Good Q4 For CG Power | Railway Segment Expanding Into Markets Beyond India, Says Company | CNBC TV18

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[00:00:00]Moving on now to the next management and that is CG power. The company's reported a good set of Q4 numbers. The company's revenues have gone up by 25%. The embida margins have expanded by 100 basis points to 13.5%. Profits ahead of estimates at 32.5% and the order book has surged more than 60%. Amar call group CEO MD of the companies now joining in. Thank you very much sir for joining in. Remma here. It's the power systems the power systems which is driving growth for you in Q4 solid near 50% topline growth. Now given the order book and the visibility on the power side what can you guide for the company's overall revenue growth next year what are you gunning for and in that the contribution of power?

[00:00:42]>> Thank you. Thanks Rea for having me here. Uh yes, I think the team did a good job in terms of the performance and uh for your specific question on power.

[00:00:51]Uh we are pretty uh positive about the way industry is growing, sustainability focus and also the power grid transmission that is happening modernization of the grids. I think all that is uh building into the demand further and uh we are pretty bullish on that as well.

[00:01:08]>> Can you help with some numbers? And even margins expanded for the power systems business. Ebon margins hit 23.8% 8% in Q4. Is that the new base? Can you sustain given the raw material volatility? So margins and even some indication of the growth pipeline on power.

[00:01:23]>> Yeah. So it's a combination of multiple things. You know, I think there's no one size that fits all. I think not everything came from the customers. You know, it's also our foundational execution excellence that we have been practicing for last more than two years.

[00:01:37]uh keep compressing the lead times, eliminate the waste from the system, make sure your demand and supply side is uh balanced on sio processes uh have that right forecasting. So there are multiple things you know I can talk for two hours you know what are the things we are doing that's actually showing those so what you see is actually the outcome but there's a lot of hard work which the team has been doing over the years on that so so we're pretty positive you know again we are not giving any forecast on how the margins will look like but yes uh we always look at a creative margin growth so which means when the top line goes up the margins will also go up >> yeah u Mr. call high morning and we're talking to you on a day where it's very possible that the stock hits a new all-time high. Uh I think uh it it last hit a high of 874 back in October of 24 and we're about 15 bucks away. Uh so it's done phenomenally well from the lows recent lows you know. So there is power which is doing uh which is growing gang busters but industrial systems uh is kind of looking is on the other end right some 12 13% kind of growth. So could you tell us what's happening there? Is it uh demand related issues and you know between motors, railways, what what exactly is going on?

[00:02:52]>> Sure. I think good question Pashant. Uh thanks to talk to you again. Uh yes power I think because uh you know the market is on our side which you know because of the expansion you know it pretty well. industrial is not as great as the power sector but it does not mean that you know five to 6% growth that we see on this industrial side we are in very close to those numbers but having said that what are we working on if you remember last couple of quarters that I have been talking in earnings call or interaction with you guys is there's lot of work which has gone into the motors piece of business and I'm very happy to see the large portion of the motors which is LT motors it's kind of bounced back it has reached the respectable double-digit margin that I was looking for. Again, that's not the end of it.

[00:03:36]You know, the there's a very clear road map over the next couple of quarters.

[00:03:40]How do we keep inching upwards on that?

[00:03:42]So, I'm pretty much uncomfortable on the LT motor piece. Then we have the large motor piece of the business uh which right now is undergoing that transition.

[00:03:50]We'll take I would say 3 to 6 months more uh to bounce back on that as well.

[00:03:54]Our go to market strategy on that is activating not only in India for outside India as well. uh NPD pipeline for R&D is also getting activated. So these are a couple of things that will help us to be at least 2x to 3x of the GDP growth in that particular market. So that takes care of one of the big piece of the industrial segment. Second piece is the railways business. That's going to take a couple of quarters more. Uh we had recently leadership changes. We have very very strong professionals who are running this piece. We activated a lot of NPDs on that. Lot of go to market. In fact, you know, a couple of my guys right now are sitting in outside India doing that business development and developing those accounts as well. So, it's not only for Indian railways, but we are looking at markets outside India as well. So, I'm pretty bullish on that product as well. But obviously, you know, you'll not get uh results over the next few months. It'll take a bit of more time >> and and margins here, segment margins would would >> generally because input prices are going up, cost pass through perhaps a bit of a challenge here >> or or not? uh I I would say we have been able to mitigate that to a large extent like I mentioned last time in in the last 12 months we have increased motors pricing almost by 17 and a half%. And lot of it was realization. You know, it's not that we pass the price in then gave the discounts. No, I think we were able to realize that and that's why you see decent improvement in the margin again. We don't give the each business- wise margin. But I mentioned that you know it's already bounced back to double digit margins. Uh that's a result of balancing what you get from the market and also what you are doing from the productivity point of view. M got that you know uh Mr. call just on on just to go back to uh power uh you know where are we in the ordering cycle uh you think a lot of the ordering I mean we we are halfway past or we we are in this cycle in this current uh cycle where do you think we are >> I think the simple answer is pashant that we have just started it's it's the beginning of it and if you see the jump of our order backlog is jumped by almost 60% our uh bookings went up by 30%, and the way I look at the pipeline uh is phenomenal, huge, you know, and that's why you see a lot of focus on our capacity expansions to address all of those things. Today, honestly, the orders, that's not a big problem. It's a big issue is how quickly can we get our capacities in place.

[00:06:22]>> Yep. Yep. uh for the technology piece of because because we being a large Indian organization you we're not blessed to have all the technologies available but I think our team is doing a fantastic job to build those in-house technologies to compete with the best in the world.

[00:06:37]Yeah. And this is all domestic ordering, right? What you're saying just at the beginning of it.

[00:06:42]>> No, no, no, no, no, no, no. It's a combination of all. You know, if you if you look at even exports, we don't give specific numbers, but just to give you an idea, for full year 26, financial year 26, we were 200% up on export orders. Okay. And for Q4 itself, we were almost 7 and a half times more than Q4 of previous year. So there's a big focus on exports and domestic as well. So it's a combination of both. Mhm. Any any uh so you've expanded capacity in terms of other action corporate action in terms of looking for acquisitions because as you say execution is the issue are are you looking are you scouting for opportunities I mean u >> yes I think yeah >> we have this strategy team which contin works on that we will not be shy of that shy of that if there's a potential opportunity that makes sense for us we'll definitely uh go towards that as well but I think what is control very quickly is accelerating the capacity expansion and and probably in just wait for a quarter more. What we are looking at you know typically you know the kind of product we have it takes close to 2 years 24 months to set up a new factory and we are seeing how do we compress it from 12 to 12 to 14 months. So th those are the things uh you know on lean manufacturing basis what we are working on and that itself gives you one year uh leverage of being ahead of the curve >> and on the uh the the OSAT semiconductor piece I mean things progressing well can you give us an update >> yeah OSAT as I mentioned last time our G1 which is the mini plant making about half a million chips a day that's already operational and uh just waiting for some customer approvals I think next one to two quarters we should be done with that. So it'll start producing uh as per the specs of the customer and G2 which is a mega plant which is about 14 and a half million chips a day. Uh that is going as per the plan. So between December to March is the time frame uh of this year that it'll be ready for production and then give it about two to three quarters more because that's the time it takes for customer approval and testing etc. uh so sometime in 27 and or something we should be ready with both of these opportunities on the OSAT piece.

[00:08:53]>> So somewhere halfway FI28 uh this will be completely up and running.

[00:08:58]>> Yeah. Yeah. So that and then there's a gradual ramp up that is as per the plan.

[00:09:01]But the good news is I think the team is doing a fantastic job. Uh so that in the in terms of the timeline etc we are exactly on that.

[00:09:09]>> Okay. Uh Mr. Call thank you very much for joining us. Good speaking with you.

[00:09:12]appreciate your time here on CNBC TV18.