Power equipment manufacturer ABB India's shares are sharply lower by up to 6 percent on August 4 after the company shared a muted outlook on large orders, and said tariff-related uncertainty is weighing on private capex.
The company said its large orders were impacted by 'subdued market conditions', and the base order segment grew by 5 percent on year, during the June quarter.
The company reported a 20 percent fall in June quarter net profit at Rs 352 crore on forex volatility and expenses, and a revenue of Rs 3,175 crore compared to Rs 2,831 crore a year ago. The profitability was 'tempered' by forex volatility and on-offs, the company said.
"While profitability was impacted by forex volatility and one-offs during the quarter, we continued to deliver double-digit PAT margins for the 11th consecutive quarter. Cash position of the company remains healthy due to consistent efforts in collection," Sanjeev Sharma, Country Head and Managing Director, ABB India said after the earnings. ABB India's cash position was robust at Rs 5,154 crore at the end of the June quarter.
The management said it is hopeful of regaining its growth trajectory in the second half of the year, as large order flow comes back on track. In segments such as data Centre, renewable power, infrastructure, the pipeline of orders is looking promising, ABB India said during the investor concall on August 4.
ABB India added pharma and healthcare as the theme for the quarter and said companies in this space are adopting advanced technologies and improving their efficiency, which is adding to the orderbook. India has the largest number of USFDA-compliant pharmaceutical plants outside the US, and over 2,000 WHO-GMP approved facilities, ABB India added. This segment, ABB India said, is expected to continue its growth trajectory.
On tariffs, ABB India said it 'does not see significant impact' at this point of time, and is expanding its base in India with energy efficient solutions across segments. Only 10 percent of revenue contribution is coming from exports, with only a minor part exposed to the American market, said ABB India.
The environment of uncertainty is weighing down on the private capex, and while the government capex has started picking up but is yet to gather pace, ABB India added.
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