Earnings Review
High input costs drag CG Power PAT growth to 14-quarter low
This story was originally published at 17:49 IST on 28 January 2025
Register to read our real-time news.Informist, Tuesday, Jan. 28, 2025
Please click here to read all liners published on this story
--CG Power Oct-Dec consol net profit INR 2.41 bln vs INR 7.48 bln yr ago
--CG Power Oct-Dec consol revenue INR 25.16 bln vs INR 19.79 bln year ago
--CG Power: Board OKs setting up transformer plant for INR 7.12 bln
--CG Power Apr-Dec consol net profit INR 7.03 bln vs INR 11.93 bln yr ago
--CG Power Apr-Dec consol revenue INR 71.56 bln vs INR 58.54 bln year ago
--CG Power Oct-Dec consol EBITDA INR 3.65 bln vs INR 2.89 bln year ago
--CG Power Oct-Dec consol order intake INR 43.90 bln, up 82% on year
--CG Power consol unexecuted order backlog INR 97.06 bln as on Dec. 31
--CG Power Oct-Dec industrial systems EBITDA INR 1.94 bln vs INR 1.77 bln
--CG Power Oct-Dec power systems ops EBITDA INR 1.7 bln vs INR 1.1 bln yr ago
By Aman Aryan
MUMBAI – Increased input costs and other expenses dragged down CG Power and Industrial Solutions Ltd.'s December quarter earnings, marking the biggest on-year fall in net profit in 14 quarters. The electrical engineering company's consolidated net profit fell despite the company reporting the highest revenue in 10 years. While the net profit missed the Street's view, the company's revenue beat estimates.
CG Power's consolidated net profit for the quarter was INR 2.41 billion, down 68% from the year-ago quarter. Analysts had expected the company to report a consolidated net profit of INR 2.56 billion. The company's consolidated revenue for the December quarter rose 27% on year to INR 25.16 billion. CG Power's revenue growth for the quarter was the highest in seven quarters, according to data available with Informist. Sequentially, the revenue was up 4% and the net profit was up 9%.
The growth in revenue was offset by the higher cost of materials and an increase in other expenses, which drove the growth in the company's total expenditure to equal its revenue growth. The company's cost of materials rose to INR 17 billion during the quarter, the second highest in 10 years. CG Power's input costs rose 30% from a year ago, marking the highest growth in 10 quarters. The company's other expenses for the December quarter rose 22% to INR 2.68 billion. Overall, the company's total expenses rose 27% on year to INR 22.14 billion during the quarter.
Apart from high input costs, a gain of INR 5.51 billion in the year-ago quarter also affected the company's net profit growth during the reporting quarter. Excluding the one-time gain of INR 5.51 billion from discontinued operations, the company's consolidated net profit for Oct-Dec was up 22% on year.
The company's earnings before interest, tax, depreciation, and amortisation for the December quarter rose 26% on year and 13% sequentially to INR 3.65 billion. The EBITDA margin fell 10 basis points on year to 14.5% in the reporting quarter.
The company's revenue from its power systems segment rose 42% on year to INR 9.20 billion. The segment reported an EBITDA of INR 1.71 billion, up 59% on year, with an EBITDA margin of 18.6%. The segment's EBITDA margin for the December quarter expanded 200 bps from the year-ago quarter due to better price realisation and operating leverage, CG Power said. The segment's order intake rose 97% on year to INR 17.59 billion during the quarter and it had orders worth INR 59.84 billion as of Dec. 31.
The company's industrial systems segment's revenue rose 21% to INR 14.70 billion during the December quarter. Although the industrial segment's EBITDA for the quarter rose 10% on year to INR 1.94 billion, its EBITA margin contracted 140 bps on year to 13.2% as the sales mix was skewed towards the railways business. CG Power said margins for its motors business improved slightly during the quarter due to improved productivity and product mix. In the December quarter, CG Power received orders worth INR 18.77 billion, up 37% on year, for its industrial systems segment. As of Dec. 31, the segment had orders worth INR 29.68 billion.
The company said it generated free cash flow of INR 2.16 billion in the reporting quarter and the annualised return on capital employed for the quarter was 34%, compared with 32% in the September quarter. Overall, the company's order intake for the December quarter was INR 43.90 billion on a consolidated basis, up 82% on year. Its order book is worth INR 97.06 billion as of Dec. 31, the company said.
CG Power said its board had approved greenfield expansion of its power transformers capacity by 45,000 megavolt amperes at an estimated investment of INR 7.12 billion. This would increase the company's overall capacity to 85,000 megavolt amperes by the financial year 2027-28 (Apr-Mar). The expansion is being undertaken to cater to the anticipated increase in demand for transformers in the domestic and export market, the company said.
For the nine months ended December, the company reported a consolidated net profit of INR 7.03 billion, down 41% on year. For the same period, the company reported a revenue of INR 71.56 billion, up 22% on year. On Tuesday, shares of the company closed at INR 574.95 on the National Stock Exchange, down 3.4%. The company declared its results during market hours. End
Edited by Rajeev Pai
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
