Orders exploded 50% in Q1FY27 led by data centers (15-17% of intake).

My first question is in relation to your margins. Your profit margins for the quarter are closer to the lower end of the white band of 12% to 15% that you wish to operate in. Qualitatively, if you could elaborate whether margin pressures around material cost, the market dynamics, post-COVID correction are all factored in or we still have some room to go? Can this be the new normal for profitability in coming quarters after the record highs that we saw in the last calendar year?

Sumit, I think when I had definitely elaborated more than adequately on the profitability movement segment by segment at an overall level, right? So, I think that is already answered. So, I don't want to repeat it again because that is the same thing. So, now the question is, and as rightly, even in the last calls which we had said, so we are at the lower end of the percentage is what we want to operate in. And we are doing it at a pretty high levels of 15%. That probably registered in the mind as a new normal for quite a few of the markets. But I think we are at the end of the day in an engineering industry. And so we have our cyclical impacts to be handled. Coming back to what are the topics? I don't think we don't have any one-off topics other than what we told about the mix, the market dynamics as what we understand, which is more related to the competition scenario playing out on the limited investment decisions what we have, and of course the FOREX and the QCO. So, I don't have anything much more than that. When will we improve or move forward as in this particular journey? Probably I think the QCO should be addressed in another three to four quarters is what we see because that is the timeline what the government has also given. And just to give a bit of more color to our answer on this, do we find opportunities drying out at this point of time? No. Yes, the opportunities are there, but the decisions are delayed and the choice of customers today are quite variant.

So, in the backdrop of what you said and what Sanjeev mentioned on the call earlier, well, base orders are higher up 13% year-on-year. They are stable quarter-on-quarter. So, is it right for us to sort of interpret that given the decision making is a bit deferred in the backdrop of the macro environment geopolitical tensions, is this level of base orders absolute terms likely to persist for some time before we see a breakout because of a more diversified CAPEX cycle playing out? So, across three segments, the main ones, electrification, motion, and process automation, how should we think about where we are in the CAPEX cycle and how this can play out over the next 12 to 18 months?

We have had a very good cycle post-COVID wherein we enjoyed very good growth both in expansion of orders, revenues, profitability, and all elements. And that was on back of India growth story as well as lot of CAPEX put in by the government in the right places. And also we had a good support in our segments that we were focusing the new segments, mid segments, and also large core segments. At this point in time for last few quarters now there is sluggishness in the market in terms of CAPEX formation as well as expansion projects. They are at a good level, but they are not in a very strong expansionary mode. So, from our perspective, this is a cycle which comes as a correction after a strong growth. Whether it takes one quarter, two quarters that our perspective is this is going to come back. The growth is going to come back, and we will ride that cycle because our 18 divisions focus on this very dynamic 23 market segments. The moment the order intake and the order formation takes place, it will directly reflect in our books in the orders, revenues as well as in the capacity utilization, which directly impacts profitability as well.

I have two questions if they can be addressed. The first would be given that the team has mentioned that they are seeing some green shoots in base orders and tariff settlement is near, do you expect pickup in the investment cycle or broad-based pickup in large order finalizations, which has been not the case for the last two to three quarters? So, what would be your view on the likely revival or recovery in the CAPEX momentum? And if the momentum is the way it is there today with flattish book and just early teens growth in base orders, would you think it would be possible for ABB to manage double-digit growth in CY2026?

Thank you, Sanjeev, and Sridhar. I think it is a good question in terms of the market how it is behaving and also a quite elaborate question in terms of what exactly we are trying to do in data centers as well. Now, when I look at the way renewable sector is behaving, what we see is a good expansion in terms of the renewable market. Specifically, when it comes to renewable, I am also looking at something known as battery energy storage systems, which we call it as BESS. So, that is something which is really topping on the charts in terms of the opportunities which is available for the future as well. And we are also looking at something on green hydrogen, which is also becoming very prominent as a sector in the market. When I look at rail, you have seen lot of expansion across investments from the government and also into the metro sectors, metro rail across the various cities of India. On the data centers, when I look at it, I segregate into two parts: one in terms of hyperscale and the second one in terms of the colocation data centers. When I look at hyperscale, yes, there is a bit of a sluggish kind of a movement in India at this point of time or probably in the Q3. But at the same time, what is important to understand is how exactly the colocation data centers are behaving. I think colocation data centers, there is a huge demand for them. So, we feel that data centers in colocation would grow and we have seen substantial growth in Q3 as well.

Anything on the NVIDIA opportunity or TAM for India? The recent engagement with ABB parent with NVIDIA for AI data centers to develop solid state drives and cooling solutions. In your view, can the solutions be available to ABB in India, when the products are prepared and ready? And to what extent it can increase our TAM in this particular segment.

So, at this point of time, I don't have the complete details of this particular deal. I know as much as you know in terms of intent of ABB Express with NVIDIA. But as a principle, if there is no geographical restrictions or obligation of those technologies, all technologies ABB develops, they are naturally available to our customers here in India.

So, very perversely, this order which was designed to promote Indian manufactured equipment is leading to higher imports. So, that is what I wanted to understand. So, as an industry, are you guys not representative of government than that it is serving the opposite purpose of whatever was intended?

We have done through a lot of other associations everyone. Every industry is making sure that it is representing itself to the right authorities to do it. But this is a government objective. We need to go through it, Atul. We have no other way, okay? But it is good in the overall interest of the nation in the long run. That is how we look at it, okay?

So, you said that the pipeline for energy industries and process industries, that is still there. And is this just a problem of conversion to orders? And are you seeing that pipeline is increasing? Or is there an underlying issue with the demand or any loss of market share there?

So, as such, if you really look into the focus of ABB into the process industries, we have very distinct focus on market segments like oil and gas. We have mining. We have cement. We have pulp and paper, and metals. So, these are the market segments, which we participate with their CAPEX cycle as well as their OPEX cycle. And CAPEX cycle is sometimes the greenfield project and sometimes it is the expansion of the project. And also sometimes they have the upgrade of their digital infrastructure, energy efficiency infrastructure. So, we find that in these sectors given they are the continuous industries, they continue to invest in all the cycles. It is the intensity changes only when the greenfield projects kind of are announced or major expansions are announced by these players who are operating in this market. Now when it comes to the major expansion, the greenfield expansions, in certain market segments, we definitely see there is a greenfield expansion, but it is not widespread. At the same time, one has to also keep in mind, this is something which I cannot say as confirmation. But in the news media, there is a clear mention that between India and China now there is a thaw of relationship, and more and more businesses are opening up. So, it is unclear what will be the impact of Chinese imports in the country.

Good morning, Sanjeev, and Sridhar. Congratulations on maintaining a very good order momentum in base orders, better than industry maybe. Sir, I just have one question. You have the book in process automation, which is maybe around 30%, 40% down. EP is the only segment where we have grown very well, 15% top line. And I don't worry about margins, etc., on this issue. But do you think in CY '26, we can touch a 10%, 12% revenue growth given that mobility orders will take some time, given that energy is not a large basket for us and the discrete portfolio for us is growing more in just short of teens or less than that. So, a quality of assessment, Sanjeev, which will help us.

So, I think it is fair to say as process automation is concerned net of robotics, it will be only 13% of our portfolio 12% to 13% of our portfolio. So, we take benefit of industry cycle whenever there are large CAPEX projects and the large, consolidated orders coming to us or system orders coming to us. Other than that, we continue to gain on the ETO, which is engineered to order business, which is largely sitting in MO and EL. So, that continue to benefit. And then, of course, we have the EL business, which is the product business, which is made to store and made to order fast moving products in the marketplace. So, in the made to order, made to store and ETO, I think the business is quite robust. And we do feel that given the backlog that we have, the execution of it is well lined up. They are clean orders. So, we will see an uptick of revenue growth with that as we go forward both in EL and MO. But then there are some long gestation orders sitting in the mobility side that you are right. So, I think if you net that out, I think rest of the book to bill orders as well as in the EL and MO will continue to push the revenues upwards. And as far as the PA is concerned, it goes through the cycle.

I just have one question. You have touched on delay in order finalization, I think, in your opening remarks. Now, it is very clear that I think the entire order inflows are supported by base orders. But in the last four quarters, we have got only Rs. 400 crores of large orders. I want to understand if you could highlight discussion with clients and if it is further possible to quantify the kind of large orders that we are looking at over the next maybe three to four quarters, I think that will be helpful.

So, normally, we don't give this particular future projection as such, right? So, we just only give a color on how the markets are and that's exactly what Kiran or Sanjeev or Sanjeev Sharma did allude to at this point of time. So, I mean, when it is large orders definitely are widespread in all the three business areas such as electrification, motion, and process automation. What we are saying is at this point of time the opportunities are there, but the decisions are getting delayed. It is not going the same pace as what it is. But I think the good part is the base orders keep growing and which is what our focus is. So, I think to be honest, we cannot give a direct sort of a projection or a number to this particular question. I am sorry, that is the sort of policy which we have.

In that case, is it possible you all can highlight the kind of growth that you are thinking of when you are talking about classifying certain industries into high growth or medium growth or low growth? Is that something you can do?

Actually, we don't give any growth projections, right? So, we only say our ambition is to be there in the trajectory of how the market is moving and what do you call, maintain that momentum of what we have seen. And I think, of course, post COVID, we had a very, very fast growth trend which is now softening out. So, our always ambition is to be in the double-digit corridor as what Sanjeev was mentioning earlier.