This Murugappa group company which is foraying into semiconductors, rail systems, and others has capex plans of Rs. 688 crore and announced plans for semiconductors and bought a stake in G.G.Tronics is making inroads to maintain growth and grabbing opportunities that align with government policies.
Price Movement
CG Power & Industrial Solutions Limited’s stock in Friday’s session closed at Rs. 782.15 per share up by 1.64 percent from the previous closing price of Rs. 769.55. The stock has delivered a return of around 73 percent in the past year and has outperformed the Nifty Index in the same period.
Business Segments
As per the recent September 2024 results, the company recognizes its revenue from operations from Power Systems and Industrial Systems.
As of Q2FY25, the revenue from the Power Systems segment contributed around 35.04 percent, Industrial Systems by around 64.69 percent, and others by around 0.26 percent.
The Industrial system contributes more than power systems in the operating profit. However, power systems have grown at a faster pace compared to the Industrial systems which declined. The Power system segment margin is higher than Industrial systems in Q2FY25.
Future Outlook
The company plans to invest around Rs. 688 crores for capex to improve operational efficiency. The plans include Low-tension motors in Ahmednagar and Goa by increasing from 10 lacs to 18 lacs units p.a. with a plan of Rs. 327 crores. Power Transformers in Bhopal by increasing from 17,000 to 40,000 MVA with a cost of Rs. 131 crore. Distribution Transformer in Gwalior increasing from 6,900 to 9,900 MVA with a cost of Rs. 40 crore. High tension motors in Bhopal by increasing from 1,008 to 1,728 units p.a. with a cost of Rs. 35 crore and Switchgears in Nashik with a cost of Rs. 155 crore.
The company has also entered into a definitive agreement with Renesas for radio frequency components diversifying into the semiconductor segment with a consideration of $36 million. CG Power has invested in G.G.Tronics with an investment value of Rs. 319 crore and acquired Rs. 55 crore which is into KAVACH systems.
Financial Performance
Their Q2FY25 results show revenue from operations of Rs. 2,441.79 crore which increased by 21 percent year on year, from Rs. 2,018.96 crore in Q2FY24 and an 8 percent increase from Rs. 2,260.67 crore in Q1FY25. Their net profit declined by 9 percent year on year, from Rs. 242.2 crores in Q2FY24 to Rs. 220.96 crores in Q2FY25. Quarterly, the profits were down by 8.36 percent from Rs. 241.14 crore.
The debt-to-equity ratio was 0.01 times declined from 0.14 times in FY23. The RoE in FY24 stood at 54.31 percent improved from 44.28 percent a year ago. However, the RoCE stood at 37.64 percent which has improved from 42.22 percent in FY23.
Shareholding Pattern
As of September 2024, the shareholding pattern includes promoters holding a share of 58.07 percent stake in CG Power & Industrial Solutions, Foreign Institutional Investors (FII) holding around 14.58 percent, Domestic Institutional investors (DII) standing at 11.43 percent, and public holdings standing at 15.92 percent.
About the company
CG Power & Industrial Solutions Limited is headquartered in Mumbai. It is a leading engineering conglomerate established in 1937. They specialize in electrical engineering and offer a portfolio that includes power systems, consumer products, and industrial systems. Their business model focuses on providing end-to-end solutions for power transmission, distribution, and industrial applications. They cater to various sectors like manufacturing and railways. CG Power focuses on innovation and leverages advanced technologies to improve efficiency and productivity. The order backlog for H1FY25 in Industrial systems was Rs. 2,830 crore and power systems was Rs. 5,131 crore.
Written by Santhosh S
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
