Order backlog and new capacity to drive Q2 momentum
CG Power enters its Q2 earnings (Oct 23) off a strong Q1 with momentum in its core power systems business and a record ₹17,333 Cr order book. The Sehore transformer plant rollout mid-quarter adds growth visibility. Expect the Street to focus on execution pace and margin stability through a capacity ramp.
The Setup
CG Power is expected to report Q2 FY27 (Sept quarter) earnings on October 23, 2026. The company enters the quarter off its strongest Q1 in recent history—standalone revenue of ₹3,061 Cr (+16% YoY) and profit of ₹364 Cr (+27% YoY)—driven by the core Power Systems business and a 45% surge in the unexecuted order backlog to ₹17,333 Cr. The Sehore transformer facility (₹792 Cr investment, 45,000 MVA capacity) rolled out its first unit on Sept 4, providing incremental capacity that should support H2 growth visibility. The key question: does the company sustain Q1's momentum through the ramp, or do margin pressures from the new plant weigh on profitability?
~₹3,200–₹3,400 Cr
Q1 standalone was ₹3,061 Cr; on-plan flat to mid-single-digit growth expected seasonality in Q2 (Sept summer taper typically, offset by new capacity)
~16.5–17.5%
Q1 delivered 16.9% (up from 15.4% prior year); watch for margin support from new plant utilization vs. setup costs
₹17,300+ Cr
Q1's ₹17,333 Cr backlog (up 45% YoY) provides 5–6 quarters of revenue visibility; Street expects sustained wins
A strong print would show revenue of ₹3,350+ Cr with EBITDA margins above 17%, and any incremental order wins in the Sept–Oct quarter that extend the backlog beyond ₹18,000 Cr. A weak print would reveal margin compression below 15.5% (signaling higher-than-expected Sehore ramp costs), revenue miss below ₹3,150 Cr, or a slowdown in new order inflows—any of which would raise questions about Q1's sustainability.
On Track?
CG Power's FY27 guidance implies full-year revenue growth of 25–28% and EPS growth of 30%+. Q1's delivery (+16% revenue, +27% profit on a consolidated basis) is tracking the lower end of the range, but the Q1 call emphasized that summer typically underperforms. The ₹17,333 Cr backlog (45% YoY growth) is exceptional; if converted at a steady pace, it supports the FY27 guide. Analysts have raised targets in recent months—Nomura to ₹920, Motilal Oswal to ₹1,020—reflecting confidence in the backlog and Sehore's contribution in H2. The risk: if Q2 shows execution slippage or margins weaken under new plant setup, the full-year trajectory will be in focus.
What the Street Says
Since Last Quarter: Operationally Notable, Organizationally Choppy
1 · Sehore Transformer Plant (Sept 4)
Positive. First transformer rolled out from the ₹792 Cr facility. Plant is designed for 45,000 MVA annual capacity (phased ramp, 10,000 MVA initial); total group transformer capacity now 120,000 MVA. Demand drivers: renewable energy projects, data centers, export markets. The facility is positioned as India's largest single-location power transformer plant. Expect meaningful contribution in H2 FY27.
2 · VP Resignation (Sept 30)
Organizational risk. Ajay Jain, VP – Transformer Business, resigned effective Sept 2026 due to personal reasons. Transformer is the company's breadwinner; transition risk on product strategy and customer relationships. Management cited the Sehore rollout was on track; no elaboration on replacement timeline.
3 · Auditor Change (Aug 14–19)
Procedural, resolved. SRBC & CO resigned; replaced by Price Waterhouse effective Aug 19, 2026. Change was strategic alignment with holding company Murugappa Group. No red flags; audits will proceed normally.
4 · Cyber Event (Aug 18)
Non-material. Suspected cyber incident disclosed; core systems and operations unaffected per company disclosure. Remediation underway with external partners. Routine disclosure; no operational impact expected.
5 · Tax Demand Stay (Sept 8)
Favorable. Income Tax Department granted stay on revised demand of ₹215.59 Cr (FY 2022–23). Original demand ₹188.78 Cr; revision reflects scrutiny. Stay granted; contingent liability remains but imminent cash hit avoided.
6 · Tosil Systems Acquisition (Aug 20)
Positive. CG Power's subsidiary Axiro acquired 100% of Tosil Systems for ₹16.44 Cr. Move expands semiconductor/electronics vertical; fits growth strategy in high-margin segments. Small deal; immaterial to group numbers.
7 · QIP Fund Use Monitoring (July 24)
Routine. CARE Ratings' monitoring report confirms Q2 FY26 (June 2026) end—utilization of ₹3,000 Cr QIP proceeds on track. No deviations reported. Supports capital deployment narrative.
What to Watch on Oct 23
1 · Revenue and EBITDA margin trajectory
Does Q2 show sequential revenue growth (₹3,200+ Cr expected) and margin stability (16.5%+)? Miss on either front will prompt questions on FY27 guide credibility. Sehore's contribution and seasonality are the key variables.
2 · Order backlog and new wins
The ₹17,333 Cr backlog is the growth engine. Q2 call should detail inflows, conversion rates, and any pipeline announcements (renewable tenders, data center orders, export deals). Backlog decline or muted inflow language would be a risk signal.
3 · Sehore plant utilization and cost absorption
Early guidance on capacity utilization (% MVA output in Q2) and any commentary on ramp costs/efficiency will show whether the plant is accretive to margins or a near-term drag. Management will likely be cautious; strong utilization data will be reassuring.
4 · Management commentary on VP vacancy and leadership transitions
Investors will probe the Ajay Jain vacancy (critical for transformer business strategy) and the auditor change. Expect management to emphasize continuity and depth in the transformer team. Any signaling of further org changes could unsettle sentiment.
5 · Semiconductor segment (Tosil, Axiro) progress
While immaterial to consolidated numbers (~2–3% of group revenue), the Tosil acquisition shows intent to diversify. Any discussion of near-term synergies, margin profiles, or scale plans will be noted by analysts tracking diversification progress.
CG Power's Q2 FY27 print is a test of execution at scale: can the company sustain Q1's revenue and profit momentum while absorbing the Sehore ramp and managing a leadership transition in the transformer business? The ₹17,333 Cr order backlog provides exceptional visibility, but execution—and margin stability—will determine whether the 25%+ FY27 growth guide is credible. With a consensus Buy rating and modest 5.9% upside to ₹931, the market is pricing in a solid result and steady-state execution. A beat on revenue (₹3,350+ Cr) and margins (17%+), or incremental order wins, could reignite the upside. A miss would quickly focus attention on guide achievability and the impact of semiconductor losses on group profitability.
Watch for: (1) Q2 revenue run-rate and EBITDA margin; (2) order backlog trajectory and Q3–Q4 inflow commentary; (3) Sehore utilization and cost absorption; (4) management depth and continuity in transformer business post-Jain; (5) FY27 full-year guidance reaffirmation or revision.