CG Power & Industrial Solutions Ltd.'s consolidated net profit fell in the second quarter of the current financial year, missing analysts' estimates on higher raw material cost.
The company's bottom line stood at Rs 220 crore in the quarter ended September, compared to Rs 242 crore clocked in the year-ago period, according to an exchange filing on Monday. Analysts tracked by Bloomberg had a consensus estimate of Rs 258.5 crore.
CG Power Q2 FY25 Results: Key Highlights (Consolidated, YoY)
Revenue rose 21% to Rs 2,413 crore versus Rs 2,001 crore (Bloomberg estimate: Rs 2,329.48 crore).
Ebitda fell 4% to Rs 295 crore versus Rs 308 crore (Estimate: Rs 342.2 crore).
Margin at 12.2% versus 15.4% (Estimate: 14.7%).
Net profit down 9% to Rs 220 crore versus Rs 242 crore (BB Estimate: Rs 258.5 crore).
The company's margin was primarily impacted by a 25.6% surge in its cost of materials expenses.
CG Power mainly operates in two business segments: power systems and industrial systems. The company's power systems' revenue rose 36% during the three months ended September, while its industrial system segment's revenue increased by 13% on an annual basis.
Capacity Expansion and Fundraising
CG Power and Industrial Systems' board has approved funraising plans of up to Rs 3,500 crore. The company will be raising funds by the issuance of equity shares having a face value of Rs 2.
The company's board also approved the additional capacity expansion of its Power Transformers T3 unit. The additional investment required stands at Rs 26.64 crore. The proposed expansion would increase the unit's power transformer production capacity from 35,000 megavolt-amperes to 40,000 megavolt-amperes.
The expansion project is expected to be implemented within 18 months, as per the company, and will be funded via internal accruals. The expansion is proposed by the company due to the expected increase in demand for Transformers.
The shares of CG Power fell on Monday. The shares fell as much as 6.86% during the day to Rs 762.85 apiece on the NSE. The stock was trading 6.29% lower at Rs 767.45 per share as of 3:07 p.m. This compares with a 0.28% decline in the benchmark Nifty 50. It has risen 99.86% in the last 12 months and 72.82% year-to-date.
Out of eight analysts tracking the company, five maintain a 'buy' rating and three suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 10%.
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