The share price of ABB India surged over 8% in intraday trade session today, February 20. The company announced its financial results for the quarter ended December 31, 2025 on February 19.

The share price of company surged in today’s trading session despite a year-on-year decline in profit.

However, even as the stock gained momentum, global brokerage Nomura maintained a cautious stance. The brokerage has given a ‘Reduce’ rating on the stock with a target price of Rs 4,620. This implies a potential downside of nearly 19%.

So why is the brokerage cautious even when the stock is rising? Let’s take a look –

Nomura on ABB: Profit dips, but dividend declared

ABB India reported an 18% fall in consolidated Profit After Tax (PAT) to Rs 432.85 crore in the fourth quarter of calendar year 2025 (Q4CY25), compared to Rs 528.41 crore in the same period last year.

ALSO READ

However, the company’s board recommended a final dividend of Rs 29.59 per share for the year ended December 2025. The dividend will be paid after May 9, subject to shareholder approval at the Annual General Meeting (AGM). The record date has been fixed as May 2, 2026.

Nomura on ABB: Revenue and margins – Better than estimates

According to the brokerage report, ABB’s fourth quarter revenue stood at Rs 3,560 crore, up 6% YoY and 7% QoQ. This was 5% above Nomura’s estimate and 2% higher than consensus expectations.

The brokerage report noted, “Adjusted EBITDA beat our/consensus estimates by 19%/12%.”

EBITDA came in at Rs 610 crore, down 7% YoY but still ahead of expectations. The adjusted EBITDA margin stood at 17.2%, impacted by higher material costs. Gross margin came in at 38.5%. Adjusted Profit After Tax stood at Rs 480 core, which was 19% above Nomura’s estimates.

Nomura on ABB: Strong order book

One of the key positives was the order book. As per the brokerage report, “ABB’s 4Q order book stood at Rs 10,500 crore, up 12% YoY and 7% ahead of our estimate.”

Key orders during the quarter included low voltage switchgear for a major data centre, robotics solutions for an automotive company, propulsion systems for Indian Railways, electric powertrain solutions for a metals company, and automation solutions for an engineering firm.

Segment-wise, the motion, electrification and process automation businesses saw steady revenue growth.

Cash levels remained strong at Rs 5,800 crore, compared to Rs 5,500 crore a year ago.

Nomura on ABB: Growth outlook remains intact

Management remains optimistic about demand across infrastructure, railways, grid modernisation and renewable energy. According to the brokerage report, ABB is well placed to benefit from investments in metals, mining, chemicals, data centres and electronics.

The report noted, “The stock currently trades at 71x/63x CY26F/CY27F EPS.” This means that the stock is valued at 71 times its estimated earnings for calendar year 2026 and 63 times for 2027.

So why the ‘Reduce’ rating?

As per the brokerage report, valuation remains the key concern. According to the brokerage report, “We have a Reduce rating on the stock with a target price of Rs 4,620.”

Conclusion

Overall, ABB India has delivered better than expected operational numbers and maintained a strong order pipeline. The dividend announcement and cash balance add comfort.

However, Nomura’s stance highlighted a broader debate in the market that whether strong execution alone justifies premium valuations. With the stock trading significantly above the brokerage’s target price, Nomura sees nearly 19% downside from current levels.

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.