Analyst Concall
CG Power arms' drives, automation sales fall, drag margin dn
This story was originally published at 21:04 IST on 24 July 2025
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--CG Power: Order book growth in upward trajectory giving visibility ahead
--CONTEXT: CG Power mgmt comments in post-earnings analyst concall
--CG Power: Good underlying demand, leverage drove power segment margin Q1
--CG Power: Industrial revenue growth Q1 driven mainly by railways business
--CG Power: Drives, automation performance in industrial segment Q1 not good
--CG Power: Industrial margin hit Q1 mainly due to Indian Railways business
--CG Power: Axiro Semiconductor revenue flowed into consol numbers Q1
--CG Power: Raised low tension motor prices 5% Jul in industrial segment
--CG Power:Very bullish on power segment orders, will keep adding capacities
By Rajesh Gajra
NEW DELHI – In the industrial systems segment where the June quarter revenue growth was much lower than that of the power segment, the revenue numbers from the subsidiaries operating in the drives and automation business were "not good", the management of CG Power and Industrial Solutions Ltd. said Thursday in a post-earnings call with investors and analysts. The company has three subsidiaries in drives and automation business and all of them are based in Europe.
On a consolidated basis the revenue in the company's industrial segment increased 14.9% on year to INR 16.92 billion while the standalone revenue increased 16% to INR 15.74 billion. Excluding the standalone numbers from the consolidated ones in the industrial segment, the revenue from the subsidiaries was up by just 1.7% on year to INR 1.17 billion in the June quarter.
The company said in the earnings press release sales in the company's drives and automation business in Europe were lower during the June quarter. It was one of the main contributing factors to the 200- basis-point decline on year in the consolidated earnings before interest, tax, depreciation and amortisation margin to 14.2% from 16.2%, the company said.
The consolidated revenue growth in the industrial segment in the June quarter primarily came "from the railways side," CG Power's management said in the investor call. The execution of orders from Indian Railways was also a key reason behind the segment's margin deterioration for the quarter. The EBITDA margin of the standalone industrial segment contracted sharply to 11.6% in the June quarter from 14.1% a year ago.
But apart from Indian Railways business the low tension motors business also had a bit of negative impact on the industrial segment margin according to the management. To "conquer" the margin decline in low tension motors the management said the company raised the prices "by almost 5%" with effect from Jul. 1. The company is not worried about market share loss due to this price hike because "we are the market… we get to define… what should be the pricing in the market," the management said.
On the power segment, which helped the company record a strong consolidated revenue and EBITDA growth for the June quarter, the management said the strong revenue growth was on the back of higher realisation from robust underlying demand. CG Power's standalone power segment revenue jumped up 43% on year to INR 10.70 billion in the June quarter, the company said in its earnings press release. The EBITDA margin in the power segment expanded to 22% in the June quarter from 21.1% a year ago. The management said in the investor call operating leverage and the higher realisation drove the segment margin upwards.
In the June quarter, CG Power's order inflow in the power segment jumped up 2.1 times on year to nearly INR 35 billion, with the unexecuted order backlog at the end of the quarter at INR 90.51 billion, up 97% on year. The management said in Thursday's investor call that the company was "very bullish for even the next five years." As the company gets a stronger hold on the deal pipeline in the power segment, which it expects will keep "swelling", the company will "keep adding capacity," the management said. It pointed to the total standalone order backlog of INR 119.71 billion as of Jun. 30 and said the order inflows continue "to be on the upward trajectory, giving us strong revenue visibility."
To a question on the progress and prospects in the company's semiconductor foray, the management said as projected before its subsidiary CG Semi Pvt. Ltd.'s mini plant sill start production in 2026 and the main plant, a larger one, will start production in 2027. Revenue from the recently acquired radio frequency business of the Axiro Semiconductor Group has already started flowing in and reflects in the company's consolidated numbers for the June quarter.
CG Power's consolidated net profit increased 12% on year to INR 2.69 billion in the June quarter on the back of a 29% jump up in its consolidated revenue from operations to INR 28.78 billion. Thursday, shares of CG Power closed 0.38% lower at INR 680.35 on the National Stock Exchange. End
Edited by Deepshikha Bhardwaj
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