CG Power shares rise 2.5% post-Q2 results; brokerages see up to 37% upside
Following the results, brokerages maintained mixed outlook on the stock, with UBS, Nomura and Citi retaining their ‘BUY’ ratings, while Kotak Institutional Equities maintained a ‘Sell’ rating and Jefferies gave ‘Hold’ call.
Shares of CG Power and Industrial Solutions today, October 26, rose over 2.5 percent after the company posted a 44 percent year-on-year (YoY) jump in its net profit for July-September quarter of the financial year 2026-27 (FY27), supported by higher revenues and improved margins. The Mumbai-headquartered entity shared its Q2FY27 earnings last week on Friday. Following the results, brokerages maintained mixed outlook on the stock, with UBS, Nomura and Citi retaining their ‘BUY’ ratings, while Kotak Institutional Equities maintained a ‘Sell’ rating and Jefferies gave ‘Hold’ call.
CG Power share price today Shares of CG Power today opened at Rs 830 and rose 2.60 percent to an intra-day high of Rs 834.50, on the NSE. At the time of writing the report at around 1.20 PM, the stock was trading 2.39 percent or Rs 19.25 higher at Rs 832.60, on the NSE. CG Power Q2FY27 results CG Power and Industrial Solutions reported 44 percent jump in consolidated net profit at Rs 409.09 crore for the second quarter of FY27.
It had clocked a profit after tax (PAT) of Rs 284.44 crore in the year-ago period, it said in an exchange filing. During the quarter under review, the company's total income increased to Rs 3,883.25 crore from Rs 2,988.89 crore in Q2FY26. From power systems segment, the company’s revenue was Rs 1,766.76 crore as against Rs 1,254.49 crore in the year-ago quarter. The industrial systems business contributed a revenue of Rs 1,868.61 crore in the quarter as against Rs 1,533.33 crore in July-September FY26.
The company's board also approved enhancing capex investment for the GIS brownfield project at Vilholi, Nashik, from Rs 35.17 crore to Rs 44.62 crore. It also gave nod to invest Rs 15.31 crore to enhance EHV (extra high voltage) circuit breaker manufacturing capacity by 3,600 units (annually) at S3 Unit-II facility. In a separate statement, the company said its board has approved enhancing the power transformer manufacturing facility (T3) by 10,000 MVA (megavolt ampere), taking the overall capacity to 75,000 MVA.
"Given the current and projected order pipeline for the division, the Board has approved the capacity enhancement. The total estimated project investment is Rs 68 crore (net of taxes)," it said. The project is planned to be completed within 12-15 months and expected to significantly enhance the plant's manufacturing capacity, enabling the division to meet growing market demand and strengthen its competitive position.
"This is an exceptional quarter for us, with standalone revenues growing by 32 per cent YoY and an EBITDA margin of 18.2 per cent for the quarter," said Amar Kaul, Group CEO and Managing Director, CG Power and Industrial Solutions. Brokerages on CG Power UBS on CG Power: Buy with a target price of Rs 1140 UBS maintained its ‘Buy’ rating on CG Power with a target price of Rs 1,140, indicating an upside of around 37 percent, citing strong order inflows and margin expansion.
The brokerage highlighted that revenue, EBITDA and profit after tax (PAT) grew 30 percent, 43 percent and 44 percent, respectively, YoY for Q2FY27. Order inflows were strong at Rs 85 billion, up 78 percent YoY and 46 percent, ahead of UBS estimates, driven by the power segment. It said while revenue and EBITDA were broadly in line with the brokerage's estimates, the EBITDA margin of 14.2 percent expanded 131 basis points YoY and 208 bps sequentially.
The margin was broadly in line with UBS estimates and also 72 basis points ahead of consensus estimates. For the first half of FY27, revenue, EBITDA and PAT grew 15 percent, 20 percent and 25 percent, respectively, compared with the corresponding period of the last financial year. Nomura on CG Power: Buy with a target price of Rs 1100 Nomura retained its ‘Buy’ rating on CG Power with a target price of Rs 1,100, indicating an upside of around 32 percent, noting the continued outperformance by power systems business.
The brokerage described the July-September quarter performance as a record-high quarterly showing, with order inflows and AT increasing 78 percent and 44 percent, respectively, year-on-year. Revenue and EBITDA grew 30 percent and 43 percent, respectively, on YoY, beating consensus estimates by 7 percent and 16 percent. Nomura noted that the Power Systems segment continued to outperform, while the Industrial Systems business remained steady.
The brokerage's positive outlook is supported by its expectation of a 35 percent compound annual growth rate (CAGR) in earnings per share (EPS) between FY26 and FY29. It noted that the stock is trading at 54 times and 42 times its estimated FY28 and FY29 EPS, respectively. Citi on CG Power: Buy | Target price: Rs 1,100 Citi maintained its ‘Buy’ rating on CG Power with a target price of Rs 1,100, citing strong Q2FY27, with robust order inflows, revenue growth and better-than-expected margins.
Citi's target price also indicates an upside of 32 percent from the today's intra-day high of Rs 834.50. The brokerage highlighted that order inflows reached Rs 85 billion, up 78 percent YoY and 63 percent quarter-on-quarter. The figure was 50 percent above Citi's estimates and 43 percent ahead of consensus expectations, supported by demand from utilities, data centres and domestic and export markets.
Revenue stood at Rs 38 billion, up 30 percent YoY and 7 percent ahead of Citi's estimates. EBITDA margin came in at 14.2 percent, largely driven by Power Systems. Its EBIT margin expanded to 25.1 percent, due to gross margin improvement and operating leverage. Citi identified several factors investors should monitor. These are as follows: a) Execution ramp-up from recently commissioned and upcoming capacities,
b) Export based order inflow, especially from DC based segment, c) Sustainability of Power Systems margins, and d) Margin trajectory in Industrial Systems, where further price hikes appear limited. Jefferies on CG Power: Hold, Target Price Rs 855 Jefferies maintained its ‘Hold’ call on CG Power, with a target price of Rs 855, stating the company's Q2FY27 EBITDA was in line with its estimates. The brokerage noted that order flows rose 90 percent YoY, driven by 2.4x rise in power systems order flow.
CG Power's management has announced capital expenditure of Rs 4 billion to expand capacity for power transformers and switchgear. Jefferies expects the Power Systems business to continue to drive profitability, supported by a robust outlook in domestic and export markets. However, the brokerage remains concerned om Industrial Systems segment dragging down overall profit growth. It maintained its estimate of a 23 percent earnings CAGR between FY26 and FY30.
Kotak Institutional Equities on CG Power: Sell with target price of Rs 720 Brokerage Kotak Institutional Equities maintained its ‘Sell’ rating on CG Power, with a target price of Rs 720, even as it acknowledged the company's strong performance in the second quarter. The brokerage highlighted that EBITDA beat expectations by more than 10 percent, while order inflows nearly doubled, driven in large part by the company’s Power Systems division.
Kotak said timely and capital-efficient capacity expansion, coupled with cost reductions in the segment, has helped CG Power deliver strong margins in the Power Systems division. These factors could support the strength into FY28 and FY29. The brokerage, however, flagged hardening receivable days, which contributed to lower year-on-year cash flow from operations and negative free cash flow in the first half of FY27, representing only point of weakness in results. It also raised its estimates for the business excluding the OSAT segment by 8 percent to 14 percent.
