CG Power and Industrial Solutions Limited Q3 FY26 Earnings Call Summary

Summary

CG Power and Industrial Solutions Limited - Q3 FY26 Earnings Call Summary Monday, January 27, 2026 4:00 PM

Event Participants

Executives 8 Ajay Jain, Amar Kaul, Dhananjay Bapat, Gaurav Makhija, Jatinder Kaul, Marias Nel, Sriram Rangarajan, Susheel Todi

Analysts 10 Aditya Mongia, Ankur Sharma, Anupam Goswami, Atul Tiwari, Harshit Patel, Mahesh Bendre, Mohit Kumar, Ravi Swaminathan, S. Kapur, Sumit Kishore, Umesh Raut

Financials & KPIs

Geographic & Segment Commentary

• Power Systems: Segment recorded ₹1,326 crores in sales (+44% YoY) with PBIT margins expanding 378 bps to 21.4%. Growth was driven by robust execution and improved price realization. The order backlog for this segment surged 89% YoY to ₹11,289 crores.
• Industrial Systems: Sales grew 8% YoY to ₹1,585 crores, primarily from the motors and railway businesses. PBIT margins contracted to 9.4% (vs 12.5% YoY) due to commodity inflation and product mix changes in Railways. Management is implementing price increases and cost optimization to recover margins.
• International Markets: Secured a landmark ₹900 crore ($99 million) export order from Tallgrass (U.S.) for data center transformers. Total export order pipeline has grown by over 50% in the last nine months (excluding the new U.S. order).

Company-Specific & Strategic Commentary

• Capacity Expansion: Transformer capacity increased from 20,000 MVA to 45,000 MVA recently, with a target to reach 65,000 MVA in the next quarter. The long-term target of 85,000 MVA is now expected to be achieved a year ahead of the FY28 schedule.
• Semiconductor Business (OSAT): The mini-plant (M1) is operational with 98-99% yields; sales are expected within 2 quarters. The larger M2 plant is scheduled to be ready by December 2026 (Q4 FY27).
• Railway Strategic Shift: New leadership has been appointed for the Railway segment to address recent service issues and margin leakages. Kavach product approvals are in the final stages, with passenger trials starting within 5 weeks.
• Switchgear Growth: Approved a brownfield expansion for switchgears to address immediate demand, estimated to add ₹400 crores in incremental annual revenue.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Export Order Details

• Question: What is the nature and kV class of the large U.S. data center order? (Saif Gujar)
• Answer: These are customized 330 kV power transformers engineered for hyperscale uptime requirements; the ₹900 crore order is the largest in company history (Ajay Jain/Amar Kaul).

Industrial Margin Recovery

• Question: How much of the 310 bps drop in Industrial margins is sticky? (Sumit Kishore)
• Answer: It is a “catch-up game” with commodity inflation. Price hikes of 17% have been implemented and absorbed well by the market, which should reflect in future quarters (Amar Kaul).

Chinese Competition

• Question: Are you worried about Chinese players entering the domestic transformer market? (Ankur Sharma/S. Kapur)
• Answer: Even if they enter today, setting up a plant takes 24-36 months. High demand/supply gap in India and globally provides enough room for all players (Amar Kaul).

Semiconductor Progress

• Question: What is the timeline for the OSAT plants M1 and M2? (Atul Tiwari)
• Answer: M1 is seeing 98-99% yields with sales starting in 2 quarters. M2 will be operational by Dec 2026, with 1/3 capacity pre-booked by Renesas (Amar Kaul).

Key Takeaway

CG Power delivered a record-breaking Q3 FY26, with standalone revenue growing 22% YoY to ₹2,909 crores and PBT rising 35%. The Power Systems segment remains the primary growth engine, characterized by a 44% revenue surge and significant margin expansion, supported by an 89% increase in order backlog. Strategically, the company is pivoting toward high-value exports, evidenced by a landmark ₹900 crore U.S. data center order and an overall 50% growth in export bookings. While Industrial margins faced headwinds from commodity inflation, aggressive pricing actions and an accelerated transformer capacity ramp-up (hitting 65,000 MVA ahead of schedule) position the firm to capture sustained infrastructure demand. Management remains bullish on the domestic power sector through 2029, focusing on operational efficiency to mitigate potential risks from new market entrants.