The brokerage highlighted that CG Power's Q2 FY27 result was ahead of its estimates, and the outperformance was led by strong order inflow and revenue growth in power systems segment and better margins in industrial segment despite weak performance in railways within the industrial segment. Price hikes, product mix and operating leverage led to strong margin performance across segments. The pace of inflows has accelerated sharply, and consolidated order inflows were up 85% YoY at Rs 7,800 crore for the quarter.
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Motilal Oswal Report
Motilal Oswal has reiterated its Buy rating on CG Power and Industrial Solutions Ltd. following the company's above estimate results, with a revised SoTP-based two-year forward target price of Rs 1,140 from Rs 1,020, implying a potential upside of 40% from the reports market price of Rs 815.
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The brokerage highlighted that CG Power's Q2 FY27 result was ahead of its estimates, and the outperformance was led by strong order inflow and revenue growth in power systems segment and better margins in industrial segment despite weak performance in railways within the industrial segment.
Price hikes, product mix and operating leverage led to strong margin performance across segments. The pace of inflows has accelerated sharply, and consolidated order inflows were up 85% YoY at Rs 7,800 crore for the quarter.
The overall order book stood at Rs 23,600 crore, up 58% YoY. Going forward, Motilal Oswal expects CG Power to benefit from-
- recent capacity expansion at power systems for transformers and switchgear and circuit breakers,
- price hikes and a gradual demand recovery in the industrial segment, and
- a reduction of losses at CG-SEMI by FY28.
The brokerage has raised its estimates by 5%/9%/10% for FY27/28/29 to bake in higher estimates for power systems, while moderating its margin assumptions for industrial systems.
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