CG POWER & INDUSTRIAL SOLUTIONS Q2FY24 Earnings Call Highlights
Power systems margins were significantly higher year-on-year on account of execution of export orders with better margins, improved pricing due to demand environment and better operating leverage.
Order book as on hand as at 30th September 2023 aggregate to INR 5,229 crores.
Annualized ROE for Q2 FY '24 was at 44%. Free cash flow generated during the quarter was INR 319 crores. Order intake for Q2 FY '24 was INR 2,232 crores, that's 22% growth year-on-year.
The Board of Directors approved a proposal to expand the manufacturing capacity of Switchgears at its plant in Nashik at INR 155 crores; Power Transformers Bhopal at INR 31 crores for additional 10,000 MVA capacity and High Tension Motors in Bhopal at INR 35 crores.
Not seeing any slowdown or dipping in the underlying demand of motors, but the channel partners actually have been very conservative in meeting the orders on stocking.
Supply of motors to EV will take some more time, it is a long-term project, not seeing this happening at least in this financial year. Similarly, on the consumer goods.
From the industry side, inquiries or the CapEx spend has not very much increased over the last 6 months, but it is not gone down also. The finalization and the procurement is getting delayed a bit.
Export capacity buildup will take 2 years' time. The transformer project will get completed in about 15 months from now. And even then after that, the domestic demand is so high that co is not sure whether transformers exports would immediately start. It depends on the orderbook.
New capex at 90% utilisation, transformer will give about INR 1,500 crores and then Switchgear will give about INR 600 crores.
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