CG Power Q2 Results: 4-5 year Target met in 1 year

By Research Desk
about 3 years ago

When Murugappa Group’s Tube Investment acquired CG Power last year in Sept, the new promoter enlisted its target to increase company’s then annual standalone revenue of Rs. 3,170 cr (for FY20) to Rs. 5,000 cr in 4-5 years, and also turnaround loss making operations with a target PBT of Rs. 500 cr in 5 years.

Q2FY22 results were announced yesterday, and CG Power declared power-packed operating performance, with quarterly standalone revenue of Rs. 1,352 cr and PBT (before exceptional items) of Rs. 137 cr for the September quarter. Annualising these numbers leads to revenue of Rs. 5,400 cr and PBT of Rs. 548 cr. Thus, promise of 4-5 years is delivered in 1 year by Murugappa Group!

Moreover, this performance was achieved with 85% capacity utilisation on the industrial systems side and 60% at the power systems side, hinting that there is room for further improvement.

Another 5 year promise was to become debt free. Standalone net debt of Rs.1,100 cr, as of 31.3.20, has already reduced to less than half, to Rs. 460 cr, as of 30.9.21, again being on fast-track to meet this target.

While the 120 year old Rs. 40,000 cr Murugappa Group from South India is well-known for its conservative approach, but this sort of over-delivery is truly exemplary, and is one of the fastest turnaround witnessed in recent corporate history.

Share price may keep changing first figure every year. 100-200-300-400-500 for 2021/22/23/24/25.

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