CG Power Reports 26% YoY Revenue Growth in Q3 FY26

Introduction to CG Power's Recent Performance

CG Power and Industrial Solutions Ltd. announced a strong financial performance for the third quarter of fiscal year 2026. The company reported a significant 26.22% year-on-year increase in consolidated net sales, which reached Rs 3,175.35 crore for the quarter ending December 2025. This growth reflects sustained momentum across its key business verticals and underscores the company's solid market position. The announcement comes as the company continues to execute strategic initiatives, including a significant push into the semiconductor sector and capacity expansion in its traditional power and industrial segments. On January 28, 2026, the stock opened at Rs 535.20, trading actively with significant volume, indicating strong investor interest following the results.

Detailed Financial Results

The company's financial results for the second and third quarters of FY26 highlight a consistent growth trajectory. For the quarter ending September 2025 (Q2 FY26), consolidated net profit rose by 29.1% year-on-year to Rs 284 crore, while sales grew 21.1% to Rs 2,923 crore. The operating margin for Q2 expanded to 13% from 12% in the previous year, driven by improved price realization and operational efficiencies. The unexecuted order backlog stood at a robust Rs 14,953 crore as of September 30, 2025, an 88% increase year-on-year, providing strong revenue visibility for the upcoming quarters. The subsequent Q3 results continued this positive trend, with standalone net sales for December 2025 reaching Rs 2,909.44 crore, a 21.79% increase from the previous year.

Segment-Wise Performance Analysis

A deeper look into the company's segments reveals a story of robust growth in one area and temporary challenges in another. The Power Systems segment was the primary growth driver in Q2 FY26, with sales surging by 48% year-on-year to Rs 1,254 crore. This performance was supported by strong execution and sustained demand momentum. The segment's margins expanded by 310 basis points, reflecting better price realization and improved operating leverage. Order intake for Power Systems jumped 81% year-on-year to Rs 2,643 crore. In contrast, the Industrial Systems segment reported a marginal 2% decline in sales to Rs 1,395 crore, primarily due to project deferments in the railway business. Despite this, the company's focus on cost optimization and pricing discipline helped mitigate the impact on profitability.

Strategic Push into Semiconductors

One of the most significant recent developments for CG Power is its strategic entry into the semiconductor industry. Its subsidiary, CG Semi Private Limited, inaugurated one of India's first end-to-end Outsourced Semiconductor Assembly and Test (OSAT) facilities in Sanand, Gujarat. This move positions the company as a key player in India's mission to build a self-reliant electronics manufacturing ecosystem. The project is supported by the India Semiconductor Mission (ISM), with CG Semi eligible for substantial capital assistance from both the central and state governments. The new facility, G1, has a peak capacity of half a million units per day, with a larger plant, G2, currently under construction.

Capacity Expansion and Key Orders

To meet growing demand, the Board of Directors has approved a Greenfield expansion for its Switchgear business with an investment of Rs 748 crore. This expansion will increase the production capacity for medium and high-voltage circuit breakers and gas-insulated switchgear, catering to both domestic and export markets. The company also secured a landmark export order worth Rs 900 crore to supply high-capacity power transformers for a US-based data centre. This is the largest single order in the company's history and marks its entry into the fast-growing global data centre infrastructure vertical, reinforcing its capability to deliver mission-critical technology solutions worldwide.

Stock Performance and Valuation

As of January 28, 2026, CG Power's stock demonstrated significant trading activity. The stock reached an intraday high of Rs 583.65, nearing its upper circuit limit. The company has a market capitalization of approximately Rs 91,596 crore. However, its valuation remains a key consideration for investors. The trailing twelve months (TTM) price-to-earnings (P/E) ratio stands at a high 85.78, which is considerably above the sector P/E of 57.13. The price-to-book (P/B) ratio is also elevated at 12.28. While these high valuations reflect strong growth expectations, they also suggest that the stock is priced at a premium compared to its peers.

Analyst Outlook and Future Prospects

Analysts maintain a generally positive outlook on CG Power, with a consensus 'Buy' recommendation from a pool of 15 analysts. Technical analysts have suggested accumulating the stock in the Rs 680-700 range, with potential upside targets of Rs 750-820 over a 6-8 week period. The company's strong order book, strategic diversification into semiconductors, and capacity expansions provide a solid foundation for future growth. The backing of the Murugappa Group ensures strong corporate governance and strategic clarity. While execution risks and high valuations are factors to monitor, CG Power is positioning itself as a key player in India's industrial and technological transformation.

Conclusion

CG Power and Industrial Solutions has delivered a strong operational and financial performance, highlighted by robust revenue growth and a burgeoning order book. The company's strategic foray into the semiconductor business and continued expansion in its core power and industrial segments align well with national priorities and global technology trends. While investors should remain mindful of the stock's high valuation, the company's growth trajectory and strategic initiatives present a compelling long-term narrative.