CG Power: Driving Growth with Innovation and Expansion into Emerging Markets

CG Power and Industrial Solutions Limited was established in 1937 and is a leader in the Electrical Engineering Industry offering an impressive and diverse portfolio of products, solutions and services for the Power and Industrial equipment sector catering to myriad needs across varied industries around the globe.
The Company has been a pioneer in its leadership position of application of electrical energy. CG Power and Industrial Solutions has world-class manufacturing plants across 9 locations in India and one in Sweden with around 3,100 employees . It has been the supplier of high quality, ‘Smart’ electrical, industrial and consumer products and solutions across the world over. It’s unique and diverse portfolio ranges from Induction Motors, Drives, Transformers, Switch gears and other allied products for the Industrial and Power sectors as well as Traction Motors, Propulsion systems and Signal Relays for the Indian Railways. Recently, the company has also made a foray into the business of Consumer Appliances (Fast Moving Electrical Goods) such as Fans, Pumps and Water Heaters in the vast domestic market . The company’s portfolio has been structured into two business lines—Industrial Systems (including Motors, Railways and Fast Moving Consumer Goods) and Power Systems. For the second quarter of FY25 , CG Power and Industrial Solutions posted sales of ₹2270 crores and profit before tax of ₹298 crores showing a growth of 19% y-o-y.
The free cash generated for the second quarter of FY2025 was ₹237 crores while the return on capital employed was 33% on an annualised basis. The order intake book stood at Rs 3196 crores which shows a whopping 43% growth y-o-y and the unexecuted order book swelled to Rs 7831 crores , which is approximately 50% higher y-o-y .Segment wise, the industrial system sales were higher at Rs 1425 crores showing a 11% growth y-o-y . The Power system segment posted sales of Rs 846 crores for Q2FY25 showing a growth of 37% y-o-y , while the PBIT stood at Rs 149 crores which was 17.6% up as against Rs 103 crores for the second quarter of last year. The order book stood at Rs 1463 crores showing a positive 31% growth y-o-y .
Meanwhile , the unexecuted order book closed at Rs 5131 crores which is 53% higher y-o-y . During the quarter, the company completed the acquisition of CG Tronics Private Limited with a 55% equity stake at an aggregate consideration of Rs 319 crores . Also, CG Power and Industrial Solutions has entered into a definitive agreement with Radio Frequency components marking its foray into Semiconductor design at a consideration value of around $36 million . The management had last year put in place a capacity expansion for the Power transformer business from 25000 MVA to 35000 MVA and has now further given the go ahead for an additional 5000 MVA capacity .
This will increase the total capacity to about 40,000 MVA. This expansion is proposed considering the expected increase in demand for the transformer business. The company has recently bagged an order from Chittaranjan Locomotive Works, West Bengal for the supply, installation, testing and commissioning of Onboard KAVACH equipment as per RDSO specifications for an approx value of Rs 500-600 crores . The supply scope also covers complete wiring, harnessing, cabling, and integration with the Loco KAVACH system. Onboard KAVACH is an advanced train safety system developed by Indian Railways designed to prevent train collisions and ensure the safety of passengers .This system uses a combination of sensors, communication devices and onboard equipment to detect signals, track conditions and train movements. KAVACH, which stands for Knowledge-based Advanced Vehicle Assistance for Collision Hazard alerts train operators about potential dangers, such as signal violations or unintended movements and can automatically apply brakes if necessary to avoid accidents.
The system is part of the broader efforts by Indian Railways to enhance safety and reduce accidents on the railway network.
Analysts and foreign brokerage houses are extremely bullish on CG Power and Industrial Solutions with the potential to benefit from rising demand for energy-efficient motors as it holds over 35 percent market share in the LT motors segment along with the growing adoption of advanced drives.
It is also well poised to capitalise on the increasing demand for power equipment in the power systems segment spurred by the integration of renewable energy and better power evacuation from
thermal plants.
Moreover , the company’s Railways division is also set to benefit from modernisation initiatives, with the expected potential to capture 25-30% business . The CG Power stock currently quoting at Rs 730 on the bourses is a good fundamental buy for long term gains .