CG Power and Industrial Solutions Limited

CG Power & Industrial Solutions reported a robust start to FY26, with stand-alone sales growing 25% YoY to INR 2,643 crores and PAT increasing 23% YoY to INR 286 crores. Consolidated sales reached INR 2,878 crores, up 29% YoY, while consolidated PAT was INR 267 crores, 11% higher than the previous year. The company saw exceptional order intake, with stand-alone orders growing 56% YoY to INR 4,764 crores and consolidated orders up 62% YoY to INR 5,138 crores. This strong performance has bolstered the consolidated order backlog to INR 13,072 crores, an 82% increase YoY, providing significant revenue visibility.

The Power Systems segment demonstrated strong growth, with sales increasing 43% YoY to INR 1,070 crores and PBIT rising to INR 225 crores (21% of sales) from INR 149 crores in Q1 FY25, driven by better price realization and operating leverage. In contrast, the Industrial segment's sales grew 16% YoY to INR 1,574 crores, but PBIT declined to INR 172 crores from INR 182 crores in Q1 FY25. This margin pressure in Industrial was primarily attributed to the inability to fully pass on commodity price increases due to price variation clauses in railway contracts and a less favorable product mix.

To meet the robust demand, CG Power is aggressively expanding its manufacturing capacities in the Power sector. The existing plant is on track to increase its capacity from approximately 20,000 MVA to 40,000 MVA by September 2025. Additionally, construction has commenced for a new plant with a planned capacity of 45,000 MVA. Management expressed high confidence in the Power sector's outlook for the next five years, anticipating that demand will continue to outstrip capacity.

The company's strategic investments in the semiconductor space are advancing according to schedule. The mini plant for CG Semi is projected to begin production in 2026, with the larger main plant slated for production in 2027. Management noted that the project is currently running slightly ahead of target. Furthermore, the Axiro (Radio Frequency Semiconductor Components) business, acquired last year, has already started contributing to revenue, with its operational performance included in the consolidated results for the first time this quarter.

The KAVACH (Stationed Train Collision Avoidance System) project, for which G.G. Tronics secured an INR 148 crore order, is transitioning to the execution phase, with passenger trials in progress. Management expects to commission at least 100 KAVACH installations monthly starting in the next couple of months. In the Motors business, despite a deteriorating LT Motor market, the company implemented a 5% price hike effective July 1, with competitors reportedly following suit. Efforts are also underway to expand motors exports, focusing on both smaller LT and customized motors, supported by establishing skilled teams and service centers in target regions like Africa and Europe.

CG Power successfully completed a Qualified Institutional Placement (QIP) of equity shares, raising approximately INR 3,000 crores. The issue, which closed on July 3, 2025, was oversubscribed by more than three times, reflecting strong investor confidence. The company is also strategically developing its service business, aiming for a multi-stage model that includes full-fledged 5-10 year contracts and 'motor-as-a-service' offerings focused on energy efficiency, although a detailed roadmap for 2030 is still under development.