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Power systems performance remains strong for CG Power

CG Power and Industrial Solutions Ltd (CG Power) missed first-quarter (Q1FY27) earnings were below estimates, but the company is expected to benefit from capacity expansion, price hikes and gradual demand recovery in the industrial segment, according to analysts.

Motilal Oswal Financial Services Ltd (MOSL) said the company’s first-quarter (1QFY27) result was below its estimates.

“Margin performance remained strong for the power systems segment but was impacted by one-time provisions for the industrial segment and continued high losses for the semiconductor segment,” MOSL said in a report.

“We expect inflows, particularly for the power systems segment, to start ramping up from next quarter. Going forward, we expect CG Power to benefit from capacity expansion at power systems for transformers and switchgear and circuit breakers, price hikes and gradual demand recovery in the industrial segment, and reduction of losses at CG-SEMI by FY28,” it added.

The company’s earnings were below estimates mainly due to lower-than-expected execution in the power systems division, lower-than-expected margins in the industrial systems division, and higher-than-expected losses in the semiconductor division.

Going forward, MOSL expects CG Power to benefit from capacity expansion at power systems for transformers and switchgear and circuit breakers, price hikes and gradual demand recovery in the industrial segment, and reduction of losses at CG Semiconductor by FY28.

Key risks

The key risks for the company include a slowdown in T&D capital expenditure (capex), an increase in commodity prices and weak motor demand, among others.

Nuvama

CG Power missed Q1FY27 consensus net profit by 9 per cent despite a 14 per cent YoY revenue growth.

The net profit was impacted by gross margin, which fell to 30.8 per cent, and Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA), which fell to 12.1 per cent. The gross margin and EBITDA were impacted by commodity cost pressures, especially in railways, Nuvama said in a report.

EBITDA margins contracted 110 basis points YoY to 12.1 per cent due to a 31 per cent YoY increase in other operating expenses. GM improved 60 bps YoY, declined 130 bps Quarter-on-Quarter (QoQ) to 30.8 per cent.

In the Semiconductor (Axiro) segment, revenue dipped 13 per cent YoY to ₹94 crore while EBIT loss widened to ₹50 crore from ₹8.7 crore in Q1FY26. Axiro coupled with motors to deliver double-digit growth.

Total backlog stood at ₹18,960 crore (+45 per cent YoY/+11 per cent QoQ).

The company’s board approved a ₹35.17 crore Extra High Voltage Gas Insulated Switchgear (EHV GIS) brownfield expansion at its Nashik EHV GIS facility to double capacity with commissioning likely in four–six months.

Power transformer capacity was 75 Gigavolt-Amperes (GVA) (distribution: 10GVA). An additional 45GVA transformer capacity is to be commissioned in 12–14 months. The new plant will add 45GVA and is likely to be commissioned in 12–14 months (ramp-up to 10GVA, 30GVA and 45GVA over first three quarters of operations).