Detailed Narrative
Strong Q3 FY26 Performance and Margin Expansion
CG Power reported an outstanding Q3 FY26, achieving all-time high standalone revenue and PBT. Standalone sales grew 22% year-over-year to INR 2,909 crores, with PBT increasing 35% to INR 454 crores, representing 15.6% of sales. This performance led to a 148 basis points margin expansion in PBT, reflecting operating discipline and strategic focus. Consolidated sales also grew robustly by 26% year-over-year to INR 3,175 crores, with PBT before extraordinary item📎s up 25% to INR 420 crores.
Robust Order Book and Landmark Export Win
The company's order book remains strong, with the standalone unexecuted order backlog strengthening by 66% year-over-year to INR 14,859 crores as of December 31, 2025. Order intake for the quarter was INR 4,096 crores, a 13% year-over-year growth. A significant win was a INR 900 crore ($99 million) export order for power transformers from Tallgrass in the U.S. for a data center project, secured on January 16, 2026, with an execution period of 12 to 20 months. This order is for the current quarter (Q4 FY26) and not included in Q3 results.
Power Systems Drives Growth, Industrial Segment Faces Headwinds
The Power Systems segment demonstrated a sharp rise in sales of 44% year-over-year to INR 1,326 crores, with PBIT at 21.4% of sales, marking a 378 basis points margin expansion. This was driven by improved price realization and robust demand. In contrast, the Industrial segment saw an 8% year-over-year sales growth to INR 1,585 crores, but PBIT declined to 9.4% of sales from 12.5% in the prior year, primarily due to lower price realization, product mix changes in railway, and commodity inflation not fully passed on.
Aggressive Capacity Expansion in Transformers and Switchgear
CG Power is rapidly expanding its transformer manufacturing capacity, increasing from 20,000 MVA three quarters ago to 40,000 MVA currently, with a target of 65,000 MVA within the next quarter. Further additions of 10,000-20,000 MVA are planned for the subsequent 2-3 quarters. Additionally, a brownfield expansion for the switchgear business is expected to be ready in the next couple of months, projected to add INR 400 crores in incremental revenue.
Semiconductor Business Progress and Outlook
The mini OSAT plant (M1) has commenced activity, with sales expected to begin in the next two quarters and decent sales anticipated in 2-3 quarters. The larger OSAT plant (M2) is targeted to be ready by the end of December 2026 and operational by Q4 FY27. While the semiconductor segment had a negative impact of INR 41 crores (130 basis points) on consolidated PBT due to talent investment and deferred revenue, the design business (Axiro) is expected to achieve $64 million in revenue for the year and breakeven.
Long-Term Bullishness on Domestic Power and Exports
Management expressed strong confidence in the domestic power transmission sector, anticipating sustained growth until at least 2029, supported by government infrastructure expansion. Export orders have shown significant momentum, growing over 50% year-over-year in bookings from April to December. The company emphasizes a clear, focused go-to-market strategy for exports, leveraging its speed, technology, and product reliability across various geographies beyond the U.S.