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Motilal Oswal Report
CG Power and Industrial Solutions Ltd. is currently trading at 81.3x/60.7x P/E on FY27E/FY28E EPS.
Motilal Oswal has roll forward its SoTP-based target price to Jun'28 and reiterates Buy rating with a target price of Rs 940.
The brokerage ascribes a 58 times multiple for the power systems business, which bakes in the upcoming large capacity in the power systems segment and also some discount to MNC players.
The brokerage ascribes a 55x multiple to industrial systems, which is at 10% discount to ABB, and ascribes value to the OSAT business via DCF to capture the benefits that will start accruing from FY28.
In-line revenue and Ebitda, while Net profit beat estimate
- CG Power's consolidated revenue grew 25% YoY to Rs 3,400 crore in Q4 FY26, driven by strong performance in the power systems division (+50% YoY), while industrial systems grew 2% YoY.
- Gross margin expanded 230bp YoY to 32.1%, while Ebitda increased 36% YoY to Rs 5,000 crore with margin expanding 110bp YoY to 13.7%.
- While revenue and Ebitda were broadly in line, PAT beat our estimate due to higher other income and a lower tax rate.
- PAT was up 34% YoY to Rs 4,000 crore with PAT margin at 11%.
Order inflow during the quarter stood at Rs 5,300 crore (+39% YoY), taking the total order book to Rs 17,100 crore (+61% YoY).
For FY26, revenue/Ebitda/PAT grew 25%/25%/27% YoY to Rs 12,400 crore/Rs 1,600 crore/Rs 1,200 crore, and Ebitda margin remained broadly flat YoY at 13.1%.
Meanwhile, OCF dipped 23% YoY to Rs 700 crore due to higher working capital requirements, while FCF turned negative at Rs 72.4 crore (vs. Rs 490 crore in FY25) due to higher capex during FY26.
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