Event Participants
Executives
7 Ajay Jain, Amar Kaul, Dhananjay Bapat, Gaurav Makhija, Jatinder Kaul, Marais Nel, Susheel Todi
Analysts
11 Amit Mahawar, Atul Tiwari, Girish Chipalia, Harshit Patel, Kartik Kohli, Prathamesh Salunke, Rahul Gajare, Ravi Swaminathan, Sameer Thakur, Shirom Kapur, Sumit Kishore
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Standalone) | INR 3,061 crores | Record Q1; +16% YoY, led by power systems (+31%) and strong motors growth |
| Revenue (Consolidated) | INR 3,281 crores | +14% YoY; includes Drives & Automation Europe, CG Semi, G.G. Tronics, Exero subsidiaries |
| Order Intake (Standalone) | INR 4,692 crores | Power systems INR 3,106 crores; industrial INR 1,586 crores |
| Order Backlog (Standalone) | INR 17,333 crores | +45% YoY; multi-quarter revenue visibility |
| Order Backlog (Consolidated) | INR 18,965 crores | +45% YoY; includes G.G. Tronics ( |
| PBT (Standalone) | +27% YoY | 140 bps margin expansion; absolute value not disclosed |
| PAT (Standalone) | INR 364 crores | +27% YoY (vs INR 286 crores); 11.9% of sales vs 10.8% |
| PAT (Consolidated) | INR 308 crores | +16% YoY (vs INR 267 crores); semiconductor investment of ~INR 43 crores (132 bps) partially offset standalone gains |
| ROCE (Standalone) | 23% | Annualized for the quarter |
| ROCE (Consolidated) | 20% | Annualized; dragged by semiconductor ramp-up investment |
| Power Systems PBIT / Margin | INR 324 crores / 23% | vs INR 225 crores; +209 bps YoY (21% → 23%) on disciplined execution and operating leverage |
| Industrial Segment Sales / PBIT | INR 1,671 crores / INR 148 crores | Sales +6% YoY; PBIT vs INR 172 crores, impacted by ~INR 20 crore one-off railway provision |
Geographic & Segment Commentary
Industrial Systems: Sales of INR 1,671 crores (+6% YoY) with PBIT of INR 148 crores (vs INR 172 crores) after a ~INR 20 crore one-off railway provision; excluding this, margins were comparable to or slightly better than last year. Motors delivered double-digit revenue growth (high-teens) and double-digit margins for the fourth consecutive quarter, driven by cement, metals & mining, and OEM end-markets. G.G. Tronics (Kavach) completed all trials with accuracy higher than competitors; ISA audit done, RDSO approval expected in ~4-6 weeks, with manufacturing setup being readied in parallel.
Power Systems: Sales of INR 1,402 crores (+31% YoY) and PBIT of INR 324 crores (23% margin, +209 bps YoY) on disciplined execution and operating leverage. Order intake was INR 3,106 crores with backlog of INR 14,434 crores (+59% YoY), offering multi-quarter visibility. Demand spans T&D, data centers, renewables, oil & gas, and grid modernization; export order intake grew
84% YoY. Sequential intake decline attributed to absence of a large BCA order (INR 650 crores) booked in Q4 FY26.Transformers: Operational capacity at 75,000 MVA power transformers (up from 22,000 MVA four quarters ago) plus
10,000 MVA distribution. New greenfield plant of 45,000 MVA expected in 12-14 months (one year ahead of original FY27-28 plan), with ramp-up of 10,000 → 30,000 → 45,000 MVA and further expansion under study. Lead times no longer a constraint.Semiconductors: CG Semi's G1 OSAT facility at Sanand commenced commercial production (June 2026); ~50% capacity offtake agreed with Renesas, with additional customer development ongoing. Exero (RF/Satcom design) delivered double-digit top-line growth with larger order sizes and near-doubling revenue potential; profits reinvested into technology expansion including power electronics. Consolidated semiconductor P&L drag of ~INR 43 crores (132 bps) is an intentional investment.
Company-Specific & Strategic Commentary
EHV Switchgear Capacity Expansion: Commissioned S3 Unit 2 at Nashik on June 4, 2026, adding 7,200 EHV circuit breaker units annually (33-245 kV) to the existing 9,000 units - an 80% capacity increase - equipped with 500 kV/350 kV high-voltage testing laboratories to serve domestic and international transmission demand.
Motors Product & Pricing Strategy: Cumulative price hikes of ~22.5% (17.5% through January 2026 plus ~5% subsequently) have been absorbed by the market; full IE3/IE4/IE5 product range targeted for completion in the next 12 months, with R&D acceleration positioned as the next growth driver beyond pricing.
Semiconductor OSAT/Design Expansion: CG Semi commercial production launch with Renesas offtake of ~50%; Exero expanding beyond RF/Satcom into power electronics adjacencies; management evaluating Semiconductor Mission 2.0 incentives while continuing the organic ramp-up of existing plants.
Railways Portfolio Advancement: Vande Bharat (Kinetic) order under execution at the new Bhopal facility with test lab commissioning underway; Kavach trials cleared with superior accuracy awaiting final approvals - both positioning CG for follow-on orders. Railways Q1 performance came in better than anticipated despite the one-off provision.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Formal revenue/margin guidance | None provided | Management reiterated its policy of not giving forward-looking statements; directional outlook below reflects Q&A commentary |
| Motors revenue growth | High-teens for FY27 | Incremental ~5% price hike after 17.5% being absorbed; strong demand from cement, metals & mining, OEMs; double-digit margins sustained |
| Kavach (G.G. Tronics) revenue | Start in ~4-6 weeks | ISA audit completed; RDSO approval pending; manufacturing setup being readied for daily production as per railway requirements |
| Transformer capacity | 45,000 MVA new plant in 12-14 months | Accelerated ~1 year vs original FY27-28 plan; ramp-up of 10,000 → 30,000 → 45,000 MVA; further expansion plans being evaluated |
| Exero revenue | Potential near doubling | Order sizes and momentum strong; execution capability is the key constraint; profits reinvested, not distributed |
| Semiconductor investment | Continued ramp-up losses | No slowdown planned; costs mostly employee-related; CG Semi production commenced; Renesas offtake ~50% with more customers being signed |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw material inflation | Commodities remain inflationary; management noted latest price hikes are not fully sufficient ("is that sufficient? No"), requiring a continuous cycle of price increases to protect industrial margins. |
| Competitive intensity / China entry | Industry-wide capacity expansions and potential participation of Chinese players in government T&D projects (subject to approval processes) could pressure pricing; management believes global demand still exceeds supply but remains watchful. |
| Semiconductor investment drag | |
| Regulatory approval dependency | Kavach revenue start hinges on RDSO approval (expected in 4-6 weeks); any delay postpones G.G. Tronics revenue and industrial margin recovery in consolidated numbers. |
| Order/revenue lumpiness | Power systems order intake declined sequentially due to absence of the ~INR 650 crore BCA order booked in Q4 FY26; individual transformer shipments of INR 100-150 crores create quarterly volatility. |
| Railway technology provisions | INR 20 crore one-off provision taken in Q1 due to fast-evolving innovation; management believes the material may still be usable, but further provisions are possible if technology shifts again. |
Q&A Highlights
Power Systems Pricing & Margins
- Question: With all major companies expanding capacity, have prices stabilized or moved downward? (Harshit Patel, Equirus Securities)
- Answer: Demand still outpaces global capacity additions, so no pricing stress is visible; pipeline continues to grow; competition is a normal market dynamic. On sustainability of 23% margins: no formal guidance, but pipeline is not depleting and execution discipline remains intact. (Amar Kaul)
Industrial Segment Margin Pressure
- Question: Consolidated industrial margins fell to 7.6% from 10.2% YoY - what explains the dip beyond the INR 20 crore one-off? (Atul Tiwari, J.P. Morgan; follow-up Shirom Kapur, Jefferies)
- Answer: G.G. Tronics (under industrial in consolidated) is not yet revenue-generating - a major dent; railways took the INR 20 crore provision; motors, the largest component, is consistently improving with double-digit margins. Railways has always been single-digit and consumer (within industrial) is at breakeven, so the delta is largely mix-driven. (Amar Kaul)
Motors Pricing & Growth Outlook
- Question: After the 17.5% price hike (January 2026), what has been taken since and is it sufficient? Can 20-25% growth be achieved in FY27 on IE3/IE4 shift? (Harshit Patel; Amit Mahawar, UBS)
- Answer: Another ~5% increase has been taken and the market is absorbing it, but commodities are so inflationary that it is a continuous journey and not yet sufficient. Motors are currently at high-teens growth; full IE3/IE4/IE5 range will be complete in 12 months, with R&D acceleration driving the next level beyond pricing. (Amar Kaul)
Railways: Kavach & Vande Bharat
- Question: What is the status of RDSO approval for Kavach, and any tech partner progress on Vande Bharat? (Sumit Kishore, Axis Capital; Rahul Gajare, Macquarie)
- Answer: All Kavach trials are complete (CEO attended the 6th trial); accuracy is higher than competition; ISA audit done, RDSO approval expected in 4-6 weeks with manufacturing setup being readied in parallel. Vande Bharat order with Kinetic is under execution - Bhopal facility and test lab are being commissioned - with first 1-2 years focused on in-house technology development; bidding for more orders is ongoing. (Amar Kaul)
Transformer Capacity Expansion
- Question: Where does capacity stand now, and when will the new plant ramp? (Atul Tiwari; Sameer Thakur, Ambit Capital)
- Answer: Power transformers at ~75,000 MVA (from 22,000 MVA four quarters ago), distribution at ~10,000 MVA; the new plant adds ~45,000 MVA. Commercial production expected in 12-14 months, at least a year ahead of the original FY27-28 plan, with ramp-up of 10,000 MVA in the first quarter → 30,000 → 45,000; further expansion plans are being evaluated. (Amar Kaul)
Exports & Geography Strategy
- Question: What is the export growth number, and which geography (US/Europe/MENA) becomes most relevant over three years? (Girish Chipalia, Morgan Stanley; Aditya, Kotak Institutional Equities)
- Answer: Export order intake grew ~84% YoY - practically doubled - though exact revenue numbers are not disclosed; go-to-market strategy is working well. The strategy is not to put all eggs in one basket: portfolio will be spread across the US, Europe, and MENA, with India remaining the primary growth market. (Amar Kaul)
Semiconductor Investment & Offtake
- Question: Is Renesas offtake ~40%, are more customers signed up, and what is the loss cadence for CG Semi/Exero through FY27? (Girish Chipalia; Kartik Kohli, Kotak; Sumit Kishore, Axis Capital)
- Answer: Renesas offtake is close to 50%; business development with other customers is ongoing, but names are confidential. Exero has double-digit top-line growth with larger order sizes - revenue could nearly double if momentum holds; profits are reinvested rather than paid out. Semiconductor is a long-term investment, mostly employee cost; CG Semi production has started and investment will not slow down. (Amar Kaul)
Competition & Order Inflow
- Question: What is the impact of Chinese players being allowed in government T&D projects, and was the power intake decline just the BCA comp? (Rahul Gajare; Ravi Swaminathan, Avendus Spark)
- Answer: Management does not comment on competitors; everyone must go through approval processes, and focus remains on efficiency, productivity, and customer solutions. Power intake decline was indeed the ~INR 650 crore BCA order in the prior quarter - apple-to-apple growth was fairly good; transformer lead times are no longer a constraint. (Amar Kaul)
Key Takeaway
CG Power delivered a strong Q1 FY27, with standalone revenue of INR 3,061 crores (+16% YoY), PAT of INR 364 crores (+27% YoY, 11.9% of sales) and order backlog of INR 17,333 crores (+45% YoY), led by power systems revenue up 31% and PBIT margins at 23% (+209 bps). The company commissioned an EHV switchgear facility (80% capacity addition) and commenced commercial production at its Sanand OSAT plant, with ~50% Renesas offtake and Exero order momentum pointing to near-doubling revenue. Motors are growing at high-teens with double-digit margins after cumulative ~22.5% price hikes; the 45,000 MVA transformer plant is expected in 12-14 months; and Kavach approvals are due in 4-6 weeks. Watch items include a ~INR 43 crore quarterly semiconductor investment drag, raw material inflation, competitive intensity including potential Chinese T&D participation, and timing of RDSO approval.