steady supplies to customers amid strong demand.
ABB India predicts strong demand, capacity expansion, and growth in emerging sectors to drive volume growth in the coming periods, even as margin recovery relies on alleviating cost, currency, and geopolitical pressures.
This is the slightly edited transcript of the interview.
Q: What could one expect as exit rate for margins in calendar year 2026?
TK Sridhar: Currently, margins are significantly impacted by material cost increases, particularly commodities, which are at elevated levels, along with foreign exchange volatility. We are currently at 12-13% EBITDA levels. We aspire to return to previous margin levels. Demand remains robust, and we have promising emerging segments poised for growth.
Next levels of expansion will primarily focus on volume, making growth volume-led, while margin recovery will take additional time.
We are committed to ensuring customer satisfaction and resilience at this stage, confident that settling volatility will position us well.
Q: So, it will be more of a volume-led growth versus margin-led growth, with margins taking time to recover. Perhaps by calendar 2027, we may see some stability regarding geopolitical factors influencing margin recovery.
TK Sridhar: Geopolitical uncertainties are beyond our control, but we are a resilient organization capable of navigating these challenges. Historically, we have managed to navigate such situations, and we are confident that as they settle, we will see an upward trend in margins.
Q: Mr. Sharma, while there is no direct correlation, we’ve noticed that every time the parent group shares their performance numbers, ABB India’s order inflows are also affected. For instance, this time the parent group’s orders increased by 81%, while ABB India reported a 50% increase. Can you clarify if there are other sectors where orders are booked directly by the parent company?
Sanjeev Sharma: Yes, there is a noticeable gap between the group’s reporting and our figures in India. This occurs because ABB has a highly diversified product portfolio, with some established within the country that flows through to our customers directly.
However, there are certain opportunities where the group can supply products from the global portfolio. This gap has been narrowing over time and is expected to continue, though it will remain significant in the years ahead.
As demand for specialized products consolidates, we incorporate these into ABB India’s localized portfolio and broaden our market reach.
Q: You mentioned that this gap is decreasing. In previous quarters, the figures were nearly aligned, and this time it seems to be a one-off incidence in order inflows.
TK Sridhar: Indeed, this quarter, while the group reported an 80% growth, we achieved a 50% increase, with a 30% gap attributed to two strategic opportunities booked at the ABB Group level.
One was under a global contract with an Indian customer, indicating an order arrangement linked to ongoing contract execution.
The second relates to the marine and ports sector, where we are currently building our capabilities and competencies in India. The main systems are provided by the ABB Group, while the Indian entity assists with services, installation, and commissioning.
This is akin to other businesses where group support facilitates initial market entry, and subsequently, we aim to close the gap. This trend is expected to continue in the marine and ports domain.
Q: You are building capacity in the marine and ports sector. Are there any other areas where you are expanding to minimize this gap? What investments is ABB India making in the near future for capital expenditure?
TK Sridhar: For our organic growth strategies, we are committed to a minimum annual investment of ₹300-350 crore.
We maintain our capacities at 85-90% to allow for 10-15% room for organic expansion when necessary. This approach has resulted in consistent customer supply.
You may recall that during a recent visit from the global CEO, we outlined our capex plans, which will proceed over the next two to three years to ensure we are prepared for future demands.
Q: Focusing on data centers, you mentioned they represent about 15-17% of your order books. How do you foresee this segment scaling up? What opportunities and inquiries are flowing in?
Sanjeev Sharma: The market remains strong, and we’ve documented robust data center demand for the past seven years. By focusing on this sector early on, we have established a high resilience level.
Looking ahead, we expect this demand to grow, and our existing portfolio and capacities are ready to meet the increasing needs.
We anticipate a strong order book from data centers moving forward.
Q: Looking at how this contributes to overall revenues, what share do you expect it to represent in the coming year?
Sanjeev Sharma: Data centers generally engage in fast-paced projects with rapid decision-making and delivery demands. Consequently, we expect a favorable ratio between incoming orders and outgoing deliveries.
With 15-17% of orders sitting with us, we expect a conversion into revenue within five to six months. Certain customers who standardize with ABB could see even speedier conversions.
