ABB India: Is the Electrical Equipment Stock Overvalued?

Synopsis: Multiple brokerages turned cautious on ABB after weak quarterly profitability, citing sustained margin pressure, execution challenges, and expensive valuations despite healthy order inflows and steady demand visibility across segments.

The shares of this large cap company majorly engaged in manufacturing power equipment and supplying the complete range of engineering products were in focus after multiple brokerage reports overvalued the current share price of the company. 

With the market capitalization of Rs. 1,34,142 Crores, the shares of ABB India Ltd were trading at around Rs. 6330 per share which is19 percent discount from its 52 weeks high of Rs. 7825 per share and is trading at a P/E of 88  whereas industry P/E stands at 40.5

Q4 FY26 Results: 

Year on Year analysis: Revenue from operations has increased from Rs. 3010 Crores to Rs. 3184 Crores, up 5.7 percent. Operating profit has decreased from Rs. 560 Crores to Rs. 408 Crores, down 27 percent and net profit has increased from Rs. 475 Crores to Rs. 1784 Crores, up 275 percent 

Quarter on Quarter analysis: Revenue from operations has decreased from Rs. 3423 Crores to Rs. 3184 Crores, down 7 percent. Operating profit has decreased from Rs. 527 Crores to Rs. 408 Crores, down 22 percent and net profit has increased from Rs. 433 Crores to Rs. 1784 Crores, up 312 percent.

Citi Highlights Margin Miss and Execution Concerns

Citi on ABB India – Sell | Target Price: Rs 5,200. Citi maintained a Sell rating on ABB after the company reported a weak quarterly performance with EBITDA falling 19 percent  YoY and missing estimates by 16 percent . The brokerage said margins remained under pressure due to commodity inflation, INR depreciation, competitive intensity, selective price reductions, and execution slippages arising from Middle East conflict-related disruptions. Despite these challenges, order inflow remained strong with 25 percent  YoY growth. However, Citi believes the healthy order book is already factored into the stock price, limiting near-term upside potential. 

BofA Securities Cuts Estimates After Weak Operational Performance

BofA Securities on ABB India –  Underperform | Target Price: Rs 4,764. BofA Securities stated that ABB’s revenue growth excluding the robotics business slowed to 6 percent  YoY and came 4.3 percent  below its estimates. The brokerage highlighted that EBITDA margins contracted sharply by 576 basis points YoY due to rising raw material costs and an unfavorable revenue mix. Although order growth remained healthy at 25 percent  YoY, BofA reduced its earnings estimates due to persistent margin pressure and the impact of the robotics business divestment. The brokerage also maintained that ABB’s current valuation remains expensive relative to its earnings outlook. 

Jefferies Expects Margin Recovery to Remain Challenging

Jefferies on ABB India – Downgrade to Underperform | Target Price: Rs 5,915. Jefferies downgraded ABB to Underperform after the company restated its March quarter financials following the sale of its robotics business. The brokerage noted that EBIT excluding robotics missed estimates by 29 percent , while EBITDA margins excluding robotics declined 576 basis points YoY to 12.8 percent . According to Jefferies, rising commodity costs could not be adequately passed on to customers, leading to weaker gross margins. The brokerage further said industrial capex growth outside the Power T&D segment is expected to remain subdued, making recovery toward earlier margin levels of 18-19 percent  unlikely in the near term. 

Macquarie Lowers Profitability Estimates Across Forecast Period

Macquarie on ABB India – Downgrade to Underperform | Target Price: Rs 5,470. Macquarie downgraded ABB from Neutral to Underperform after the company reported weaker-than-expected quarterly earnings. The brokerage highlighted that EBITDA and PAT declined 27 percent  and 25 percent  YoY respectively, despite revenue growth of 6 percent . EBITDA margins dropped nearly 580 basis points YoY due to slow execution, higher input costs, adverse revenue mix, and unfavorable forex movement. While total order inflow rose 25 percent  YoY, Macquarie noted that base order growth remained relatively weaker at 9 percent , with the overall growth supported by one large order. The brokerage also trimmed EBITDA margin estimates by 50 basis points each for CY26E, CY27E, and CY28E, while lowering PAT estimates by 6 percent , 6 percent , and 8 percent  respectively.

Conclusion

ABB’s latest quarterly performance has triggered a cautious stance across major brokerages as sharp margin contraction and weaker profitability overshadowed strong order inflows. Rising commodity costs, forex headwinds, execution delays, and an unfavorable revenue mix continue to pressure earnings, while the robotics business divestment has added further uncertainty to growth visibility. 

Although the company reported healthy 25 percent  YoY order growth, analysts believe much of the optimism is already reflected in valuations. With multiple brokerages downgrading the stock and cutting future earnings estimates, concerns remain over the pace of margin recovery and the sustainability of profitability in the coming quarters.

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