The shares of the power generation company gained up to 2 percent after the company signed an asset purchase agreement with Renesas Electronics America Inc. for USD 36 million.
With a market capitalization of Rs 1.08 lakh crore, the shares of CG Power and Industrial Solutions Ltd were trading at Rs 720.60 per share, increasing around 0.25 percent as compared to the previous closing price of Rs 718.80 apiece.
Reason for rise:-
According to the company filing, CG Power and Industrial Solutions Ltd have signed an asset purchase agreement with Renesas Electronics America Inc. and other affiliate entities of Renesas Electronics Corporation (“Renesas”) for the acquisition of the Radio Frequency (“RF”) Components business through one or more subsidiaries to be formed by the company. The transaction value of this acquisition is USD 36 million.
Moreover, The proposed acquisition will enable the company to enter into the semiconductor design business. However, The acquisition is expected to be completed in about 6 months.
Financial condition:-
Looking forward to the company’s financial performance, revenue climbed by 18 percent from Rs 1,874 crore in Q1FY24 to Rs 2,228 crore in Q1FY25 but during the same time, net profit magnified by 18 percent from Rs 204 crore to Rs 241 crore.
On Standalone, Sales grew 19% YoY to ₹2,106 crores, while Profit Before Tax (PBT) rose 27% to ₹325 crores, marking the highest quarterly sales and PBT in recent times. EBITDA margin improved to 15.4%, driven by higher realization and cost efficiencies, with ₹63 crores in free cash flow.
Segment performance:-
In the Industrial Systems segment, sales reached ₹1,357 crores, up 8% YoY, with PBIT at ₹182 crores (13.4% of sales), down from ₹197 crores. Conversely, the Power Systems segment saw sales of ₹750 crores, a 47% increase, and PBIT rose to ₹149 crores (19.9% of sales).
Global footprint:-
The Company has world-class manufacturing plants across 9 locations in India and one in Sweden, and a Pan India network of 5 Regional and 14 Branch offices, with around 3,113 employees.
Order Book:-
As of June 30, 2024, the company’s unexecuted order book reached ₹7,054 crores, up 44% YoY. The Industrial Systems segment’s order book increased by 20% to ₹2,451 crores, while the Power Systems segment saw a significant 60% YoY surge to ₹4,603 crores.
Strategic Developments:
The company approved the acquisition of a 55% stake in G.G. Tronics India Private Limited, which specializes in embedded systems and supplies to railways. G.G. Tronics is among four approved suppliers for KAVACH, a train collision avoidance system, with anticipated government allocations for safety measures.
Market outlook:-
Management expects a 40% growth in the railway business due to awarded tenders, with a positive outlook for H2 FY ’25 driven by improved demand and margins. Current capacity utilization stands at 85%-90%, with planned expansions in the power and switchgear segments by Q3 FY ’25.
New Product Development:
The company is focused on developing electric vehicle (EV) motors certified for automotive applications. Prototypes for 3-wheeler cargo and LCV motors are currently in advanced testing stages, with a commercial launch anticipated within the next year, signaling a commitment to the growing EV market.
Company profile:-
CG Power and Industrial Solutions Limited is engaged in providing end-to-end solutions to utilities, industries, and consumers for the management and application of electrical energy. The Company’s segments include Power Systems and Industrial Systems.
Written by:- Abhishek Singh
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