My second question is pertaining to acquisition of Rotork by parent and probably synergy that India business make it from the areas like data center, water or say, power, especially because now Rotork is industrial flow control specialist and probably, in a few of these end user markets, your addressable market can go up. So how do you think about this synergy playing out for India business?
Great. So I think it is pretty early for us to comment on it, because globally, if you look at the announcement as well, the shareholders of Rotork have still not approved this particular deal or it is pending for the approval. So we have no other information other than that which has been announced by the group. So we have nothing to comment at this point of time. And it will be too early for us to work and give you these details. So probably when we get more information or when the group advances on their particular pursuit of this, then we could sort of share with the investors further details on this.
When we started the calendar year 2026, the team was fairly conservative and cautious on the growth outlook. And then we had the Southwest Asia conflicts. Now looking at the numbers, 1Q was a soft quarter, 2Q bounced back very strongly on execution and revenue side. So what has changed in terms of business offtake? Was it just slippages of revenues, which caught up in the second quarter? Or you are seeing a much better acceptance from the customer in terms of deliveries? And also reflected in the numbers, the channel partner had seen a pretty good jump in the revenue mix this quarter. So was that also to do with any share of channel inventory stocking up involved versus relatively soft offtake from any users or EPC companies? And the second question is, looking at the order accretion, which is fairly well balanced in large and short cycle orders of the first half of the year, where do we see the margin headwinds easing out? And with operating leverage kicking in by end of the year, do we believe worst for ABB in terms of the operating EBITDA is behind? And can we see margins coming back to mid-teen levels through end of the year or next year?
Coming to your first question, which is the transition from what was the market in the first quarter and second quarter. Yes, I think when the first quarter we closed, because at the time, it was what was the West Asia crisis had st ruck the entire world. And if you remember the quarter 1 call, we did say that we did miss certain revenues because of the West Asia crisis. And that also had a spillover on the Q2 revenue, which we had. So I mean, I cannot deny that particular fact, right? And whether it is onl y export-oriented revenues, the answer to that is no. It's a mix of both export on domestic revenues, because export is one side of it, but domestic is also important, because we get material to import from the other countries or feeder factories, which we then converted to finished products to apply locally as well. So this is basically the situation. So it's a mix of both. And therefore, when you look at H1, so H1 revenues are 13 % up. Otherwise, it would also be up by a larger percentage. So it's sort of a stabilization which has happened. Coming to your next question on the margin side, I think we have a strong backlog. It is all dependent on 3 things. As what I'm saying, will the material cost, the metal prices and the forex rates remain at today's level, okay? If today's level is sort of maintained, because we know that this is what it is today in the pricing. And we see that the mix, and we don't have any distortion in terms of supply chain, right? Probably we get better leverage of the operating leverage going forward in the next 2 quarters. But our research says, and this comes back to the same slide where I was showing the different commodities and the prices, our research says that we will still have certain headwinds from that particular side, and we have to carefully navigate this particular situation as what we see. So today, I'm not comfortable to tell that what is that mid-teens of EBITDA margins, which we will do. Most important is protect what we are today so that we are able to develop the revenues and the orders in a good manner and then start to grow from there. That's what we are looking at it on a short-term basis.
Of this 50% growth, how much is volume led and how much is price led? Any comment on that?
We normally don't look at it from that volume and price led because it's all embedded in the offerings what we do because we have a mix of products, projects and services. And if you look at it, it will be mostly volume, right, because price, of course, has a lag as what Kiran was alluding to. So I think it's mostly volume, and that's where we get the leverage from.
First is -- is it right to say that the base orders, I know you've not differentiated on base and large, but it's after a gap of almost 1.5 years that the base order growth is almost more than 20%, clearly, which has not been the case in the last 1.5 year. And bulk of this is value growth in pricing because when we talk to channel partners, there is a very strong impact on June quarter onwards of the pricing and volume is yet to play out. That's my first question, sir.
What we are seeing is -- as Sridhar said, we do not differentiate, of course, we do not want to differentiate between base orders or the large orders. And I was also speaking to you on various segments of the market, which is actually supporting us in terms of growth. So the partners are able to get the pull from the market, and they are seeing a lot of very quick decisions being taken by the customers there. So they are very excited to place a stock order as well and also cater to the requirements of these customers. And that's where the order growth has been happening.
Second question is on the capex. So we are expanding capacity. We are spending a good number to prepare ourselves for the upcoming high growth in some specific segments including data centers and renewable power. What kind of top line can this USD75 million, USD80 million capex handled in the next two years to three years if you can give the quality of the top line also.
So I think we don't measure with respect to topline. So actually, what we want to ensure is that every year, when you look at the future demand, we want to make sure that we have at least 15% of our headroom to cater for the future demand. So that means at every, any moment of time, our capacity utilization hovers between, say, 80% to 85% or 90% is the maximum, right? So every year, we could see that there is for an incremental growth of 10%, 15% to create a headroom, right? So we always plan for that ahead, right? And this capex, what we are doing at this point of time and every year will help us maintain that momentum of 15% to 20% headroom of increase in sales, which we could cater. Yes, if you ask me, are you only looking at that? Are you want to do a big scale investment to look at in 5-year to 10-year horizon for per se, I think that's a very big topic to handle at this point of time, given the uncertainties we have as we see, Amit.
The kind of strong growth you have seen in orders. Could you talk about are we seeing an expansion in the market share for ABB, I mean if you can talk about the Electrification and the Motion segment individually. The other question is the pressure from peers especially on the railway side. So within the Motions, if you could maybe talk about segregating the railways and the other part of the Motion, are the margin performance very different and the pressure that you're seeing is a good part coming from the railways.
With respect to, the question is about Motion, about the railways and the traction. So I think what we have is we have long-term contracts with the railway exposure, and those are not difficult. I think there's only a time element of execution based on the configuration being changed with by the railways. So I think the predictability of revenues is there in front of us and also the price predictability is also there for us, including the service that we will deliver to them alongside the delivery. So we don't see any specific pressure at this point of time. On the metro, which is the business from the same segment, we see good traction, and I think there's a good expansion going on. And there are certain OEMs and the kind of players in the market wherein we work closely, and they are succeeding in the marketplace. And accordingly, we are getting that effect. So as such, we don't have any impact in our overall books and on the railway and metro side.
The first question was on the market share, the kind of strong growth that you've seen in orders. Have you seen expansion in the market share or is it the market growth that we are seeing at such strong level?
Yes. The market digested whatever the previous year's growth was, and now it's normalizing again. So I would say these growth rates that we see, it comes in a spurt after the lull in the market and then they normalize to a kind of a level that we like. And that's how our capacities as well as our expectations are built in. So I would say that, yes, markets are coming back. There are certain concerns in certain customers and certain market segments. But most of the market segments we are exposed to, we are seeing quite a good traction at this point of time.
My first question is pertaining to strong ordering performance during the quarter. So if you can give us details about growth on base ordering side during the quarter? And second, also growth in terms of ordering from, say, emerging industries, infrastructure and transport, and core industries in these 3 buckets.
So the first thing is about large orders or base orders. I think we want to move away from differentiating between base orders and large orders. I think we realized that large orders were very important when we had Power Grids as a division because large orders we define as USD15 million, which is roughly about, say, INR900 million or INR1,000 million or INR100 crores of orders which in a business where we have almost 70% or almost 80% coming from products, I think these type of large orders is something which is very less. So I think to answer to your question, in this quarter is everything is base orders. So the next question was how did you perform in these different segments? I think Data Centers orders in this quarter has been almost 15% to 17% of our orders came from base orders. Metals and Mining was 15 %and then oil and gas was 9% and Buildings and Infra was 8%. Renewables was 6%. So, I think the balance is all, distributors or order segments.
First question is on the 3 segments, Electrification, Motion and Automation. So you earlier alluded on the commodity inflation and forex impact. So just wanted to understand passing on the pricing or the cost inflation. So where are we facing challenges and where it is easier to pass on inflation? And what kind of price hike you have taken in this quarter?
I think it's a very important question at this point of time. When you have this West Asia crisis and also the kind of prices we are going through with respect to the commodity prices impact and also the forex impact. So I think these two are really hitting us hard. And you can also see from the slide that the margins of Electrification has dropped from what it was earlier as well. So it was very, very important for us to take some corrective actions. Of course, there's a bit of a lag in the corrective actions what we have taken and the impact of the price and cost which is impacting us. So that you can see in the graph itself. At the same time, what we have done is we have passed on two price lists into the market. These are two price hikes. This is a publicly available price list, which is there. And this is really supporting us in terms of trying to compensate the EBIT which is coming into picture. When I look at the acceptance, yes, there has been a lot of challenges in the market with respect to the customers accepting the price. But I think it's been handled in a very dedicated way from our side in terms of creating an awareness on what exactly is happening. Of course, most of the customers are aware of what's happening in the commodity price. But I think it's very important to very clearly explain to the customer what is in-depth, the content of silver of copper, which is present in our products. I think it was very evidently proven to the customers and customers for sure are quite logical in accepting something as a product with very high reliability and sustainable performance. I think they are coming back to us and paying the price what we need. At the same time, I think digital market is extremely important, and they understand the connectivity of devices which are required from our perspective. So they are coming back to us even more faster than what they were doing. And hence, there is a price acceptance as well from their end.
Second question was on the geopolitics and also the maybe -- I mean, what I think or believe is -- if you can just correct me. The order growth or the inflow growth, which has been quite strong Y-o-Y. So is there any -- are you seeing any delays in decision making from the client side, given the higher level of commodity prices and geopolitics or more in a normalized situation, otherwise, order inflow should have been stronger. So just wanted to understand the color on the ground and the demand side across the segment. Barring the current situation, we are in high inflationary environment and any delay in decision making from the client and its impact on growth of order inflows?
I would say that there has been certainly a certain amount of impact due to the West Asia crisis. For once, for sure, since we deal with the refining sector, which is one of the key sectors here. When we see on the cape x side for those investments that have been already announced, those projects are more moving ahead, though a bit sluggish, which is typically normal of the movement of public sector. However, when it comes to services, the companies really pull back because of the increase in crude oil prices, and that's easing up now. So essential activities are carried out. So I would say there's a little bit of sluggishness definitely on the refining side. On the downstream other core industries, which had a direct relationship with the crude oil prices, we did see a little bit of a sluggish movement, but I would not say that we press the panic button. Since the crude oil prices are settling even though the situation is quite volatile, we are still seeing movements here. We would rather see that there could be some real movements in the upstream side, we are hopeful that certain projects will be shortly announced. The power sector definitely has seen a lot of investments while we're seeing a lot of growth in the renewable side, but considering the low inertia of renewables and the crisis that is coming up in terms of natural gas supply chain, we are seeing a good uptake in the conventional power generation systems as well.
Sir, in this quarter frame, the parent company reported 81% order inflow growth and you have reported 50%. And historically, we have seen that there is some difference, but not as large a difference as in this quarter. And I think in previous quarters, you have presented slides also explaining the variation. So could you comment on where is this wide variation coming from in this quarter?
I think in this quarter as well, in my commentary, I explained that we have given a slide on this. If you look at the presentation, which has already been upload on the portal, it is a separate slide, which is talking about demand versus supply of how much of ABB Group orders and ABB India Limited booked orders. So this is more coming from Indian customers placing orders on ABB Group companies for systems which ABB India cannot provide or their convenience per se, and that's basically where you have a gap. So that's the situation there what we have because of which we have 80% growth as shown by the group, whereas we are talking about 50% growth.
Any colour on the importance of the factory setup in India for the parent, given the gap between ABB India orders and ABB global orders from Indian customers?
So Amit, I think the variation which you see today, which was one-off, okay? And the reasons for that were basically because one-off and orders globally was actually diverted to a local Indian customer, and therefore, they had to novate it to, of an already executing backlog was novated to Indian customer and who in place had to place an order to global company. So that's basically to manage the execution of an order, which was an ongoing, right? That's number one. And number two, was more from a sector of marine and ports, where we don't have the system in this particular country at this point of time or the competency. So that's, therefore the main systems and the references because globally, I mean, other companies in the European ABB units have that particular experience. They get the main order and we are associated with the support and the service and installation of that in India, right? And typically, there is a journey. So whenever we want to bring a large system order, the main system gets executed by the global parent. I think this also would have seen in Power Grid orders of HVDC where you have repairing first and then afterwards Indian entity gains the competence, it's the same. So the journey on marine and ports has started in that way. So probably going forward, we will do that. So the two things to your question, first thing, this is just a onetime what you see, but previous quarters and all, we didn't have so much of variations to the differences between Indian and the global.
Sir, if I look at the absolute order inflow for Electrification and Motion 1Q to 2Q, it seems to be flattish to down on a quarter-to-quarter basis. And if I understand correctly, we have taken price hikes. So is there an underlying volume sluggishness on a quarter-to-quarter basis or is this interpretation wrong?
I think if you look at sequentially, we were INR2,400 crores in Q1 and INR 2,400 crores, a similar number in Q2. The good part is that the data centers, which are helping us is continuing to do orders every time, either directly or indirectly to channel partners. So I think that's basically what it is, coupled with the pricing, which is always happening as a part of the market reaction. So I think this is what it is, Mohit.
Sir, and is the QCO impact completely behind us now?
Yes. Actually, QCO because we also got used to now what is the requirement which came from the government because earlier that was something which was not very clear. So we as well as our suppliers were struggling to meet those requirements. So that clarity is also now in place. And also, there is some of the relaxation which is coming from the government on some of the components and equipment where they have postponed and given an extended time for us to meet those requirements. So at this moment, I will not say it is completely behind, but it is definitely relaxed and we got an extension of time, and we also learned how to meet those type of requirements.
Can you give a sense of your roughly INR11,900 crores order book that you have? Some sense, what portion of this is executable over 1 year?
So over the INR11,900 crores, whatever we have, we will consume at least 40% in the next 2 quarters' revenues what we need to have. Plus, we will have some left for that one bill to meet the revenue commitments with the customers, right? And the balance will go to the next 4 quarters of 2027.
My first question is, how has the inquiry pipeline from the data center segment developing? And especially, I'm talking about the pipeline improving over last 6 months, given the lot of projects that we announced. And the related question is that is there a need to invest in any new products or investment to improve our TAM to serve these hyperscalers there?
Mohit, this is actually a very interesting question, and I fully agree with you. Quite a lot announcement and very, very strong pipeline from the data center, which we are really seeing it. And to meet those requirements, there are definitely ce rtain particular components are required, particular type of breakers. And we are investing quite heavily in increasing our capacity, because we are definitely seeing that picking up which will come -- the demand will multifold in the coming quarters and maybe like 2027, 2028, we will be struggling to meet those demand. And looking into that, we are already started investing into our capacity for that particular product, which are required in the data center. You're absolutely right.
Follow-up on colo data centers demand and capacity expansion for new products.
I think Ganesh spoke probably from the hyperscale side. Let me talk to you on the probably colo part side. So on the colo side as well, the demand has been quite substantial. We see a very good pipeline of orders being concluded and also concluded pretty fast as well. And because there are a lot of changes in configurations from the clients, w e are looking at what could be done in terms of their footprint, what is required, and what kind of specifications are required. So we are working on that. We have also, if you remember, launched a factory in the first quarter, which is the second factory in Nelamangala. That's what we were talking about in the slide as well that there's a new location for us for some new products which we have launched for the data center requirement. So we continue to invest. We continue to localize, and we will continue to develop new products which are required for data centers.