CG Power and Industrial Solutions Q1 FY27 earnings call

CG Power and Industrial Solutions Limited reported a strong Q1 FY27, with standalone sales growing 16% year-over-year to ₹3,061 crores. Profit Before Tax (PBT), excluding exceptional items^📎, reached a new Q1 high, and standalone Profit After Tax (PAT) increased 27% year-over-year to ₹364 crores, representing 11.9% of sales. Consolidated sales grew 14% year-over-year to ₹3,281 crores, with consolidated PAT up 16% to ₹308 crores. The company achieved a 140 basis points margin expansion and an annualized Return on Capital Employed of 23% (standalone) and 20% (consolidated).

The Industrial segment recorded aggregate sales of ₹1,671 crores, a 6% year-over-year increase, driven by strong double-digit growth in motors. However, PBIT for the segment was ₹148 crores, down from ₹172 crores in the prior year, primarily due to a one-off^📎 provision of approximately ₹20 crores in the Railway Business. In contrast, the Power Systems segment demonstrated robust performance with sales growing 31% year-over-year to ₹1,402 crores. PBIT for Power Systems surged to ₹324 crores from ₹225 crores, with a significant 209 basis points margin expansion, reaching 23% of sales, reflecting strong execution discipline.

Order flow remained strong during the quarter, leading to a consolidated order intake of ₹5,211 crores. The unexecuted consolidated order backlog as of June 30, 2026, stood at ₹18,965 crores, marking a 45% year-over-year increase and providing multi-quarter revenue visibility. The Industrial segment's order intake was ₹1,586 crores, with an unexecuted backlog of ₹2,899 crores. The Power Systems segment secured ₹3,106 crores in new orders, boosting its backlog to ₹14,434 crores, which is 59% higher year-over-year. Export order inflow also doubled year-over-year, showing an 84% growth.

CG Power announced the commissioning of its EHV switchgear manufacturing facility (Unit-II) in Nasik, Maharashtra, on June 4, 2026. This new facility will expand the company's EHV circuit breaker manufacturing capacity by 80%, adding 7,200 units incrementally to the existing 9,000 units annually. Additionally, CG Semi, a subsidiary, commenced commercial production at its G1 OSAT facility in Sanand on July 4, 2026. The company also plans to add approximately 45,000 MVA to its transformer capacity with a new plant starting up in the next few months^⏳, aiming for a 12-14 month commissioning timeline compared to the typical 24-36 months.

The semiconductor business, including CG Semi and Axiro Semiconductor Group, is viewed as a long-term investment. While it contributed to a consolidated margin impact of approximately ₹43 crores (132 bps) due to continued investment in talent and operations, Axiro is already revenue-generating and showing double-digit growth. CG Semi has secured a 50% offtake agreement from Renesas, up from a previous 40%. The company plans to continue investing in technology and expanding into adjacencies around power electronics, beyond its current focus on radio frequency and SATCOM.

The motors business demonstrated strong double-digit growth and consistently improving double-digit margins. Management noted a continuous journey to manage raw material inflation, having implemented a 5% price hike after a previous 17.5% increase, which the market has absorbed well. The company is focused on completing its full range of IE3, IE4, and IE5 motors within the next 12 months to enhance its competitive offering. End markets such as cement, metal, mining, and OEM are performing particularly well, driving demand for low-voltage motors.

The railway business performed better than anticipated in Q1 FY27, despite a one-off^📎 provision of ₹20 crores. The G.G. Tronics Kavach project has completed all trials, with management personally attending locomotive trials. The company is awaiting RDSO approval, which is expected within 4 to 6 weeks. Manufacturing setups are being geared up in parallel to commence production and commissioning once approval is received, with the aim of producing sets as required by the railways.