CG Power hits record high; stock surges 10% in two days on heavy volumes

In H1FY23, Ebitda margins improved 200 bps to 14.2% on account of improved sales realisation, favourable product mix, moderation in input costs, procurement efficiencies and better operating leverage.

Shares of CG Power and Industrial Solutions hit a record high of Rs 298, gaining 3 per cent on the BSE in Tuesday’s intra-day trade amid heavy volumes in an otherwise weak market. In past two trading days, the stock has rallied 10 per cent.

In comparison, the S&P BSE Sensex was down 0.65 per cent at 60,354 at 10:23 AM. The average trading volumes at the counter jumped 1.4 times with a combined 2.4 million shares changing hands on the NSE and BSE.

CG Power on Monday said that a meeting of the board of directors of the company is scheduled to be held on January 24, 2023, to consider and approve the unaudited financial results of the company for the 3rd quarter ended 31st December, 2022 (Q3FY23).

The Murugappa Group company is engaged in the business of power conversion equipment which includes a wide spectrum for all industrial applications of Medium and Low Voltage Rotating Machines (Motors, Generators, Alternators), Drives and Stampings for all industrial applications. The company is a reputed supplier of equipments & solutions to the Indian Railways for rolling stock, railway electrification, coach and signalling segments for more than three decades.

For the first half (April to September) of the financial year 2022-23 (H1FY23), CG Power had reported a strong 91 per cent year-on-year (YoY) jump in its standalone profit after tax at Rs 302 crore. Sales grew 36 per cent YoY at Rs 3,147 crore. Earnings before interest, taxes, depreciation, and amortization (ebitda) margin improved 200 bps YoY to 14.2 per cent from 12.2 per cent in H1FY22. Margins were higher on account of improved sales realisation, favourable product mix, moderation in input costs, procurement efficiencies and better operating leverage, the company said.

All the businesses of the company have multiple opportunities for growth. The Industrial Business, given the massive investments in the infra sector and the starting of the Capex cycle, is expected to have a sustained organic growth. Besides, the electric vehicle (EV) segment is another big opportunity to cater to for the next several years, CG Power said in FY22 annual report.

In the Railways Business, the Ministry of Railways has unveiled the roadmap for the next decade with significant outlay. The introductions of Vande Bharat trains, setting up dedicated freight corridors, and measures to improve passenger safety, etc., are all new business opportunities for the company, it added.

Significant investments are committed in the energy sector. Development of solar parks and ultra mega solar power projects with proposals to set up 25 solar parks targeting over 20,000 MW of solar power over 5 years have been announced. These will result in increased requirement of the company’s products under the Power Systems business.