CG Power and Industrial Solutions Ltd (CGPOWER) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (IIFL Capital Services Limited): Ladies and gentlemen, good day and welcome to CG Power and Industrial Solutions Limited Q2 FY '27 earnings conference call hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note, this conference is being recorded. I now hand the conference over to Ms. Renu Baid Bhugalia from IIFL Capital Services Limited. Thank you and over to you, ma'am.
Renu Baid Bhugalia (IIFL Capital Services Limited): Thank you, Nazneen. A very good afternoon, everyone. On behalf of IIFL Capital, we'd like to welcome the management team of CG Power for the second quarter FY '27 earnings call. From the leadership team today, we have with us, Mr. Amar Kaul - Managing Director and CEO, Mr. Susheel Todi - Chief Financial Officer, Mr. Ramesh Nair - EVP, Drives and Automation and International Motors Business, Mr. Gaurav Makhija - Vice President, Switchgears and EPD Business, Mr. Dhananjay Bapat - Vice President, Railway Business, Mr. Jitendra Kaul - EVP, Motors Business, India Subcontinent and Mr. Sameet Khanna - Vice President, Consumer Products Business. With these words, I now welcome the management for the opening comments. Once again, Amar and your team, many congratulations for a strong result. And, sir, over to you for your opening comment.
Amar Kaul (CG Power and Industrial Solutions Ltd): Thank you.
Amar Kaul (CG Power and Industrial Solutions Ltd): Thank you, thanks Renu and rest of the team. Good afternoon everyone and welcome to the CG earnings call. At the outset, I'm pleased to share that CG has continued to build on the growth momentum, delivering record high quarterly revenue along with margin expansion. Our Q2 and H1 performance reflects the continued strength of our diversified portfolio, disciplined execution and and continued focus on operational excellence, leveraging CG Edge, which is our operating rhythm. Our Q2 sales grew by 32% year-over-year and order intake grew by about 90% year-over-year, and profit before tax grew by 47% year-over-year, ensuring the positive leverage and also outpacing the revenue growth with about 180 basis points on the margin expansion. This makes it another one of the strongest quarter performance in the recent times. Further, our orders remain robust with 90% growth year-over-year and order book strengthened further at 2,000, 21,820 crores, offering multi-quarter visibility for the organization. Now, as I go deeper into the standalone performance, aggregate sales for the quarter was at 3,505 crores, recording a growth of 32% year-over-year. PBT had a growth of 47% at 602 crores, which is 17.2% of sales, as against 409 crores, which was 15.4% in Q2 in the previous year. So, 180 bps better margin improvement year-over-year primarily driven by the Power Systems segment and also a contribution from our Motors business as well. Return on capital employed annualized was at 27%. Order intake for the quarter was 8,016 crores, which is 90% growth year-over-year, and unexecuted order backlog as of 30th September 2026 was 21,820 crores, which is 61% higher year-over-year. Now, if I double-click on each segment, going to the Industrial segment first, strong growth across revenue and PBIT despite a dynamic cost environment. Aggregate sales for the quarter was 1,738 crores, which is 25% year-over-year, driven by strong growth across all the businesses. PBIT was at 164 crores, which is 9.4% of the sales against 135 crores in Q2 last year, which is 60 bps improvement in a sequential manner versus the previous quarters, driven by the margin expansion in Motors. Order intake for the quarter was 1,758 crores, which is 12% year-over-year, and unexecuted order backlog as of 30th September remains healthy at 2,856 crores, providing visibility for the coming quarters. Now, if I double-click on the Power Systems performance, there were strong growth and further margin expansion reflecting continued operating momentum and the robust demand. The aggregate sales for the quarter was 1,769 crores with a sharp rise of 41% year-over-year supported by the disciplined execution using our vehicle of CGEH. PBIT was at 443 crores, which is 25% of sales as against 260 crores, which was 20.7% in sales in Q2 financial year '26. 430 basis points improvement year-over-year, underpinned by the strong price realization and better operating leverage amid resilient demand. Order intake for the quarter was 6,258 crores, which is 137% growth year-over-year, and unexecuted order backlog as of 30th September was 18,964, which is 81% up, providing again the multi-quarter visibility. With that, we conclude deep dive into our standalone performance, and I'll now move to the consolidated performance. And for consolidated results, it includes performance of our operating subsidiaries in Sweden, Germany, and Netherlands, CG Adhesive Products, which is based in Goa, CG Semi Private Limited, G-Tronics, NexGen Semiconductor, and other non-operating subsidiaries. Aggregate sales for the quarter was up at 3,802 crores and a growth of 30%. Profit before tax was 44% higher at
Amar Kaul (CG Power and Industrial Solutions Ltd): 359 crores, which is 14.7% of sales, as against 388 crores, which is 13, which was 13.3%. Now margin expansion led by power, strong power performance, partially offset by continued talent investments that we are doing in our subsidiaries like CG Semi and Axiro, which is a semiconductor business and the impact of about 35 crores, which is 91 bps. Return on capital employment for the quarter was 25%. Order intake for the quarter was 78% year-over-year, at 8,485 and the unexecuted backlog as of quarter ending 30th September was 58% up at 23,4-- 646 crores. Now, some of the key events that I would like to highlight is post today's board meeting, CG strengthened India's power infrastructure manufacturing capabilities with the rollout of first transformer from India's largest transformer manufacturing facility at Sehore in Madhya Pradesh. On 4th of September, the greenfield facility was made operational within 13 months and is spread over 50 plus acres. This facility is India's one of the largest single location power transformer manufacturing facility built for 220 kV to 1200 kV class power transformers with the capacity to rollout 35 power transformers every month reaching its peak and we are honored to have Honorable Chief Minister of Madhya Pradesh, Dr. Mohan Yadav, who graced the occasion of the first transformer rollout. Axiro Semiconductor, which is the wholly owned subsidiary of CG acquired 100% of equity stake in TOCEL System Private Limited for 16.4 crores. The transaction was completed on 20th of August and makes TOCEL a wholly owned subsidiary of Axiro. TOCEL is engaged in the business of providing semiconductor and embedded engineering services company, providing silicon design, verification and physical implementation, embedded software and Linux BSP development with edge AI engineering services to global semiconductor and electronics OEMs. Now this is a step forward in the direction of what I've been saying earlier into building our competence and capability in that design capability of semiconductor. CG CG's existing manufacturing facility in switchgear business is witnessing peak capacity utilization in view of the increasing order pipeline and growing demand for extra high voltage products and in order to cater to that growing domestic and export demand, CG proposes to undertake the following capital expenditure projects. S1 unit, which is based in Ambad in Nashik, the proposed project involves an investment of 300 crores to increase the manufacturing capacity of OIP Bushings and transformer instrument transformers up to 800 kV by 4,236 equivalent units per year, taking the total capacity of S1 unit to 11,436 equivalent units per year. The project will in- involve augmentation of manufacturing, assembly, testing and associated infrastructure with production tentatively expected to be commenced within 30 to 36 months. S3, which is again at the same location in Nashik, unit two phase two, further to our disclosure dated 4th of June 2026, we wish to inform that the board has approved an additional investment of 15.31 crores to enhance EHV circuit breaker manufacturing capacity by 3,600 units annually at S3 unit two facility, taking the total capacity to 10,800 units per annum. The proposed capacity addition is planned to be completed within a period of 6 to 9 months. Going to the GIS division in Vilholi, further to our disclosure on 24th of July '26, we wish to inform that the board has approved enhancement of capex investment for the GIS brownfield at Vilholi Nashik from 35.14 crores to 44.62 crores, representing an additional investment of 9.45 crores. The enhancement primarily provides for procurement of 800 kV high voltage testing system along with contingency to enable testing of 245 kV and 400 kV gas insulated switchgears.
Amar Kaul (CG Power and Industrial Solutions Ltd): from 228 equivalent bays last year to 468 equivalent bays as as it matures. The above investments are part of greenfield investment proposed for switchgear business. And the existing power transformer manufacturing facility which we name as T3 is currently operating at its mc- maximum capacity and CG has taken as part of CG Edge the lean manufacturing initiative and basis the work done by the teams there, the scope is to enhance the capacity by another 10,000 MVA within the same facility. So taking T3's overall capacity to 75,000 MVA. Given the current and projected order pipeline for the division the board has approved the capacity enhancement. The total estimated project investment is Rs. 68 crores net of taxes. The project is planned to be completed within a period of 12 to 15 months and is expected to significantly enhance the plant's manufacturing capacity, enabling the division to meet the growing market demand and strengthen its competitive position. That sums up summary of our financial performance and key events. Looking ahead, we remain focused on capitalization on the opportunities across power infrastructure, industrial manufacturing, railways, semiconductors and while continuing to invest in technology, capacity and capabilities. We'll maintain our focus on the profitable growth, execution of excellence and a long-term approach to value creation for all our stakeholders. With this, I conclude my opening remarks. The unaudited financial statements with detailed notes are available as part of stock exchange filings and on our company website. Thank you for listening in and back to you, Renu, for Q&A.
Renu Baid Bhugalia (IIFL Capital Services Limited): Sure. Nasheen, we can open the session for Q&A, please.
Moderator (IIFL Capital Services Limited): Okay. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator (IIFL Capital Services Limited): First question is from the line of Prathamesh from Abacus. Please go ahead.
Prathamesh (Abacus): Hello, hello.
Amar Kaul (CG Power and Industrial Solutions Ltd): Yeah, Prathamesh.
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