CG Power and Industrial Solutions has delivered another strong quarterly performance, with consolidated profit rising 44% and its order backlog reaching ₹23,646 crore. But the biggest surprise lies in the Power Systems business, where profit growth significantly outpaced revenue growth.

The Murugappa Group company announced its unaudited financial results on October 23, 2026, reporting strong demand, improved operating margins and a sharp increase in new orders for the quarter ended September 30.

Consolidated revenue increased 30% year-on-year to ₹3,802 crore, compared with ₹2,923 crore in Q2 FY26. Consolidated profit after tax rose 44% to ₹409 crore from ₹284 crore a year earlier.

The company also reported consolidated EBITDA of ₹621 crore, representing 40% year-on-year growth from ₹443 crore. Its consolidated EBITDA margin improved to 16.3% from 15.2%, an expansion of approximately 110 basis points.

Sequentially, revenue increased 16%, EBITDA rose 29% and profit after tax climbed 33%, indicating stronger performance compared with Q1 FY27.

However, investors should distinguish the consolidated results from the standalone numbers highlighted in the company’s press release. On a standalone basis, CG Power reported sales of ₹3,505 crore, up 32% year-on-year, while profit after tax rose 46% to ₹450 crore.

Standalone EBITDA increased 47% to ₹637 crore, with the EBITDA margin improving to 18.2% from 16.4%. The 180-basis-point improvement in standalone EBITDA margin indicates that operating profitability strengthened faster than revenue.

Management attributed the improvement primarily to the performance of the Power Systems division. The company’s consolidated order intake rose 78% year-on-year to ₹8,485 crore during the quarter.

Its consolidated unexecuted order backlog reached ₹23,646 crore as of September 30, 2026, representing 58% growth from the previous year.

This backlog provides visibility for future business execution, although the timing of revenue recognition will depend on project delivery schedules. The most impressive segment performance came from Power Systems.

Power Systems revenue increased 41% year-on-year to ₹1,769 crore, compared with ₹1,254 crore in the corresponding quarter last year. Segment EBITDA surged 70% to ₹458 crore, while the EBITDA margin expanded to 25.9% from 21.5%.

Power Systems profit before interest and tax increased 71% to ₹443 crore, with the PBIT margin rising 430 basis points to 25%. The company attributed this improvement to stronger price realisation, better operating leverage and resilient customer demand.

Power Systems also recorded order intake of ₹6,258 crore, representing 137% year-on-year growth. Its unexecuted order backlog reached ₹18,964 crore, up 81% from the previous year.

These figures indicate that Power Systems is currently the company’s most important driver of margin expansion and order-book growth. Industrial Systems also delivered revenue growth, although its profitability trends were more mixed.

Segment revenue increased 25% year-on-year to ₹1,738 crore, supported by growth across its businesses. Industrial Systems EBITDA rose 22% to ₹177 crore, but its EBITDA margin declined slightly to 10.2% from 10.4%.

Segment PBIT increased 22% to ₹164 crore, while the PBIT margin decreased to 9.4% from 9.7%. However, the company reported a 60-basis-point sequential improvement in Industrial Systems PBIT margin, supported by better profitability in the motors business.

The Industrial Systems order backlog stood at ₹2,856 crore, providing additional visibility for future quarters. Beyond quarterly earnings, CG Power announced important manufacturing capacity developments.

The company rolled out its first transformer from its new Sehore facility in Madhya Pradesh on September 4, 2026. The facility is designed to manufacture power transformers ranging from 220 kV to 1,200 kV and has the capacity to produce approximately 35 transformers per month.

CG Power also approved additional capital expenditure to expand manufacturing capacity across several switchgear and transformer facilities.

The proposed investments include approximately ₹300 crore for the Ambad S1 unit, ₹15.31 crore for additional EHV circuit breaker capacity, an increase in the Vilholi GIS project investment to ₹44.62 crore, and approximately ₹68 crore for expanding the existing T3 power transformer facility.

These investments reflect management’s expectations of sustained demand for power infrastructure equipment. However, capacity expansion will also require capital expenditure, execution discipline and sufficient future demand to generate attractive returns.

Another important development concerns CG Power’s semiconductor operations.

The company disclosed that its semiconductor businesses, including CG Semi and Axiro, had a combined negative impact of approximately ₹35 crore on consolidated profitability during the quarter, equivalent to around 91 basis points.

This reflects continuing investment in talent and capabilities as the company expands into semiconductor-related activities.

While the semiconductor business offers potential long-term diversification, investors should monitor its investment requirements, commercial progress and impact on consolidated margins.

CG Power also completed Axiro’s acquisition of Tosil Systems for ₹16.44 crore in August 2026, strengthening its semiconductor and embedded engineering capabilities.

Commenting on the quarter, Group CEO and Managing Director Amar Kaul described the results as exceptional and highlighted disciplined execution across the company’s businesses.

Management expressed confidence in sustaining performance as the company scales, although the press release did not provide a specific numerical revenue or profit growth forecast for the coming quarters.

The filing also does not provide analyst consensus estimates, so it would be inappropriate to classify the results as a market-expectation beat or miss without separately verified forecasts.

For investors, the key opportunity lies in the combination of strong power equipment demand, rising order intake, expanding manufacturing capacity and improved operating margins.

The main risks include execution delays, raw material cost fluctuations, working-capital requirements, capital expenditure commitments and the near-term profitability impact of semiconductor investments.

The next quarterly results will be important for assessing whether Power Systems can maintain its elevated margins and whether Industrial Systems profitability continues improving.

Investors should also monitor the pace of order-book conversion, utilisation of newly commissioned manufacturing facilities and the financial performance of semiconductor subsidiaries.

CG Power’s Q2 FY27 results demonstrate strong operating momentum, but the sustainability of its growth will depend on converting the ₹23,646 crore order backlog into profitable revenue while managing expansion costs effectively.