CG Power's transformer capacity roadmap keeps shifting; Kavach approval delayed a year
Order book hit ₹17,333 cr, up 45%, but management has revised capacity targets three times in 18 months and repeated a 4-6 week RDSO approval timeline that was first given a year ago.
What's new
- Order book rose 45% YoY to ₹17,333 cr (standalone) and ₹18,965 cr (consolidated).
- Power Systems sales up 31% to ₹1,402 cr; margin expanded to 23.0% from 21.0%.
- Motors grew high-teens with another 5% price hike after 17.5%; double-digit margins sustained.
- CG Semi commenced commercial production; semiconductor investment dragged consolidated PAT by ₹43 cr.
Themes from the call
Demand
Order book up 45% YoY; Power Systems demand strong across utilities, renewables, data centers; export pipeline doubled.
Margins
Power Systems margin expanded 200 bps to 23.0% on better cost absorption from higher volume; Industrial margins hit by ₹20 cr Railways provision.
Capital allocation
Transformer capacity expansion accelerated ahead of original schedule; semiconductor investment continues despite 132 bps PAT drag.
Guidance watch
- New transformer plant to add 45,000 MVA, targeting 10,000/30,000/45,000 MVA ramp over three quarters.
- Kavach RDSO approval still expected in 4-6 weeks — same as in Jul 2025; timeline credibility is now in question.
- Motors IE3/IE4/IE5 range to be completed within 12 months; further price hikes needed to offset commodity inflation.
Risk flags
- Repeated capacity roadmap changes reduce confidence in management's forward visibility on transformer expansion.
- Kavach approval delay of over a year risks missing the Indian Railways signaling opportunity window.
- Semiconductor investment continues to drag earnings; no timeline given for breakeven or profitability.
- Commodity inflation persists, requiring further price increases in motors despite already 17.5% plus 5% hikes.
Key quotes
-
"Order flow continued to be strong during the quarter, with the order book rising 45.0% year-over-year to Rs 17,333 crore."
— Amar Kaul, CEO -
"Power transformer capacity is already about 75,000 MVA, and distribution is close to 10,000 MVA. With the new plant starting up in the next few months, we will add approximately 45,000 MVA more."
— CG Power management, Jul 2026 call -
"The ISA audit has happened, and we are waiting for that and the RDSO approval, which should hopefully happen in 4-6 weeks."
— CG Power management, Jul 2026 call (same as Jul 2025)
The brief
CG Power delivered a headline-beating quarter: order book at ₹17,333 cr, up 45%; Power Systems margin expanded to 23.0%; motors kept growing in high-teens. But the numbers are shadowed by a management narrative that keeps moving the goalposts. Transformer capacity guidance has shifted three times in 18 months (from 85,000 MVA by FY27/28 to 40,000 MVA last year to 75,000 MVA already operational and another 45,000 MVA on the way) without a single explanation. Kavach is worse: management told investors the same 4-6 week RDSO approval timeline in July 2025 and again in July 2026. A year passed and nothing changed. On motors, the demand story reversed from 'market deteriorated' last year to 'good traction' this year, with no clarity on whether that is a market recovery or share gain. The underlying business is strong, and the order book offers multi-year visibility. But when management keeps revising its own capacity roadmaps and repeating a regulatory timeline that never comes, the street is left guessing which numbers to trust. The semiconductor investment (₹43 cr drag, 132 bps on consolidated margins) compounds the uncertainty. CG Power has the orders. The question is whether it has the execution credibility to match.
CG Power's order book is rocketing. Its guidance credibility is not. That gap is the risk.