ABB India Limited (ABB) Q1 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to ABB India Limited's Q1, January to March quarter, CY2026, Earnings Conference Call. As a reminder, all participant lines will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded, and any unauthorized recording of this call is strictly prohibited. The recording will be made available on the company's and SEBI's website subsequently. I now hand the conference over to Mr. T.K. Sridhar, Chief Financial Officer of ABB India Ltd. Thank you, and over to you, sir.

Thank you. Thank you, Ushya, and good evening, ladies and gentlemen. Thank you for joining the Q1 2026 results. So, on the call with me is Mr. Sanjeev Sharma, Country Managing Director for VB India, Kiran Dharap and Ganesh Kutavadeh, who lead the Business Division Connectification. Sanjeev Arora is not able to join because he's traveling, but we have Balaji, who leads the Process Automation Division. Right. So, over to you, Sanjeev. I think we have the presentation up. The press release is in the process of getting uploaded. Right. So, some technical glitch, not from our side, but from the other side of it. So, I think we're trying to get it sorted out. So, in the meantime, we will take the liberty of walking you through the presentation, which is definitely going to give some color about the press release also. Yeah. Over to you, Sanjeev.

Thank you, Sirizar, and good evening to all of you. And thanks for showing interest and joining in on Friday evening this late. And we will keep it sharp and brief for you. As for those of you who are joining it for the first time and also those who would like to have a bit of a reminder, ABB in India at a glass is a company which is focused on electrification, motion, and automation solutions. And we have a very strong footprint for manufacturing in the country, and we represent all ABB Group business divisions in the country, which are highly localized and also are connected with the customers. And at the same time, we serve our customers from our 28 sales offices, an increasing number of general partners who take us to the deeper side of the market and also do value-added services closer to the customer. And from this country, we are exporting to about 30-plus countries, which are increasing as we progress with our portfolio and footprint of the manufacturing in the car. Next, please. So, those of you who have been following ABB on a constant basis, so last year, we did see there was a bit of market corrections, and then I think they were also reflected in our number. But for last quarter of last 2025 and the first quarter, we see demand has become resilient, and we are seeing quite a good uptick of it in our books. And this is across all our segments. As you know, we have 16 divisions, which are distinct business models, which are connected with 23 market segments. And we see all the market segments that are brought to us, they are showing good resilience and good capex formation and also good ordering. So we had a 25% order growth. 6% revenue growth, and we continue to have, you know, a good cash position within the company, and also we have a good backlog, which gives us the good revenue possibility. Sirazar will take you to the profit after tax numbers when we break down the financials later on, but some of the highlights. That we announced about $75 million investments to expand manufacturing and R&D in the country, and we also dispatched the first locally manufactured wind-powered converter from the Nilamangla facility, which is, again, one milestone, and also opens up another revenue and order stream for the future. And we also have R2 formula, a next-generation low-voltage gear platform, which is used by... Our partners in the market to give a value-added solution to power distribution industry. And on sustainability side, we have scope one and two greenhouse emissions down by 82%. And we are secured rank three in electrical and electronic sector and rank nine across industries in BW business world, most sustainable companies. Next, please. If you see the order momentum, it is coming across core and emerging sectors, namely in transport, building infrastructure, data center, food and beverage, process industries, and renewables, and which gives us. Good visibility going forward because the customer interest and the order pipeline formation is robust at the moment. And given our backlog, we see very good revenue execution going forward. Of course, we will see what impact the West Asia issues come in, but those will be temporary as we go forward. Please continue. So you can see that we have a portfolio wherein we are seen by our customers in the segments like data centers, renewables, industries, infrastructure, and transport as the best-in-class supplier of products and solutions, and we continue to gain and enjoy that confidence from our customers, and these are some of the examples that you can see. Next, please. So, among the market segments, where in our 16 businesses are focused, which are the 23 market segments, you can see the emerging industries, which are growing quite strong, and infrastructure and transport that is on a healthy scale. We have highlighted by colors and core industries, which are modest, but they also form a fairly large part of our portfolio. And we continue to see strength in some of these market segments, which are cyclic in nature. And that's exactly what is interesting about our portfolio. 16 business models operating on 23, and we continue to show resilient results over a period of time And because there's a cyclist among the market segment. So that's a good place to be, and that's what we have observed over a period of time. Let's continue. Just to give you an idea about what we do in the data centers, because that's a flavor of the day. So we have a lot of products and solutions, especially in the low-voltage power distribution, which essentially powers up the computer racks in the data centers, and also the medium-voltage and primary-secondary distribution, which brings in the power into the data center, and the alternate power sources like generators, battery energy storage, that also become part of that solution. UPS is another power protection facility which goes from us. And then we have a number of drives and motors that go into the cooling system components and number of installation products and also automation solution for data centers plus medium-voltage substations. So this combination is enjoyed by customers, especially the hyperscalers. We have a good demand globally for these products. In fact, very strong demand globally as well as in India, and we are kind of serving our customers quite effectively given our capacities available and our capabilities available locally to support not only in installing the solution but also provide long-term service and support to the customer. Let's continue. Sustainability in practice, as I mentioned to you earlier, our GHG emissions are down by 82%. Water recyclability is up 46%. And you can read our BRSR report, which we have released. And there, again, we have highlighted in much more details about what kind of focused effort our company does in this particular area. And we continue to get recognition for the work that is done by our teams across the country. Next piece. On the CSR part, we continue to stay focused on three areas, education and skilling, diversity and inclusion, communities and environment, and we have our track record for the last 10 years that we spent 100% of our commitment, and we really measure not by spend but by impact, and we also do audit for the impact of all the spend done in the areas we meant it to be done, and our board and the CSR committee always reviews it. And they have been quite satisfied in terms of the impact that we create with our CSR spending. Next, please. Now, factors, too, that we are watching for 2026 are the economic power, then green energy and sustainability, urbanization and smart infrastructure, automation and AI, consumerism and lifestyle upgrades, and, of course, coupled with the global uncertainty. This is a combination plate that we have. Quite frankly, we have seen many cycles in this country. We are manufacturing for the last 75 years. We have probably seen most of the events that we can record in the history. So our team and the businesses are pretty resilient in terms of not to over kind of blow the uncertainties because every year there is something. Last year was tariff. This time is the West Asia. And a few years back, it was COVID. We have all gone through those cycles. But the team really knows to keep focus on the customers, what the customer is demanding. And keep fulfilling what customers' demands are. And I think that's a simple recipe for us to stay resilient. Next, please. On the financial highlights, now I hand it over to D.K. Silver, who will go on more granular on the results.

Thank you. Thank you, Sanjeev. So, just to give more insights about how did we perform in Q1, orders were pretty strong. I think 25 percentage, base orders nine, but large orders is something which we got, and it was from the data center space and the railway space, right? So not to mention what the order values, but these are the two market segments from which we got these large orders. But overall, I think we are in a very solid position in terms of order backlog to 11,000 crores. I think this is a good backlog, which gives a nice visibility for the coming quarters. That's what we can go through. Revenue, 3,184, slightly subdued, I would say. I think we were sort of well positioned to go to 3,300, 400 levels, but the last-minute topics which we had to deal with in our common West Asia crisis sort of stifled the offtake as well as the supplies, and that's something which we had to stay where we are at this point of time. And this naturally had an impact on the performance and the profitability level. But apart from that, we also had quite interesting development on the metal side of it, which is copper, silver, and aluminum. And apart from that, we had the currencies, Indian would be depreciating pretty sharply against the European and the US dollar. So that's something which really led to a muted performance as far as profitability is concerned. I'm sure that this is not in line with the expectation of the market, but I think this is the best possible option with the revenue mix which we had and the crisis which we have to deal with at the last night. So this is something about what is the factors which led to a profit growth. So that's what it is. But the cash is definitely strong. So we have, at this point of time, 6,042 crores. But this is without the cash which we got from the sale of robotics. If I include that, it is roughly around about 7,600 crores, right? So that's the overall strong cash position, what we are in at this point of time. Yeah, we'll go to the next slide. So, to deal with what really impacted the profitability of it for the granular way, I think other income, of course, included the interest which we had been getting on the advances and the cash balance which we have. So, that's been increasing. So from that, if you look at the material cost, stood same levels as 61.3 and 61.4 sequentially, but that compared to Q125, we are definitely up by three and a half, three percentage should be enough to be precise, right? So that's what it is. And now if you look at what it lead to the dip of margin, I mean, the higher material cost in 3.7 percentage, I could say I would attribute basically three factors to that, which is one is definitely competition intensity and the commodity and the rupee depreciation part of it and the revenue mix of it. So, the competition and the intensity, probably a percentage, a commodity price increase in rupee depreciation, almost two percentage, and the revenue makes the balance one percentage. So, roughly, this is the cut between what was the material cost in Q1 2025 versus Q126. That's the sort of stuff. And personal expenses as a person related remains the same, but higher in terms of value for relating to a people increase and the salary increase which happened and a slight delta for the impact. For the labor code impact on the revised cell is what we have. So that's how it is. But I think on the expenses part of it, we were well positioned to do a larger revenue. So we had revenue and expenses, which is slightly higher. And if you look at it, as we mentioned, there is also a swing in the exchange commodity losses, which is this time 27.5 crore's impact on our issues, which are well known to us. So overall, I think this is a quarter where there has been a correction, there has been a bit of an unprecedented headwind, and due to which we could see profitability which is going down, and revenue slightly could have been a bit more higher compared to what we are doing at this point of time. But the good part and the more positive part of it, which we are all looking forward to, is the development in the orders, and which is going to give a good runway for revenues in the coming quarters. Next slide, a bit of a color on how did the division, how did the business segments perform? So, electrification, so 36% up, right? So, I think on year on M, year on year. Solid percentage is what we see, and that's more driven by the data centers and the building segment in order of orders, what we are getting from this. And revenues also driven by backlogs, but could have been still more higher. That's what it, that could be something which you would have wished for. And profitability, 21.4 to the 3.2. And last year, we had a very big data center order, which we got executed in Q1, which is not there in this particular. That's what we meant by revenue mix. And more importantly, the cost impact on account of copper and silver price, which is being definitely. To a high level in EL electrification segment and to add to that for the rupee depreciation. So this is something which we saw, but I think we have a backlog of 200 crores, which is actually below the next 5-6 crores. Motion. Motion is actually also grew by 22%. They are maintaining their quarter-on-quarter growth consistently in a band of plus 20% despite the competition and what they see. And it is more driven by orders from the rail segment and also the renewables and private industries, which we have also been able to do for the drives part of it. So, and there's a slight decline in the exports, right? So, but I think it's more indicatable because of the crisis which we had to undergo in the last minute over here in the month of March. Revenues, 1,200 crores, and profitability at 12.8 percentage is what we see. So, I think that's a bit subdued. And also here, the material cost was definitely higher, and that's also applicable to the same reasons as what we do. So, overall, if you look at these factors, it has impacted the major product divisions of… Automation. Automation, while electrification and motion show a robust growth in orders, automation, which depends more on private capex and the public expenditure, is more subdued on the order intake part of it. But I think we have a good opportunity pipeline, but the decision-making speed is slightly slower at this point of time as what we see for the human, as what we see. Good opportunity pipeline, but slow decision-making is a characteristic of automation is what we see at this point of time, but we are confident that this will turn out to be potential orders in the quarters to come. Revenues, they are driven by weaker order backlogs, so the revenue pace is also slowing down, but the profitability is higher because of a good mix between service and project systems and also some good profitability, profit marginalization from the projects which are under execution and completion. So this is the overall view on business. And on a backlog, 2100 course, I think we will have to ramp it up for. So, this is the model of business models, what we see by business areas, if you look at it, MO and EL are now 81%. We don't have robotics at this point of time. Robotics used to be 5% for the 5%. But now, without robotics, slightly changed, but not so. 19% to automation and 81% to MO and EL. In terms of offerings, projects at 8, projects at 7, 81% for products, and 12%. I mean by exports, I think it was 11 and 89, slightly higher because of the more export orders which came in. So, that's it. So, I think we could probably try to take some questions between now and half past weeks because this being a weekend, we don't want to extend beyond 6.30. And just in case if there are definitely there could be some questions, take it on some day later for next week.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants are also requested to please limit your questions to two per participant. The first question is from the line of Renu Pugalia from IIFL Capital. Please go ahead.

Yeah, hi. Good evening, team. My first question is on the private sector investment revival that you were expecting sometime around early this calendar year. So, do you see, and as you have briefly highlighted, but do you see the customer sentiments getting materially impacted on business making and closure beyond the process automation to within the core business segment? And also, any likely budgetary impact on cash flows, can that derail or postpone the infraspend, which is in the moderate growth category that you have highlighted in terms of order flows? That's the first question. And second would be on the recent KPIX that you have announced, how do we see the export portfolio ramping up and our exposures to data centers in terms of local product footprint expanding with the recent localization plans that you have announced on the new KPIX?

Okay, so Renu, I think the first question is around the market. I think we have on the private CapEx, we have Kiran and Ganesh who could give an electrification view of how the private CapEx is happening and we have Balaji. So for the motion piece of it, I think their commentary will also cover in a way that actually does because we don't have Sanjeev on the line. So I think we will try to answer that from this, right? On the CapEx part of it, which is the $75 million, what we said, and not 75, that's for the total ABP, excluding the Hyderabad Labs, so probably Nesha. So, I will give you a color at the end. So, Kiran, if you would like to take this question, and then we pass it on to Ganesh.

Thank you. Thank you, Rino, for the question. What we are looking at is quite a robust scenario in terms of investments.

Thank you. We lost a bit of a connection in between technical glitch, but in our thoughts, we are now gathered together as to what we need to answer. Go to you, Kiran, back to you.

Thank you.

Thank you. I think we were speaking about private capex, and then I was talking about data centers as well. I was also talking about hyperscale and co-location both getting into investments, and we are able to get some very good investments coming in at the same time orders for us as well. I was also talking about railways and renewables. Rail, we are talking about both in terms of cooling stocks. At the same time, we are also talking about the station development and innovation projects. Extremely good in flow of traffic. We are also looking at renewables. Specifically, I was talking about the best systems, which is extremely promising for us, and we are able to get great orders in the first quarter. The last point I wanted to make is on the building side. It's quite mixed scenario at this point of time. We are seeing a very good numbers, but at the same time residential side, while the mid and the lower end is a bit of a challenge, but the premium segments, we see a very good offer. So that's what from my end. Maybe Ganesh, if you can add your thoughts.

No, Kiran, you almost covered the segments which are looking promising. Like what you say, data center is very strong. Renewables is also coming up very strong and it's reflecting in our order book also and the opportunity pipeline which is getting shrink. And there is a private investment which is coming in even the industry side. We have seen a couple of very strong inquiries which are in the pipeline. So, we are very optimistic about the investment which is coming from the private side.

Yep. Very good. Balaji, if you're there.

Yeah, from an automation side, firstly, I just want to qualify that there is a certain life cycle of a project, especially in the early stages, and it follows a pattern, and typically automation comes towards the... The end of ordering. We see a strong pipeline. However, there are industries that are depend upon petroleum products as their raw materials. There is a little bit of stress. We see that this could be a temporary one. Having said that from both public sector and private sectors, the inquiry bank is quite strong and those inquiries which is already issued they are proceeding. Unfortunately, due to the nature of the stage I am not able to call So, we will talk about those specific segments, but there are very strong pipeline and quite a strong movement towards closure of orders.

Sure. Can we conclude that basis, while you have seen execution headwinds because of the West Asia crisis, the ordering momentum or process has not seen any derailment or postponement from customers because of the ongoing inflationary trends or the West Asia crisis? Is that right or there is some impact? That was my question.

See, you have looked at our order growth, right, so that it very clearly reflects the way we are in the position now. On electrification side, we are shown by that. So, that shows the kind of robustness in terms of the business in India, and that's where we are also able to get a portion of that file, and that's the reason why we are showing that business.

Sorry, can you interrupt me? I may request Ms. Daino to please rejoin the QMAP.

So, I think there was one question which Renu had raised about the investments, how much it is going to help us. I think, as you have already said in the past, ABB sees that there is definitely a market which is developing for the products and services what we are manufacturing. These are the future market opportunities to serve the market, future market opportunities. So this is basically coming from drive products expansion. We have then the service expansion for motion and also more in the service. And of course, we will have the smart products manufacturing also increasing quite extensively going forward, right? So, that's the plan what we have, and I think we will hear more as we go into the few quarters as these projects are getting commissioned.

Thank you. The next question is from the line of Amit Mahavar from UBS. Please go ahead.

Yeah, I just have two questions. First is, do you think this is going to be a year where, you know, we will have a lot of lumpy orders, you know, which is basically going to be part of the intake? And more importantly, and you can specify if this is going to be a strong, you know, high double digit growth year for orders. And second is on profitability. If I look at the parent commentary, obviously, Yale was a very, very strong indicator. We also saw that in some bit in our results in terms of top-line growth. Do you think the profitability, you know, this year can be significantly better than last year? And I understand the short-cycle weakness is still, you know, holding up. So any color on the profitability, I know we don't give guidance, but... You know, and we have variations in this quarter, but the balance of the year, any color on profitability, because I can see a lot of initiatives by the parents. So I just want to understand how India is positioned. Thank you.

Okay, with a limited knowledge of how the parents are profitable, if you understand, they have the balancing power of a fair forage gain in countries which are exporting, right, to economies which have a weaker depreciation currency, and that's a compensating upside, right, so which whereas we don't have that, so that's an intrinsic advantage what they have. And also their growth, if you look at it, in our... And so, there the ability to get a premium is far, far higher, right? So, therefore, what I mean to say is the yardstick of the global performance to compare the India performance is something I think we cannot walk it through, right? So, that's this thing. So now we're coming to... India performance and such. I mean, going... We have in backlog of 11,000 crores. I think we'll have to execute. So, what is probably which we will have the receiver is around the absorption, capacity absorptions, which will really help us going forward. That means the velocity of revenue conversion has to increase depending upon what the customer will take is, right? But whereas if you look at the pricing, the support to get more productivity, it's something which is now saturated compared to BVCH. So now you have a lever of volume which could pull up the margins, but you have the other impacts of the forex and the commodity, which is not in our control, Which is basically more than offsetting what you can also do on a volume basis. So I think what we expect is that I think we should be able to mitigate this risk of forex and material volatility at this point of time with a volume which we see. But I think we need to work more on how the market develops in terms of accepting. For a colour which I could give at this point of time, Amit.

Sir, can I sneak in one small one? Yes, please. Yeah, sure. Yeah, sure, sure. So, you know, when we talk to channel partners across you and your peers, there is a very clear short cycle weakness, as you speak, for different reasons. It's been there for two years. Do you think this is a year where your base business can grow in top line by 15% and large order, I can already see the last two quarters are very, very strong and we have a good pipeline. So, collectively, the intake, you know, for it to move towards a different run rate, do you think this is too early for us to comment or in next two, three quarters, we can see base orders, you know, shifting because there is a restocking cycle for last two years? Then comment on base business, Shudar. That will help you. Thank you.

So, I think amid Bayes' business, we grew only at 9%, not the 15% of what we see, right? So, that means we definitely see the channel partners. I don't know with whom you've spoken. I think what we see is that there is an in-market velocity which is there. It's not that market is bad, but I think it's more about the timing of it, right? So, it could be a bit of, as you rightly said, a choppy situation, but the good part is that there are opportunities, and we are confident these opportunities. We'll convert into orders for ABB.

Thank you, and good luck with that. Thank you.

Thank you. The next question is from the line of Pariksit Kharthapal from HDFC Securities. Please go ahead.

Hi, sir. So, our first question is, what kind of inflationary pricing actions we have taken across businesses to mitigate the impact on inflation so we can quantify the price as we have taken across businesses?

Inflation, okay.

Inflation. A commodity, okay.

So, we are a product business, product organization. That's what it is. If you look at it, we have more than 70 percentage of our businesses. Always, I mean, even though we call it a short cycle, it will have some lag. So, therefore, we always have two lags to impact the price. So, that's something which we as a business take a strategic decision to revise the prices. So, to give add more color to it, I think I could invite Kiran to give a bit of more insight on this as to how do we manage these price increases.

Absolutely. At the end of the day, any price increases... What we have done is to go for a price increase. We have already gone for two price increases in the market. It's public anyway, and that's the way. And as Sridhar said, there is a lag between the prices which are impacting, the cost which are impacting, and the price increase in the market. And that's what we need to manage, and that's what we have done. We already have two price increases now.

Can you quantify it, sir? How much is the percentage increase?

So, that's something which is very sensitive for us to diverse. I don't think it's an apt answer which you could give, please.

Okay. The second question is on data centers. So on data centers now, I mean, we are maybe going from 2 gigawatts to maybe 10 gigawatts in four to five years. And there would be a significant ramp up from the hyperscaler side. So I think initially in your inventory, you did mention about four or five product lines there. So just wanted to understand how is our time increasing as hyperscalers gain market share in this and that. And also if you can understand what are you doing in the substation side of it.

I have a Ganesh. Ganesh, if you...

Yeah, see as you are very rightly said, quite a lot investment which is happening on the data center, not only in the hyperscale, but even the Colos and the Asia data center. And our portfolio is very well positioned, means across the electrification, as well as all other products to really take on into this particular job. And we are also actually matching the capacities as per the requirement because many of these hyperscalers has already signed the contracts with us and we are very well positioned to capture this particular market. In fact, we are building up the capacity to meet their demand.

And on the station 5, what are we exactly going to do? And also the opportunity in terms of time, what is like our per megawatt opportunity, addressable opportunity now with this ramp up.

What would you like to say something?

On the data center.

On the substation side.

On the data center, what is called the content and why the substation of course is moderate. What is the total content of ABB on the data center?

Per megawatt. Per megawatt, if the KPEX is 8090 cross or 50200 cross, what will be our per megawatt opportunity there, and on substation side, what are we exactly going to do?

As we have discussed in the past and also in a slide today, that we have different opportunities in the data center, which is a direct opportunity wherein customer buys the power supply, bringing a medium voltage input to the center where they want to, you know, set up the data center so that medium voltage, you know, can offer. Switch gear and the associated equipment, that's where our scope is. And after that, it gets stepped down and goes into voltage distribution to the power rack, rather the computer racks. That's another scope. By the UPS and also in the utilities and ancillaries, we have drives and motors going. So that's the typical scope we have in India as well as globally. Yes, we do know what is a factored, you know, scope per megawatt, but this is something we don't publicly talk about. But yes, it's a substantial scope, especially when you have the larger gigawatt opportunities. I think the size is a very large. Opportunities that we see. So far, we have executed some contracts with the hyperscalers. I think the speed at which they are executing it and also the quality they are executing it, the demand of our products is preferred in the marketplace. And that's what we are enjoying at this point of time in India as well as in India. So I'm sorry I'm not able to give you a factor, but we do know the factor.

What's the percentage of order book, current order book in data centers, is that data, if you can share, what is the total order book, what is the percentage of data centers?

Data centers orders would be up to around 12 to 13 percentage.

Okay.

Sure, sir. Thank you. Thank you.

It's not a fixed percentage. It does vary in a band based on when the order gets booked and what is the size of the orders and the book. So, it can vary between 12 to 16% as well. Okay. Yeah, please continue.

Thank you. The next question is from the line of Atul Tibari from J.P. Morgan. Please go ahead.

Yes, sir. Thanks a lot. Sir, in the month of April and May, have you noticed any incremental weakness over the month of March for your short cycle orders because of the customer sentiment around war and fuel prices, etc.?

So, as we do, 90% of our business is in India, and 10% is exports. Quite frankly, last year, there was a weakness in the market for different reasons, but those few, two or three quarters, we saw it, but starting the last quarter, And what we are experiencing, we are barely experiencing robust demand at the moment. So quite frankly, it is not adding to our concerns directly what's happening in the West Asia at the moment. If there is a lag effect that comes up in the month and the quarters later on, of course, we will share with you.

Okay, good to know. And so my last question is on price hikes that you mentioned. So when you are taking these price hikes, are those hikes acceptable to customers? And despite the price hikes, are you able to kind of broadly maintain your market share for the respective products?

So we have had quite a good experience, you know, during COVID period, wherein a lot of supply chain disruptions came, and we had to pass on some cost to the market, and which we did. And now, one thing, one phenomenon we have understood and clients have understood pre-COVID and post-COVID is that post-COVID, the customers have become more kind of, they're more kind of. You're aligned with the thought process that when the market disturbances take place, they have to participate in the market with the suppliers to get the high-quality products. So one is that the demand for the high quality products like we is quite high and the customers appreciate it. But whenever there is an inflationary issue or the displacement of the supply chain takes place, whenever we go with the better price in the marketplace, I think customer responds positively. So that's where our team is quite sensitive to it. Not that we have to pass on everything. We also optimize with the productivity in-house. And then whatever we cannot hold on, our customers are able to participate on that. And the increases that we carry it out is basically calibrated around that.

Okay, that's good to know. Thank you.

Thank you. The next question, ladies and gentlemen, before we take the next question, we request to every participant to please limit your question to one per participant. The next question is from the line of Mohit Kumar from ICSA Securities. Please go ahead.

Yeah, good evening and thanks for the opportunity. My first question is, do you have escalation clauses in long cycle orders like Metro Rail, which you signed in this quarter? Escalation for commodities, high commodity inflation, if it happens, are there escalation clauses which protect us?

Yeah, Mohit, I think it's a very good person. Thanks for that. Okay. So, I think there are escalation clauses, there are price variation clauses in all contracts which we do on a long-term basis, but we should understand these price escalation clauses may also come with a ceiling. Right? After which it is there. So, it's basically about risk mitigation and how fast we execute this particular contract. But to answer to your question, yes, we do have a crisis collection process in our contracts.

Even when you sign with the private card, is that right?

Yes.

If I can ask you one more question, are you seeing the conversation happening for large data centers of 100, 200 megawatt size, or do you think it's too early and expect it to materialize as the Intel F-27 and F-28, or F-20, F-29?

Best person to give a color to it is Ganesh Patawde.

The question is, are you seeing the conversation happening

for a very, very large data center of 100, 200 megawatt quantum, or do you think it's too early and those conversations will start in maybe CY27 and CY28?

No, it has already been started because whatever hyperscalers has placed all around us in the previous years, those exhibitions are ongoing and even whatever contracts now which we are signing or discussing, there is already delivery schedules which has been given for the 26, 27 and even up to 28. So, conversation is already going on. So, I don't see any delay into that.

Thank you. Ladies and gentlemen, we would request you to please limit your question to one per participant. The next question is from the line of Puneet from HSBC. Please go ahead.

Yeah, thank you so much, sir. You know, in the beginning of the conversation, you talked about one-person impact from competition intensity. Can you give some more color on what are you seeing in the market and in what segments?

We have 16 distinct businesses, and if you pick up each and every business, they have a very different profile of competitors. So if I collage it for the whole company, it makes a very large kind of a country. So I would say, yes, you're right. There is a competition intensity as the size of the market grows. You have participation coming from Japanese. You have participation coming from Koreans, from Chinese. So you naturally have non-traditional players, which they're increasing in the marketplace. So it's not the majority of our market segment. It's on the certain market segments wherein it is more. The intensity increasing on the competition side.

And if you can just give some more color on how should one think about the $75 million capex in terms of phasing and when do you expect it to capitalize?

It is about expanding our capacities, both in the development as well as, you know, certain businesses which we had, they were small, but now they have grown to a size that they require larger places to produce more. And also we have introduced some new product pipelines which are localized, and they also have not only mandate for India, but they also have mandate for exports. So those are the places in this expansionary investments are being carried out. And this is a continuous process, and we will see that in future, there's always a run rate for it.

Understood. That's all for myself. Thank you so much.

Thank you.

Thank you. Participants are requested to only use handsets while asking a question. The next question is from the line of Sameer Thakur from Ambit Capital. Please go ahead.

Hi, thanks. Can you give us the breakup of volume and price between the gurus? Is that possible? Volume and price mix.

Volume and price mix.

Volume and price mix of what?

The growth, I mean, within, if you, sales growth within it, how much is the volume?

Sorry to interrupt you, Mr. Thakur. Sir, can you please check your handset mode? We are unable to hear you clearly, sir. We have lost the line for the participant. We'll move to the next question, which is from the line of Rahul Gizare from Macquarie Capital. Please go ahead.

Yeah, hi. Good evening. So, we have seen a sharp decline in margin over the last two years, and we understand this is a combination of QCO, Forex, and now the Gulf War being the latest variable. Now, based on your assessment and on the back of the price hike that you have taken, when do you think we can see ABB going back to 18%, 19%? Or if that is a two-step process, when do we see another company going back to 16-17% margin?

Okay, so I think, Rahul, I think we need to deal with the problems one at a time, right? So, but unfortunately, the problems keep coming. It doesn't seem to be ending. So, but having said that, I think there are continuous efforts to mitigate this particular risk in both the markets. It was a combination of both volume and pricing and also the inflation being, we were able to take the inflation of commodities and rupee-de-prix. It's a very bit of an, I would say, not a simple game and work to do, right? So I think all efforts are on. We also aspire to be in the so-called ones we have reached 15 percentage. And we said that we will be there at 12 is what we ended up last year. So that is actually a good range to be in, as what we see with the current challenges, what is ongoing in the market.

Mr. Rahul, is your question answered?

Yeah, but do you see, yeah, thanks. So do you see, you know, this entire year will be subdued in terms of profitability based on, you know, the backlog that you'll have and the limited price that you have been able to take?

So, normally we don't give any guidance about what could be the future, right?

No, no, I'm not looking at guidance. You know, this is your cost and you have taken X price, you know, so price size. So, have you been able to take price size higher than the cost? You know, that's the only thing I'm looking at.

But, you know, we are a short-cycle order. The price size which we take today is not valid next quarter because the commodity and the products, they trade faster than the price size what we have.

Okay. So, regular price hike is the answer.

Because I think there is always a lag between what the inflation and market is behaving on the input cost, vis-a-vis the price which you could take, we are taking into account the competition intensity and the market dynamics. Thank you very much. Thank you.

Thank you. The next question is from the line of Samir Thakur from Ambit Capital. Please go ahead.

Hi, thanks. I got disconnected earlier. So in data center, we said there's 30 to 14% of backlog. So it's mostly in electrification, if I'm not right. It should be so like 24-25% of the backlog in electrification. And is that margin equity? It should be margin equity. So mix can be positive going forward. Is that the right reading?

You mean, what is the percentage in electrification? I think we haven't calculated it off our head, but we've given you on the company basis. But yes, it's a substantial in the books of our distribution solution led by Ganesh and also on the smart product business, smart power product group as well. So yes, this is definitely positive for our books as well as on the margin side, yes.

Okay. I got disconnected earlier, so I'm not sure whether it's a repeat question, but any split on the price and volume in the growth?

I think this is the first quarter, so we have another four quarters to go probably, but then it will be in a good position to say that what could be an aggregated impact of this, so I think. Okay, fine.

Just last question. In data centers generally get the base orders or generally there are large orders only?

We have both. There are two ends of it. One is you have the hyperscaler asking for a very large scale power supply into it. But then also you have the partners and integrators who supply into the, you know, the mid-level and colo data centers and they supply power supply into those. So those are not as large, but that's where, you know, we are able to address different market segments in the data center.

Thank you. Thank you. That was all from myself. Thank you.

Thank you. The next question is from the line of Suvideep Mitra from Nuwama. Please go ahead.

Good evening, and thank you for the opportunity. My question was on the margin side, we've seen the impact over the last four quarters, also because of the QCO impact. And my understanding was that the QCO impact should probably taper off over the next one, two quarters. So we just wanted to get an understanding that with the price hike that's already been taken, and hopefully with the QCO impact going away, probably over the next two months, can we see some recovery in margins going on?

So, yes, I think your answer is yes, and that's why we come every morning to office to make sure that that happens. But what our observation over a period of time is that whenever the markets are disturbed, whether it is because of the COVID reasons or some QCO reasons, these are not very good things. Because what you require is you require a certain amount of certainty and linearity for businesses to operate based on how the business models have been constructed. But yes, last year, because of tariffs, uncertainty, and then QCO, and this year now, whatever is going on in West Asia, there is some kind of a disturbance that comes to the linearity. The moment things stabilize, I think given our equation with the gross margins we get out of the market and we... Thank you. If you do it on top of the stable supply chain, I think you have seen that whenever that happens, we have a good margin availability into our business. Thanks. We have to allow a little bit of sustained period of stability, not so much variations every few quarters.

No, understood. Understood. Thanks for your detailed explanation. Just one last question from my side on the data center bit. You know, while we are hearing of a 2 gigawatt annual KPS is what the government is targeting, are you seeing the annual ordering now in that 2 gigawatt way? Because our understanding was that the current bidding pipeline is probably somewhere between 500 to 700 megawatts.

We do see it in the project pipeline that buildup is there, yes. Perfect.

And would you be also catering to the overseas market for data centers where you produce in India and supply to parent for data centers overseas?

So we have organization all over the world, and we have capacities to serve. But right now, you're right, the demand and the global system is quite high. So there are certain specific products which our global, you know, businesses pick up from India. And yes, we do participate in that. Perfect. Thank you so much.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. T.K. Strider for closing comments.

Thank you. Thank you very much. Thank you everyone for joining this particular call at a very short notice, but we thought that we should complete it immediately because we have some extraordinary results to tell about it. So, but I think we'll again definitely connect in the next quarter. And in case in the between, if you have any queries, anything which you need to know more, feel free to drop a line to us. We will answer to your queries. Thank you very much. And to the team who are good, we can join the call.

Thank you. On behalf of ABB India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.