ABB India shares fall 10% as analysts flag weak margins, rich valuations

Dalal Street turned cautious on ABB India after its parent ABB reported Q1CY26 results showing strong order inflows but continued pressure on profitability, as analysts maintained bearish views citing weaker execution, margin pressure, the impact of the robotics divestment, and stretched valuations.

 

ABB reported a 24 per cent year-on-year rise in order inflows for Q1CY26, including 26 per cent growth from India within the AMEA region, driven by demand from data centres and railways. However, margins came under pressure due to higher raw material costs, adverse currency movements, intensifying competition, and slower execution

 

The weak profitability trend weighed on sentiment, with ABB India shares slipping as much as 9.80 per cent to an intraday low of ₹6,325 on Monday. At 10:55 AM, the stock was trading at ₹6,359, down 9.32 per cent from its previous close of ₹7,012.50.

Meanwhile, here is what brokerages said on ABB India:

MOFSL: Neutral | Target price: ₹6,600

Analysts at MOFSL downgraded the stock to ‘Neutral’ from ‘Buy’, with a two-year forward target price of ₹6,600, stating that at the current price, ABB India is trading at 83.8x, 69x, and 56x P/E on CY26/CY27/CY28 estimates, which appears expensive.

  

Going ahead, Teena Virmani, Vatsal Magajwala, and Prerit Jain expect ABB India to continue benefiting from its offerings for data centres and renewables in both domestic and export markets. With an uptick in select private sector industries and strong momentum in high-growth segments, they expect ABB to sustain its order inflow momentum.  

While inflows have improved, analysts believe meaningful margin expansion is still some time away. MOFSL has cut its estimates by 14 per cent and 11 per cent for CY26 and CY27, respectively, to factor in the robotics divestment and lower margins. MOFSL now expects revenue growth of 5 per cent, 13 per cent, and 14 per cent in CY26, CY27, and CY28, and margins of 15.2 per cent, 16.1 per cent, and 17.6 per cent, translating into PAT growth of 3 per cent, 22 per cent, and 23 per cent for CY26, CY27, and CY28.

 

MOFSL, however, has cautioned that a slowdown in order inflows, pricing pressure across segments, increased competition, supply chain disruptions, and geopolitical risks could affect estimates and valuations. 

JM Financial: Sell | Target price: ₹5,210

Analysts at JM Financial maintained their ‘Sell’ rating on ABB India, citing elevated valuations, with a target price of ₹5,210. According to Priyankar Biswas and Neelotpal Sahu, a positive read-through for India is the reported Q1CY26 order inflow growth of 26 per cent Y-o-Y—the highest in the key AMEA region for ABB Global. This, they said, appears in line with their estimate of around ₹4300 crore, implying nearly 27 per cent Y-o-Y order inflow growth (excluding robotics) for ABB India in Q1CY26.

 

That said, analysts believe margins may remain under pressure for ABB India. Moreover, current valuations at 76x CY27E EPS make the risk-reward profile significantly adverse.

 

“The stock was trading well below its average P/E of around 60x until the recent rally in the stock (up 25 per cent in the last one month) inflated the valuation to around 76x CY27E EPS, also one standard deviation higher than its historical levels. We believe the magnitude of the recent re-rating renders ABB India’s risk-reward profile significantly adverse,” wrote the analysts. 

Elara Capital: Sell | Target price: ₹6,180

Elara Capital revised its rating on ABB India to ‘Sell’ from ‘Reduce’ after factoring in continued near-term margin pressure, while raising the target price to ₹6,180 from ₹5,800 based on 55x March 2028E P/E. The brokerage said the current market price already factors in most positives, while continued pressure on margins and profitability is likely to weigh on the stock.

 

Analysts at Elara, led by Harshit Kapadia, expect an earnings CAGR of 18 per cent during CY25–CY28E, with average ROE and ROCE of 22 per cent each during CY26–CY28E.

 

The brokerage has lowered its EPS estimates by 9 per cent for CY26 due to continued near-term margin pressure, but raised CY28E estimates by 4 per cent, citing healthy inflow momentum led by data centres and railways, which are expected to provide robust revenue visibility over the coming years.    ============================================== 

(Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.)