CG Power and Industrial Solutions Limited — Q3 FY26 earnings call

Call held 27 Jan 2026

Management summary

CG Power & Industrial Solutions Ltd. reported a strong Q3 FY26, driven by record standalone revenue and PBT, and a robust order backlog. The Power Systems segment was a key growth driver with significant sales and margin expansion. While the Industrial segment faced margin pressures, the company secured a major export order and outlined aggressive capacity expansion plans for transformers and the new OSAT business, maintaining a bullish long-term outlook on domestic power and export markets.

Highlights

  • Standalone sales grew 22% YoY to ₹2,909 crores, achieving an all-time high.

  • Standalone PBT grew 35% YoY to ₹454 crores, with a 148 basis points margin expansion.

  • Order backlog strengthened by 66% YoY to ₹14,859 crores as of December 31, 2025, indicating sustained demand.

  • Power Systems segment sales rose sharply by 44% YoY to ₹1,326 crores, with PBIT margin expanding by 378 basis points to 21.4%.

  • Secured a significant ₹900 crore ($99 million) export order for power transformers for a US data center, to be executed over 12-20 months.

Concerns

  • Industrial segment PBIT margin declined to 9.4% from 12.5% in Q3 FY25, impacted by lower price realization, product mix changes in railway, and commodity inflation.

  • Consolidated PBT was impacted by ₹41 crores (130 basis points) from the semiconductor segment due to investment in talent and deferred revenue.

  • Railways business is expected to take 'a few more months to come back on track' due to past issues and service challenges.

Key financials

  1. Standalone Sales ₹2,909 Cr +22%YoY
  2. Standalone PBT ₹454 Cr +35%YoY
  3. Standalone PBT Margin 15.6%
  4. Consolidated Sales ₹3,175 Cr +26%YoY
  5. Consolidated PBT before EI ₹420 Cr +25%YoY
  6. Consolidated ROCE 21%

What they filed

Q1 FY27: revenue up 15.8%, net profit up 27.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,270 2,389 2,563 2,643 2,649 +17%2,909 +22%3,128 +22%3,061 +16%
EBITDA286 329 338 374 370 +29%408 +24%485 +43%437 +17%
Net profit223 244 275 286 307 +38%312 +28%412 +50%364 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentSalesPBITPBIT % of Sales
Industrials (Standalone)₹1,585 Cr₹149 Cr9.4%
Power Systems (Standalone)₹1,326 Cr₹283 Cr21.4%
Semiconductor Segment Impact (Consolidated)———

Order book

high confidence

Total value

₹15,753 Cr

as of 2025-12-31 quantified

62% YoY

Inflow this quarter

₹4,372 Cr

Composition

Mix 2 segments
  • Power Systems ₹11,289 Cr 76%
  • Industrials ₹3,569 Cr 24%

Share of order book by segment, derived from disclosed amounts

Pipeline

other

Power Systems pipeline up almost 50% year-on-year

Order backlog remains robust with sustained demand across all businesses, providing multi-quarter visibility.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Transformer capacity expansion
    • OSAT M1 mini plant
    • OSAT M2 bigger plant
    • Switchgear brownfield expansion
    So I think capacity is going on pretty well. I think just 3 quarters back, we were at 20,000 MVA. We are already 40,000 MVA. And in the next 1 quarter or so, we'll be 65,000 MVA. I think that's the kind of jump we are making. And hopefully, next 2 to 3 quarters, we'll be adding another 10,000 to 20,000 MVA more into that from that facility. So once we get better visibility of that, we'll, of course, announce that. ... So OSAT, as you would have heard last time, the mini plant, which we call M1, has already started, commenced its activity. ... And the new plant, which is the bigger plant, M2, as we call it, that should be ready by end of December 2026. ... I think after today's Board meeting, we also took the approval for brownfield in between because the new plant will take more than a year to come up. And we can see very strong demand, not only in India but outside India as well. So I think in the next couple of months, we'll be ready with our brownfield, which is close to our existing facility. That will come up, and I think that itself should give us close to INR 400 crores incremental revenue or sales.

Guidance & targets

Capacity

  • Transformer Capacity Capacity · next 1 quarter · High confidence 65,000 MVA

    From 40,000 MVA today

    We are already 40,000 MVA. And in the next 1 quarter or so, we'll be 65,000 MVA.

    — Amar Kaul

  • Transformer Capacity (further) Capacity · next 2 to 3 quarters · Medium confidence 10,000 to 20,000 MVA more
    And hopefully, next 2 to 3 quarters, we'll be adding another 10,000 to 20,000 MVA more into that from that facility.

    — Amar Kaul

  • OSAT M2 Readiness Capacity · end of December 2026 · High confidence ready
    And the new plant, which is the bigger plant, M2, as we call it, that should be ready by end of December 2026.

    — Amar Kaul

Sales

  • OSAT M1 Sales Commencement Sales · next 2 quarters · High confidence start sales
    I think next 2 quarters, we should start sales out of that on a small scale, and then it will keep graduating. I would say, next 2 to 3 quarters, you'll start seeing a decent amount of sales coming.

    — Amar Kaul

Operational

  • OSAT M2 Operational Operational · Q4 of next financial year (FY27) · High confidence operational
    And so I would say Q4 of next financial year is when we start some activity. The lead time for customer approval and validation of the chips doesn't take as much time as the mini plant takes. So yes, there will be some time. I would say, another 1 year or so, it should be operational.

    — Amar Kaul

Revenue

  • Switchgear Brownfield Incremental Revenue Revenue · upon readiness · High confidence INR 400 crores
    That will come up, and I think that itself should give us close to INR 400 crores incremental revenue or sales.

    — Amar Kaul

  • Axiro Revenue Revenue · for the year · High confidence $64 million
    So I'm not worried about Axiro because that's already we committed about $64 million we'll do for the year. How much? $55 million, $56 million, I think should do that.

    — Amar Kaul

Market Growth

  • Domestic Power Transmission Sector Growth Market Growth · up until 2029 · High confidence not slow down
    So last year, also I said next 5 years, up to '29, I don't see a concern that this sector will not grow. Unless something catastrophic happens, then obviously, that's out of control of everybody. Otherwise, the way expansion plans are, the way government is expanding infrastructure, power generation, so I don't see anything slowing down up until 2029.

    — Amar Kaul

What to watch in Q4 FY26

Kavach project approvals and supply commencement

this quarter (Q4 FY26)
Current Approval process almost complete, passenger trials starting (4-5 weeks)
Target Approvals done, supplies commenced

Why it matters

Key railway project moving from development to revenue generation, with a larger order expected.

I'm expecting that in this quarter, we should be done with the approvals and commence the supplies as well. And there's already a bigger order, which we have shortlisted, so final order should be coming very soon.

Risks & concerns

  • Industrial Segment Margin Pressure

    medium

    Lower price realization, product mix changes in railway, and commodity inflation not fully passed on led to PBIT margin decline from 12.5% to 9.4%.

    Management acknowledged

  • Semiconductor Segment Initial Losses

    medium

    Investment in talent pool and deferred revenue in Axiro resulted in a ₹41 crore impact on consolidated PBT.

    Management acknowledged

  • Railways Business Recovery Delays

    medium

    The Railways business is expected to take 'a few more months' to get back on track due to past issues and service challenges.

    Management acknowledged

  • Competition from Chinese Players

    low

    Potential entry of Chinese players in PSU tenders, but management is confident in operational efficiency and long lead times for new entrants.

    Analyst downplayed

Q&A highlights

7 direct
Power Systems order intake momentum Direct
not seeing any decline or slowdown in the pipeline of the orders that we have. So I think it continues to be as strong as it has been and growing as well.

Addresses concerns about potential deceleration in a key growth segment, confirming continued strong demand visibility.

Asked by Ravi Swaminathan

Motors segment volume growth and margin Partial
it's a combination of the price increase we did. The realization has been fairly good. We are satisfied with that. Of course, it could not completely cover the increase in the commodity prices. But we are still working on that. And second is also, if you look at, a little bit of stress on PBT also we are working aggressively on the I2V piece, which is Innovate to Value.

Explains margin pressure in the Industrial segment (motors) due to commodity inflation and outlines mitigation efforts.

Asked by Ravi Swaminathan

Potential entry of Chinese players in PSU tenders Direct
honestly, as CG, we are not really worried about that even if Chinese players come in. Important is level playing field. ... I'm a big fan of saying that, with the level playing field, we have to be operationally efficient and then we can compete with anybody

Addresses a significant competitive risk, with management expressing confidence in their operational efficiency and ability to compete.

Asked by Ankur Sharma

Outlook for domestic power transmission business Direct
I don't see anything slowing down up until 2029. And of course, it can go beyond that as well. But it's a combination of publicly available data as well as what we see in the market.

Provides a long-term bullish outlook on a core domestic market, citing government infrastructure expansion plans.

Asked by Mahesh Bendre

Status and ramp-up of OSAT (semiconductor) business Direct
mini plant, which we call M1, has already started, commenced its activity. I think next 2 quarters, we should start sales out of that on a small scale... new plant, which is the bigger plant, M2... ready by end of December 2026... Q4 of next financial year is when we start some activity... another 1 year or so, it should be operational.

Gives clear timelines for the progression of the new semiconductor manufacturing facilities, a key strategic diversification.

Asked by Atul Tiwari

Kavach project status and future orders Direct
approval process has almost reached the end. The passenger trials are about to start now, which should take another 4 to 5 weeks. So I'm expecting that in this quarter, we should be done with the approvals and commence the supplies as well. And there's already a bigger order, which we have shortlisted, so final order should be coming very soon.

Provides an update on a critical railway project, indicating imminent approvals and supplies, with a larger order expected soon.

Asked by Saif Gujar

Transformer capacity expansion and utilization Direct
3 quarters back, we were at 20,000 MVA. We are already 40,000 MVA. And in the next 1 quarter or so, we'll be 65,000 MVA. I think that's the kind of jump we are making.

Details aggressive capacity expansion plans for transformers, a high-demand product, and confirms high utilization rates.

Asked by Anupam Goswami

Switchgear brownfield expansion and revenue potential Direct
in the next couple of months, we'll be ready with our brownfield, which is close to our existing facility. That will come up, and I think that itself should give us close to INR 400 crores incremental revenue or sales.

Highlights a near-term capacity addition that will contribute significantly to revenue in the coming quarters.

Asked by Harshit Patel

3 min read 6 chapters

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 items 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.

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