Synopsis: CG Power reported another strong quarter backed by healthy execution, rising orders and capacity expansion, while continued investments in new businesses and temporary margin pressures shaped the company’s near-term performance.
The shares of this large cap company majorly engaged in providing end-to-end solutions to utilities, industries and consumers for the management and application of efficient and sustainable electrical energy, were in focus after the company reports strong quarter result
With the market capitalization of Rs. 1,37,129 Crores, the shares of CG Power & Industrial Solutions Ltd were trading at around Rs. 871 per share which is 11 percent discount from its 52 week high of Rs. 981 per share and is trading at a P/E of 108 whereas industry P/E stands at 32.8
Strong Financial Performance
CG Power delivered another healthy quarter in Q1 FY27. On a standalone basis, revenue rose 16 percent YoY to Rs. 3,061 crore, while profit after tax increased 27 percent YoY to Rs. 364 crore. PAT margin improved to 11.9 percent from 10.8 percent a year ago, and ROCE stood at 23 percent . On a consolidated basis, revenue grew 14 percent YoY to Rs. 3,281 crore, while PAT increased 16 percent YoY to Rs. 308 crore, with ROCE at 20 percent .
Order Book Reaches a Record Level
The company’s order inflow remained strong during the quarter. Standalone order intake stood at Rs. 4,692 crore, while consolidated order intake came in at Rs. 5,211 crore. More importantly, the consolidated order book increased 45 percent YoY to Rs. 18,965 crore, while the standalone order book rose 45 percent YoY to Rs. 17,333 crore, giving the company strong revenue visibility for the coming quarters.
Power Systems Continues to Drive Growth
The Power Systems business remained the biggest contributor to growth. Revenue from the segment increased 31 percent YoY to Rs. 1,402 crore, while PBIT rose to Rs. 324 crore from Rs. 225 crore a year ago. PBIT margin improved to 23 percent from 21 percent , supported by disciplined project execution and better operating leverage. Order intake stood at Rs. 3,106 crore, and the order book grew 59 percent YoY to Rs. 14,434 crore, reflecting continued strength in demand.
Industrial Business Sees Temporary Margin Pressure
The Industrial Systems business reported revenue of Rs. 1,671 crore, up 6 percent YoY, supported by strong double-digit growth in the motors business. However, PBIT declined to Rs. 148 crore from Rs. 172 crore because of a one-time Rs. 20 crore provision related to the rail business. The segment received orders worth Rs. 1,586 crore during the quarter, while its order book stood at Rs. 2,899 crore. Management said the motors business continues to improve, and the margin pressure is largely temporary.
Capacity Expansion to Support Future Demand
CG Power is planning to increase the production of its transformers because there has been increased demand. As of now, CG Power produces about 75,000 MVA worth of power transformers, while the new plant will add an extra 45,000 MVA capacity to the company. The management of the company anticipates that the production of the new plant will take time to reach the full capacity and that production will first be 10,000 MVA, then 30,000 MVA, and finally 45,000 MVA.
Semiconductor Business Remains a Long-Term Bet
The semiconductor business continued to weigh on consolidated profitability, with investments reducing earnings by around Rs. 43 crore, equivalent to nearly 132 basis points. Commercial production has already started at the Sanand OSAT facility, with Renaissance expected to utilize close to 50 percent of the plant’s capacity. Management said it will continue investing in talent and expansion, even if it affects near-term profitability.
Exports and Pricing Continue to Improve
The company said exports grew by around 84 percent , supported by expansion across the Americas, Europe and the MENA region. In the motors business, cumulative price hikes have now crossed 22 percent over the past year, including an additional 5 percent increase after the previously discussed 17.5 percent hikes. Management said the market has absorbed these price increases well, although commodity inflation remains a challenge.
Conclusion:
CG Power continues to strengthen its position through healthy execution, a growing order pipeline and ongoing capacity expansion. While short-term profitability is being affected by investments in new businesses and a few temporary operational factors, management remains confident about future demand. With expansion across key segments, improving execution and a focus on long-term opportunities, the company appears well placed to benefit from the increasing demand for power infrastructure and advanced manufacturing.
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