Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
ABB India Ltd (NSE: ABB) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
T. K. Sridhar — Chief Financial Officer
Sanjeev Sharma — Country Managing Director
Ganesh Kothawade — Senior Vice President Distribution Solution, Electrification Business
Kiran Dutt — President, Electrification Products
Analysts:
Renu Baid — Analyst
Unidentified Participant
Unidentified Participant
Amit Mahawar — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to AVB India Limited’s Q1 January to March Quarter CY 2026 earnings conference call. As a reminder, all participant lines will be in the listen 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 then zero on a 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 survey’s website Subsequently. I now hand the conference over to Mr. T.K. Sridhar, Chief Financial Officer of ABB India Limited. Thank you. And over to you sir.
T. K. Sridhar — Chief Financial Officer
Thank you. Thank you and good evening ladies and assembled. Thank you for joining the Q1 2026 results. So on the call with me is Mr. Sanjeev Sharma, Country Managing Director for India. Kiran Dutt and Ganesh Putawade who are business divisions and electrification. Sanjeev Arora is not able to join because he’s traveling but we have Balaji Process Automation Automation Division. So over to you Sanjeev. I think we have the presentation up. The press release is in the process of getting uploaded so some technical glitch not from our side but from the other side of it.
So I think they’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.
Sanjeev Sharma — Country Managing Director
Thank you Siridhar 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 both 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 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 and increasing number of channel partners who take to the 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 country which are increasing as we progress with our portfolio and footprint of the manufacturing next slide. 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 that were also reflected in our number.
But for last quarter of last 20, 25 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 segment which talked 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 a good cash position within the company and also we have a good backlog which gives us the good revenue possibility.
Seridar 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 and D in the country. And we also dispatched first locally manufactured wind power converter from the Niramangala facility which is again one milestone and also opens up another revenue and order stream for the future. And we also have our two formula a next generation low voltage switchgear platform which is used by our partners in the market to give a value added solution to power distributions industry and on sustainability side we have spoken to greenhouse emissions down by 82% and we have secured rank three in electrical and electronic sector and rank nine across industries in BW business world’s 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 our 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 we 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 wherein our 16 businesses are focused which is 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 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 because there is accuracy among the market segments. 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 media 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 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 please. 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 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 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 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 it’s 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 DK Silver who will go on more granular on the results.
T. K. Sridhar — Chief Financial Officer
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 9. But large orders is something which we got and it was from the data center space and the railway space. So not to mention more the order value. 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. So 11,000 crores I think is a good backlog which gives nice visibility for the coming quarters.
That’s what we can go through. Revenue 3184 slightly subdued I would say. I think we were sort of well positioned to go to 3300, 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 max only had an impact cascaded impact on the performance in the profitability level. But apart from that we also had quite interesting development on the metal side of it which is copper, silver and aluminium.
And apart from that we had the currency Indian rupee 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 in line with the expectation of the market but I think that this is the best possible option with the revenue mix which we had and the crisis which you have to deal with at the last bit. So this is something about what is the Factors which led to a muted profit growth.
So that’s what it is. But the cash is definitely strong. So we have at this point of time 6042 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. So that’s the overall strong cash position what we are in at this point of time. Go to the next slide. So to deal with what really impacted the profitability of it was granular with 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 still same levels at 61.3 and 61.4 sequentially. But that compared to Q&Q125, we are definitely up by three and a half or three percentage to be precise. Right. So that’s what it is. And now if you look at what it lead to the book margin, I mean 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 depreciation part of it and the revenue mix of it.
So the competition and the intensity probably a percentage commodity price increase and rupee depreciation almost 2 percentage and the revenue mix the balance 1 percentage. So roughly this is the cut between what was the material cost in Q1 2025 versus Q1 26. That’s the sort of stuff. And personal expenses as a percentage 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 of the labor code impact on the revised salaries 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 our revenue linked 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 crores impact on 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 just going down and revenue slightly could have been bit more higher compared to what we are doing in this point of time.
So that’s 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 color on how did the division how did the business segments perform so electrification so 36 percentage up so I think on year on year on year solid percentage is what we see and that’s more driven by the data centers and the building segment orders what we are getting from this and revenues also driven by backlogs but could have been still more higher that’s what that could be something that you wish FOR and profitability 21.4 to 15.2 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 electrification segment and to add to that forward depreciation so this is something which we saw but I think we have a backlog of 200 crores which is executable over the next 5 to 6 quarters.
Motion motion is actually also grew by 22 percentage they are maintaining their quarter on quarter growth consistently band of plus 20 percentage despite the competition intensity what they see and it is more driven by orders from the rail segment and also the renewable 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 exports but I think which is more indicatable because of the crisis which we had to undergo in the last minute over here in the month of March revenues 1200 crores and profitability at 12.8% so I think that’s subdued and also here the material cost was definitely higher and that’s also typically the same reasons as what we do so overall if you look at these factors it might have impacted the major product divisions of electrification and motion to quite an extended system Next automation automation While electrification and motion showed a robust growth in orders automation depending on the which depends on more on private capex and the public expenditure is more subdued on the order intake part of it and but I think we have good opportunity pipeline but the decision making speed is slightly slow at this point of time as what we see for the so I think a good opportunity pipeline but slow decision making is the 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 we 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 margin margins and the projects which are under execution and completion.
So this is the overall view on business end and order backlog. 2,100 crores. I think we have to ramp it up. So this is bit of a model of business models. What we see that business area, if you look at it, Mo and Mill are now 81 percentage. We don’t have robotics at this point of time. Robotics used to be 5 percentage 4 to 5 percentage but now without robotics slightly changed but not 19 percentage to automation and 81 percentage to MO and EI in terms of offerings, projects at 8 service at 30mn service at projects at 7.81percentage for products.
And I mean by exports I think it was 11 and 89 slightly higher because of the because 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 six because it’s been a weekend, we don’t want to extend beyond 6:30. And just in case, if there are definitely some questions, take it off later for next.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one 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 assembled, please. Participants are also requested to please limit your questions to two per participant. The first question is from the line of Renu Pagalia from IIFL Capital.
Please go ahead.
Renu Baid
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 as you have briefly highlighted but do you see the customer sentiments getting materially impacted on decision making and closure beyond the process automation driven the core business segment and also any likely budgetary impact on cash flows, can that derail or postpone the infra spend which is in the moderate growth category that you have highlighted in terms of order flow?
That’s first question. And second would be on the recent CAPEX that you’ve announced. How do we see the export portfolio ramping up and our exposure to data centers in terms of local product footprint expanding with the recent localization plans that we have announced on the new CapEx?
T. K. Sridhar
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 elicitation view of how the private Capex happening and we have Balaji. And so for the motion piece of it I think they will all their commentary will also cover in a way directionally does because we don’t have some views on the line. So. But 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 ADP excluding the Hyderabad last week probably. Yes sir. So we will. 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 very much for the question. What we are looking at is quite a robust scenario in terms of investment.
Unidentified Participant
Hello.
Unidentified Participant
Does that answer your questions? Renu?
Unidentified Participant
I could not hear anything.
Operator
Please stay connected while we’ll check the connection for management. Ladies and gentlemen, thank you for patiently holding. We have management reconnected. Thank you. And over to you sir.
T. K. Sridhar
We lost a bit of a connection in between technical glitch. Right. So. But in our thoughts we are now gathered together as to what we need to answer what you can. Back to you. Thank you. Thank you. I think we were speaking about private Capex. 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 in 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 pulling stocks at the same also talking about the station development and innovation projects.
Extremely good in flow of fx. 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 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. On the side 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 Navy Ganesh, if you can add your cost.
Ganesh Kothawade
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 which is getting shown and there is a private Investment which is coming in even the industry side. We have seen couple of very strong inquiries which are in the pipeline. So we are very optimistic about the investment which is coming from the pilot side.
T. K. Sridhar
Very good. Balaji, if you’re there.
Kiran Dutt
Yeah. From an automation side. Firstly, I just want to qualify that there is a certain life cycle and 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 dependent 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’m not able to call out those specific segments. But there are. That is a very strong pipeline and quite a strong movement towards closure of honors.
Renu Baid
Can we conclude that basis? While you have seen execution headwinds because of the West Asia crisis, your ordering momentum or process has not seen any derailment or postponement from customers because of the ongoing inflationary trends or the west hat prices, Is that right? Or there is some impact? That was my question.
T. K. Sridhar
You have looked at our order growth, right. So that it clearly reflects the way we are in the position now on electricity side. We are. So that shows the kind of robustness in terms of India and that’s where we are also able to get a portion of that fund. And that’s the reason why we are showing
Operator
Maybe request Mr. Deno to please rejoin the Q map.
T. K. Sridhar
So I think there was one which Renu had raised about the investment, 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. So they the future market opportunities to serve the market. Future market opportunities. So it is basically coming from dry products expansion. We have then the service expansion for motion. And also in the service we’ll have the El.
The smart products manufacturing also increasing to an extent going forward. Right. So that’s the plan what we have. And I think you will hear more as we go into the few quarters as these projects are getting commissioned.
Operator
Thank you. The next question is from the line of Manit Mahavar from UBS. Please go ahead.
T. K. Sridhar
Yeah, hijab, 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 this is going to be a strong high double digits growth year for all us. And second is on profitability if I look at the parent commentary obviously EL was a very very strong indicator and we also saw that in some bit in our results in terms of top line growth do you think the profitability this year can be significantly better than last year?
And I understand the short cycle weakness is still 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 positioned. Thank you. Okay. There’s a limited knowledge of how the parents are profitable if you understand they have the balancing power of forex gain in countries which are exporting.
Right. To economies which have a weaker deprivation currency and that compensating upside. Right. So which whereas we don’t have. So that’s an intrinsic advantage what they have and also their growth if you look at it in the. Supply and so they have the ability to get a premium is far far higher. Right. So therefore what I mean to say is the art stick to of the global performance to compare the India performance is something I think we cannot walk it through. So that’s this thing. So now coming to India performance as such, I mean going we have in backlog of 11,000 I think we’ll have to execute.
So what is probably which we will have delivered is around the capacity absorptions which will really help us going forward. That means the velocity of revenue conversion has to increase depending upon what the customer oftake is. Right. But whereas if you look at the pricing in support to get more profitability is something which is now saturated compared to the US 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 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 the volume which we see. But I think we need to work more on how the market develops in terms of accepting more price increases to the market which is more a color which I could give at this point of time. Amit,
Amit Mahawar
Can I click in one small one
T. K. Sridhar
Yeah, sure. Yeah sure, sure. So you know when we talk to general partners across you and your peers there is a very clear short cycle weakness as we 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 last two quarters are very, very strong and we have a good pipeline. So collectively the intake for it to move towards a different run rate. Do you think this is too early for us to comment or in next 2, 3 quarters we can see base orders shifting because there is a restocking cycle for last
Ganesh Kothawade
Two years. Then comment on base business. Shubhdhar, that will be helpful. Thank you.
T. K. Sridhar
So I think Amit, base business we do get nine footage, not the 15% of what we see. So that means we definitely see the channel partners. I don’t know whom you’ve spoken to. I think what we see is that there is an enough market velocity which is there. It’s not that market is bad but I think it’s more about the timing of it. So it could be, as you rightly said, choppy situation. But the good part is that there are opportunities and we are confident these opportunities will convert into orders for ebt.
Thank you and good luck. Thank you.
Operator
Thank you. The next question is from the line of Parikshit Kandapal from HDFC Securities. Please go ahead.
T. K. Sridhar
My first question is what kind of inflationary pricing actions we have taken across businesses to mitigate the impact
Amit Mahawar
On station systems can quantify the price as you have taken to mitigate across business
T. K. Sridhar
Inflation. Okay. 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 business always. I mean even though we call it a short cycle to have some lag. So therefore we always have 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 us 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’ve already gone for two price increases public anyway and that’s the way. And as Sridhar said, there is a lag between the prices which are impacting the costs which are impacting and the price increase in the market. That’s what we need to manage and that’s what we have done already in the two price increases. Now
Renu Baid
Can you quantify sir how much is the percentage increase?
T. K. Sridhar
So that’s something which is very sensitive for us to diverse. I don’t think it’s answer which you could give please.
Ganesh Kothawade
Okay, the second question is on data center sir. So on data centers now, I mean we are maybe going from 2 gigawatt to maybe 10 gigawatt in four to five years and
T. K. Sridhar
There would be a significant ramp up on that. So I think initially in your commentary 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 and different and also if you can help us understand what are you
Ganesh Kothawade
Doing in the substation side of it. 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 Polos and the Azure data center. And our portfolio is very well positioned 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 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. Exactly going to do. And also the opportunity in terms
Amit Mahawar
Of tam what is like our per megawatt opportunity, addressable opportunity now with the chanter.
T. K. Sridhar
On the data center
Sanjeev Sharma
On the substation side
T. K. Sridhar
On the data center what is COVID19 and why? Total content of ADB on data centers
Ganesh Kothawade
CAPEX is 80, 90 crores, 50, 200
T. K. Sridhar
Crores. What will be our megawatt opportunity there and on subscription side what are exactly going to do
Sanjeev Sharma
As we have discussed in 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. To this where they want to you know set up the data center so that medium voltage, you know kind of switch gear and the 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 the another scope and 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 but this is something which don’t publicly talk about. But yes it’s a substantial scope, especially when you have the larger gigawatt opportunities. I think these size. It’s a very large opportunity that we see. So 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. So I’m sorry I’m not able to give you a factor, but we do know the factor.
T. K. Sridhar
That’s the percentage of order book, current order book in data center. If you can share the total order book, what is the percentage of data center order? Data center orders would be 12 to 13 percentage. Okay, sure sir.
Operator
Thank
T. K. Sridhar
You.
Ganesh Kothawade
Thank
Operator
You.
Sanjeev Sharma
It’s not a fixed percentage. It does vary in a band based on when the order gets booked and what the size of the orders and the book. So it can vary between 12 to 12 to 16% of order. Okay. Yeah. Please continue.
Operator
Thank you. The next question is from the line of Atul Tiwari from JP Morgan. Please go ahead.
T. K. Sridhar
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.
Sanjeev Sharma
So that 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. And what we are experiencing, we are really experiencing robust demand at the moment. Quite frankly it is not adding to our concern 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 but.
Right.
T. K. Sridhar
Okay sir, good to know. And so my last question is on price hikes that you mentioned. So when you, when you are taking these price hikes, is it, are those hikes acceptable to customer and despite the price hike, are you able to kind of broadly maintain your market share for the respective product?
Sanjeev Sharma
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 phenomena we have understood and clients have understood pre Covid and post Covid is that post Covid the customers have become more kind of recipes, they’re more kind of 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 a inflationary issue or display, you know, where 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.
T. K. Sridhar
Okay, thank you.
Operator
Thank you. The next question, ladies and gentlemen, before we take the next question, we requested to every participant to please limit your question to one per participant. The next question is from the line of Mohit Kumar from ICIC Securities. Please go ahead.
Unidentified Participant
Yeah, good evening and thanks for the opportunity. My first question is, do we have escalation clauses in long cycle orders like Metro Rail, which is signed in this quarter?
T. K. Sridhar
Escalation?
Unidentified Participant
Commodity. Commodity inflation. If it happens, are there escalation clauses which protect us?
T. K. Sridhar
Yeah, Mohit, I think it’s a very good percent. Thanks for that. Okay, so I think there are explanation classes, there are price variation classes in all contracts which we do on a long term basis. But we should understand these price escalation process 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 price escalation process in our contracts
Unidentified Participant
Even when you sign with the private parties, right? Is that right?
T. K. Sridhar
Yes.
Unidentified Participant
If I can ask you one more question. Are you seeing the conversation happening for large Data centers of 100200 megawatt size? Or do you think it’s too early and expected to materialize as we enter F20, F27 and F28 or F20 F29?
T. K. Sridhar
Best person to give a correct with this vinesh pathway. What the question, can you
Unidentified Participant
Please repeat question is are you seeing the conversation happening for very large Data centers of 100200 megawatt quantum? Or do we think it’s too early and those conversations will start in maybe CY27 and CY28?
Ganesh Kothawade
It has already been started because whatever the hyperscalers have placed out or 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
Sanjeev Sharma
For the very large interrupt.
Operator
May we request Mr. Kumar to please rejoin the queue? 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.
Amit Mahawar
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 what segments?
Sanjeev Sharma
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 becomes 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 and Chinese. So you naturally have non traditional players which they’re increasing the marketplace.
So it’s not the majority of our market segment. It’s on the certain market segments wherein it is more. Increasing on the competition side.
Amit Mahawar
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
Sanjeev Sharma
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 project, 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 for us. And this is a continuous process and we will.
They will see that in future. There’s always a run rate for it. Yeah,
Amit Mahawar
That’s all from my side. Thank you so much.
Operator
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.
T. K. Sridhar
Hi. Thanks. Can you give us the breakup of volume and types within the goals? Is it possible? Volume and five.
Sanjeev Sharma
Volume and price mix of what
T. K. Sridhar
Other growth. I mean within. If you. How much is the volume? Sorry to interrupt
Operator
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.
T. K. Sridhar
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
Kiran Dutt
The company going back to 16, 17% margin?
T. K. Sridhar
Okay, so I think Rahul, I think we need to deal with the problems one at a time. But unfortunately the problems keep coming. It doesn’t seem to be ending. But having said that, I think there are continuous efforts to mitigate this particular risk. It is a combination of both volume and pricing and also the inflation being able to take the inflation of commodities and it’s a bit of an, I would say not a simple game. And so I think all of us are wrong. We also aspire to be in the so called once we had reached 15 percentage and we have been, 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 we are ongoing in the market.
Operator
Mr. Rahul, is your answer, is your question answered?
T. K. Sridhar
Yeah, but do you see? Yeah, thanks. So do you see? You know this entire
Kiran Dutt
Year will be subdued in terms of profitability based on you know, the backlog that you’ll have and the limited price hike that you have been able to take.
T. K. Sridhar
We don’t give any guidance about what could be the future,
Kiran Dutt
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 hike. So have you been able to take price hike higher than the cost? You know that’s the only thing I’m looking at.
T. K. Sridhar
But you know there are short cycle order. The price which you take today is not valid next quarter because the commodity and the Forex faster than the price hikes what we have.
Kiran Dutt
Okay, so regular price. I give the answer. Okay.
T. K. Sridhar
Because I think there is always a lag between what the inflation, the market is behaving on the input cost. These are the price which you could take. We are taking into account the competition, sympathy, intensity and the market dynamics.
Unidentified Participant
Thank
T. K. Sridhar
You very much. Thank you.
Operator
Thank you. The next question is from the line of Samit Hakur from Ambit Capital. Please go ahead.
T. K. Sridhar
Hi. Thanks. I got disconnected earlier. So in Data center business. It is 12 to 14% of backlog. So it’s mostly an electrification, if I’m not wrong, should be so like 24, 25% of the backlog in electrification and is that margin equity? Should be margin equity. So mix can be positive going forward. Is that the right way?
Sanjeev Sharma
You mean what is the percentage in electrification? I think we haven’t calculated top of our head. But we’ve given you the 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.
T. K. Sridhar
Okay, I got question
Renu Baid
Earlier, so I’m not sure whether it’s a repeat question, but any split on the price and volume in the group.
T. K. Sridhar
So I think this is the first quarter, so we have another four quarters to go. Probably then it will be in a good position to say that what could be an aggregated impact of this. So I think. Okay,
Renu Baid
Just last question. In data centers generally get the base orders
T. K. Sridhar
Or generally get a large order.
Sanjeev Sharma
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 color 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.
T. K. Sridhar
Thank you. Thank you. That was all from my side.
Sanjeev Sharma
Thank you.
Operator
Thank you. The next question is from the line of subdeep Mitra from nuvama. Please go ahead.
T. K. Sridhar
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 QCU impact and my understanding was that the QCU impact should probably taper off over the next one to quarters. So just wanted to get an understanding that with the price hike that’s already been taken and hopefully with the QCU impact going away probably over the next two months, can we see some recovery in margins going on?
Sanjeev Sharma
So yes, I think your answer is yes. And that’s why we come every morning to office to make sure that that happens. 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 UCO reasons, these are not very good things because what you require is you require certain amount of certainty linearity for businesses to operate based on how the business models have been constructed. But yes, last year because of tariffs uncertainty, then QCO and this year now, whatever is going on in West Asia, there is some kind of 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 if we 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.
Unidentified Participant
Thanks, thanks.
Sanjeev Sharma
We have to allow a little bit of sustained period of stability, not so much variations every few quarters. Yeah,
T. K. Sridhar
No, understood, understood. Thanks. Thanks for a 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 capex is what the government is targeting, are you seeing the annual ordering now in that 2 gigawatt range? Because our understanding was that these current bidding pipeline is probably somewhere between 500 to 700 megawatt. And second, we do see,
Sanjeev Sharma
We do see it in the project pipeline that build up is there. Yes.
T. K. Sridhar
Perfect. And would you be also catering to the overseas market for data centers where you produce in India and supply it to parents for data centers overseas?
Sanjeev Sharma
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, global businesses pick up from India. And yes, we do participate in that.
T. K. Sridhar
Perfect, sir. Thank you so much.
Operator
Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to Mr. T.K. Sridhar for closing comments.
T. K. Sridhar
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. 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 could join the call,
Operator
Thank you on behalf of ABB India limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.