Buy ABB India; target of Rs 5800: Motilal Oswal

Motilal Oswal's research report on ABB India

ABB’s 3QCY25 performance was in line with our estimates. The company remains affected by lower ordering as well as margin pressure due to Quality Control Order (QCO) implementation, higher RM costs, and increased competition. Overall order inflows were down 3% YoY, while base ordering has remained strong. ABB continues to benefit from a growing addressable market from data centers, electronics, and renewables, while government and private sector ordering is yet to pick up. Due to lower-than-expected capex from the government and private sectors, we project the current trend of weakness in order inflows will continue for a few more quarters. This can hurt execution growth too for a few more quarters. Along with this, higher costs related to QCO implementation can affect margins too for a few more quarters. However, we expect these adversities to bottom out in 2-3 quarters. We project ABB to benefit from demand improvement across key capex areas. To bake in the 9MCY25 performance,

Outlook

We cut our CY26/27 estimates for ABB by 6%/7% and revise our TP to INR5,800, based on Dec’27 estimates. We reiterate our BUY rating, as we expect the company to benefit in the long run from improved ordering and higher margins.