CG Power Shares Dip on Mixed Q2 Results; Analysts Cautious Near-Term Despite Strong Orders

CG Power and Industrial Solutions Ltd experienced a 2.5% drop in its share price on the BSE on Thursday, October 30, 2025, following the announcement of its financial results for the July–September quarter of FY26.

Despite a significant 45% year-on-year surge in order inflows, reaching ₹4,800 crore, and a 21% year-on-year rise in consolidated revenue to ₹2,922.8 crore, the company's profitability faced headwinds. The Industrial Systems business, particularly the railways segment, reported execution delays, muted price realizations, higher input costs, and operating deleverage, leading to margin pressures. This offset the stronger performance in the Power Systems business, which saw a 45% year-on-year rise in orders.

Analysts from Emkay Global Financial Services downgraded CG Power to 'Add' from 'Buy', citing weaker-than-expected execution and profitability. They lowered FY26–27 earnings estimates by 7-8% but raised the target price by 11% to ₹850. Conversely, Nuvama Institutional Equities maintained a 'Buy' rating with a target price of ₹870, highlighting the strength in the Power Systems segment and growth opportunities in semiconductors.

CG Power's management expressed confidence in the enquiry pipeline and announced a fresh capital expenditure (capex) of ₹750 crore to expand its switchgear manufacturing capacity, serving both domestic and export markets. The company is also making ambitious strides in the semiconductor sector, with plans to commission one of India's first Outsourced Semiconductor Assembly and Test (OSAT) facilities in Sanand.

Impact: This news has a mixed immediate impact on CG Power's stock, with near-term concerns about execution and margins offsetting strong order growth. However, analysts see significant long-term potential driven by India's industrial capex, export opportunities, energy transition, and the emerging semiconductor ecosystem. The success of the Industrial Systems business recovery and semiconductor operations scale-up will be key. Rating: 7/10

Difficult terms: * Ebitda: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. * Order inflows: The value of new orders received by a company for its goods or services. * Execution delays: When a company takes longer than planned to complete projects or deliver products. * Margin pressures: When a company's profitability is squeezed due to rising costs or falling prices. * Operating deleverage: A situation where fixed operating costs represent a large proportion of expenses, making profits more sensitive to revenue changes. * Capex (Capital Expenditure): Money spent by a company to acquire or upgrade its physical assets like property, plant, and equipment. * Enquiry pipeline: A list of potential future business opportunities or customers that a company is actively pursuing. * OSAT (Outsourced Semiconductor Assembly and Test): A specialized service in the semiconductor industry where companies focus on assembling and testing microchips designed by other firms. * Basis points: A unit of measure equal to one-hundredth of a percentage point (0.01%).