There are companies that live on the surface of India’s industrial cycle, and there are those buried deep within its wiring.
ABB India belongs to the latter kind.
You do not see its name when a new data centre goes live or when a cloud provider sets up shop. Yet, behind the rows of servers and chillers, ABB’s electrification systems and drives keep the energy flowing and the servers running.
As India races to build its digital backbone, ABB has quietly become one of the country’s most critical enablers.
The boom in hyperscale and colocation data centres is creating a fresh industrial cycle of its own, and ABB sits right at its core.
That quiet consistency is now meeting a noisy new phase. After two years of strong growth, ABB India is at an inflection point.
The company is sitting on healthy demand from data centres, renewables, and transport infrastructure. At the same time, margins are under pressure, order inflows have slowed, and new quality control rules have complicated its supply chain.
A pause after a long run
ABB’s September 2025 quarter told the story of a company in transition. Order inflows fell 3% year-on-year (YoY) to about Rs 3,230 crore. For most firms, that would not count as a setback, but for ABB, which had posted double-digit growth in orders for nearly three years, it was a clear slowdown.
Large industrial orders were missing, though smaller base orders remained strong with 13% growth. The base business, made up of short-cycle orders from clients in renewables, buildings, and data infrastructure, now provides the cushion that keeps the topline steady. The total order backlog stands at about Rs 9,900 crore, with nearly 70% of it consisting of such short-duration projects.
The slowdown was expected. After years of robust industrial capital expenditure (capex), the broader capital-goods cycle is cooling. Private-sector expansion has become selective, with metals and chemicals companies waiting for more clarity on global trade trends. ABB’s Process Automation division saw flat growth, as many clients postponed project decisions.
The data centre opportunity
If ABB’s traditional industrial customers are slowing, the company’s future lies in the rise of India’s digital infrastructure. The data centre boom is no longer just a technology story. It is an energy story. Every new server hall needs an uninterrupted power supply, smart circuit protection, cooling automation, and efficient drives.
ABB’s Electrification and Motion businesses sit right at the centre of that ecosystem. Its medium- and low-voltage systems, motors, and drives are used across hyperscale facilities and colocation centres. The company estimates that around one-third of India’s large data centres already use its technology.
In 2024, ABB expanded its domestic manufacturing capacity for energy-efficient drives and launched IE5 (International Efficiency Class 5) ultra-premium-efficiency motors designed for heating, ventilation and air conditioning (HVAC) systems in data centres. These motors use induction technology instead of rare-earth metals, which makes them both cost-efficient and compliant with sustainability norms.
Data centres are high-value clients.
But they demand precision and reliability.
ABB’s ability to offer integrated electrification and automation packages gives it a clear advantage. The market is only getting larger. India’s data centre capacity is expected to triple by 2030, creating steady, long-term demand for ABB’s products.
For investors looking for the next clean-tech-meets-digital story, ABB India fits neatly into that bracket of a capital-goods company that is morphing into a power supplier for the cloud economy.
When regulation becomes the challenge
The biggest near-term problem is not demand but compliance. India’s new Quality Control Order (QCO) has created unexpected friction in ABB’s supply chain. The rules require that several electrical products manufactured locally carry Bureau of Indian Standards (BIS) certification. The testing infrastructure in India is still inadequate, which means ABB has had to import certain components from its global plants.
Imports are costlier, and the weaker rupee has made them even more expensive. The management has estimated that these issues have shaved off between 75 and 150 basis points from segment margins. The problem is temporary but will take three to four quarters to resolve. Until then, margins will stay below their earlier peak.
During the September quarter, ABB’s operating margin slipped to 15.1% from about 18.5% a year ago.
Analysts attribute roughly three percentage points of this fall to the combined effect of higher import costs, pricing pressure, and foreign exchange (forex) losses.
Financial strength holds firm
Despite these headwinds, ABB remains one of the most financially disciplined companies in the capital-goods sector. The company is debt-free and enjoys strong operating cash flows. This comes on the back of an asset-light business model and efficient working capital management.
In 2024, ABB India reported revenue of Rs 12,188 crore, up 17% YoY. Operating margins came in at 17%, up 5% YoY. Profit after tax (PAT) rose nearly 50% to Rs 1,872 crore. But growth is slowing in 2025. As per consensus estimates, next year, the company should clock sales of about Rs 13,000 crore and profit at Rs 1,680 crore, implying a small contraction.
Return on equity (RoE) is still strong at around 28.8%, while return on invested capital (RoIC) is near 38.6%. Dividend payouts remain steady, with a dividend yield of 0.88%.
The market’s patience wears thin
Investors, however, have turned cautious. The stock has fallen more than 30% this year. ABB’s price-to-earnings (P/E) multiple is now closer to 60 times, a deep discount to its historical median of 100 times. At these valuations, the market seems to be factoring in a moderation in earnings through calendar year (CY) 2025, with expectations of a recovery only by CY26.
The correction is less about business weakness and more about valuations catching up with reality. ABB had become a market favourite during the 2023–24 capex boom, when automation and clean energy were the dominant investment themes. The stock’s decline is part of a broader reset across industrial names that had run ahead of earnings.
Still, ABB’s long-term narrative remains intact. Its product mix is shifting toward faster-growing sectors like data infrastructure and renewables, which should give it more stable growth over time. The Quality Control Order is a short-term nuisance, not a structural setback.
But at these prices, optimism runs ahead of earnings, leaving investors watching more than buying.
Transition between two worlds
ABB’s evolution mirrors the wider industrial transformation taking place in India. The company’s old growth engines, such as process automation, metals, and chemicals, are slowing. The new ones, such as data centres, renewables, and smart mobility, are gaining scale. Managing this shift without eroding profitability is the challenge.
Once BIS certification stabilises and imported components are phased out, margins should recover toward 17%. Order inflows are also likely to improve as deferred projects in core industries and data infrastructure return to the table. The base demand from renewables and rail continues to look healthy.
What gives ABB staying power is its invisibility. It does not build flashy end-products. It builds the technology that keeps the rest of the economy running. Whether it is a data hall in Mumbai, a metro line in Chennai, or a solar farm in Rajasthan, ABB’s systems hum quietly in the background.
The invisible backbone
India’s next leg of industrial growth will depend on energy efficiency, grid reliability, and digital connectivity. ABB sits right at that intersection. Its technology powers the backbone of data, energy, and mobility — the three pillars of the next decade’s infrastructure story.
For investors scanning the market for the next true data-centre stock, ABB India may already be it, hiding in plain sight, quietly powering the country’s digital ambitions.
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
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