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Informist, Friday, May 2, 2025

By Rajesh Gajra

NEW DELHI – CG Power and Industrial Solutions Ltd. is likely to report strong on-year revenue growth for the March quarter but the performance may fall short of the high growth reported by the company in the previous quarter, according to analysts. The bottom line is seen tracking the operating profit growth, which in turn is expected to be steady on the back of favourable demand and realisations.

The year-on-year growth in top line and margin will be led by both the primary segments of CG Power, industrial and power systems. Sequentially, the power systems segment margin in the March quarter is expected to be lower than 18.6% recorded in the previous quarter. The industrial segment margin for the reporting quarter may be around 13%, the same as in the December quarter.

CG Power's segmental dynamics will have a bearing on its performance in the March quarter. In the nine months till December, the power systems segment of CG Power had a lower revenue share of 37%, but the earnings before interest, taxation, depreciation, and amortisation share was higher at 46%. The industrial segment contributed 63% to revenue, but its EBITDA share was lower at 54%.

The company is likely to report a consolidated net profit growth of 24% on year at INR 2.90 billion, according to the average of estimates by four brokerages. Sequentially, the estimated net profit for the March quarter is 21% higher. The consolidated revenue from operations of the company is seen increasing 23% on year and 7% sequentially to INR 26.90 billion.

The highest net profit estimate is INR 3.11 billion by Nuvama Wealth Management while the lowest is INR 2.78 billion by Equirus Securities. The revenue estimates range from a low of 26.72 billion by Equirus to a high of INR 26.96 billion by Nuvama. The company's EBITDA for the reporting quarter is seen at INR 3.63 billion.

In the December quarter, the company's consolidated revenue from operations rose 27% on year to INR 25.16 billion, while the consolidated net profit fell 68% to INR 2.38 billion. Excluding net profit from discontinued operations, the company's net profit increased 21% on year to INR 2.38 billion.

According to the institutional equities division of Kotak Securities, CG Power is likely to report on-year growth of 23% in revenue amid growth in the industrial segment on a low base and strong power systems business growth from robust order inflows. Equirus Securities expects the company's revenue to grow 22% on year driven by 26% growth in industrial segment revenue on a low base and 16% increase in power segment revenue. Brokerage Nomura Equity Research said in its preview report that CG Power's order inflows in the March quarter were likely driven by healthy demand in power systems and "supply contracts for Vande Bharat trains from Kinet Railway Solutions".

On profitability, Kotak expects the EBITDA margin of CG Power to expand 70 basis points on year to 13.7% on the back of "better pricing in power systems and improvement in industrial systems". Sequentially, the company's power systems margin will "moderate a bit" while the industrial segment margin will improve significantly due to a weak base, Equirus said in its preview report.

The company will detail its March quarter earnings Tuesday. After the results are announced, investors will monitor updates on pricing action in both primary segments of the company, "any further market share gains in motors business (in the industrial segment)", and updates on ramp-up of the drives business, according to Equirus.

At 1504 IST, shares of CG Power were down 0.6% at INR 622.95 on the National Stock Exchange.

Following are the Jan-Mar consolidated earnings estimates for CG Power based on reports from four broking firms in descending order of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

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