CG Power FY26 Annual Earnings Summary

Railway segment margins are squeezed due to thin margins on tenders and delayed pass-through of commodity price increases via PVC clauses.

Analyst noted slower award of interstate TBCB projects in H1 FY26, which could impact order conversion for power transformers and HV switchgear.

India missed power transformer installation targets in H1 FY26, which could slow backlog conversion to sales, though management noted developers are taking deliveries despite project delays.

Government may allow Chinese players to bid for PSU tenders, which could pressure pricing. Management downplayed near-term impact citing 2-4 year setup time.

Industrial segment PBIT margin fell 310 bps YoY to 9.4% due to commodity cost headwinds that could not be fully passed on, though price hikes are underway.

Railway segment faced supply stoppages and service issues, impacting margins. New leadership appointed to address challenges.

Rising commodity costs have already necessitated 17.5% price hikes; further inflation may pressure margins if not fully passed through.

Delivery of transformers to the US depends on capacitor and bushing supplies from Germany (9-12 month lead time), limiting ability to deliver faster than 12 months.

Railways segment margins remain in single digits due to competitive bidding; management expects improvement from services and NPD but timeline uncertain.

Investor concern about potential government approval for Chinese players to enter the Indian transformer market, though management emphasized operational efficiency as defense.

Semiconductor segment reported a loss of ₹41 crore (130 bps impact) due to startup costs and deferred revenue; profitability not expected near-term.