CG Power and Industrial Solutions Limited ($CGPOWER)

Ladies and gentlemen, good day, and welcome to the CG Power Q4 FY '26 Earnings Call, hosted by IIFL Capital Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Renu Baid Pugalia, Senior Vice President, Research of IIFL Capital. Thank you, and over to you.

Thank you, Jitesh. Very good evening, everyone. On behalf of IIFL Capital, I'd like to invite the senior leadership team of CG Power and Industrial Solutions to discuss the fourth quarter FY '26 earnings performance. From the management team, we have with us today, Mr. Amar Kaul, Managing Director and CEO; Mr. Susheel Todi, Chief Financial Officer; Mr. Marais Nel, EVP Drives and Automation and International Motors business; Mr. Gaurav Makhija, Vice President, Switchgears and EPD business; Mr. Ajay Jain, Vice President, Transformer business; Mr. Dhananjay Bapat, Vice President, Railway Business; and Mr. Jatinder Kaul, EVP, Motors Business, India subcontinent. I now like to hand over the call to Mr. Amar for his opening comments, and how do we deliver some stellar performance in the business, especially power system surprising yet again. Thank you, and over to you, Amar.

Yes. Thanks Renu and team. Good afternoon, everyone, and welcome to CG earnings call. I'm happy to share with you all that had another strong set of results for the quarter and year ended 31st March' '26, reflecting our continued momentum powered by disciplined execution and strategic focus. This is a record fiscal year performance for CG in recent times, very strong Q4 gaps of a record fiscal year with highest our stand-alone revenue order book and DBT after accounting for exceptional items. Our Q4 '26 sales grew by 22% year-over-year, EBITDA at 43% year-over-year with 260 basis points margin expansion delivering a strong finish to [indiscernible]. And for the full year, our sales grew by 21%. PBT at 34% year-over-year with 143 basis points mine expansion and again, making it a stronger stand-alone fiscal performance yet. Further, the order flow remained pretty strong during the quarter with penetration improves several new and emerging verticals and markets, taking the order backlog up 59% year-over-year to INR 15,719 crores and offering a strong revenue visibility for financial year '27. Now as I go deeper into a stand-alone performance, starting with Q4. The aggregate sales for the quarter was high at INR 3,129 crores, recording 42%, as mentioned earlier. Profit after tax was higher at a growth of 49% at INR 12 crores, which is 13.2% of sales as against INR 275 crores, which was 10.7% of sales in Q4 financial year '25. [indiscernible] capital employed for the quarter was at 27% and order intake for the quarter was [indiscernible] which is 23% growth year-over-year and unexecuted backlog [indiscernible] financial year [indiscernible] INR 3,719 crores, which is 59% up year-over-year. We further deep into standard performance for financial year '26. The sales was at INR 11,331 crores with a growth of 21%. Profit after tax was at 39% at INR 1,352 crores, which is 11.9% of sales as against INR 974 crores, which was 10.4% of sales in financial year '25. Return on capital input for the year was 22%. Order intake for the year was INR 17,574 crores, which is 30% growth year-over-year and unexecuted order backlog as of close of the financial year was at INR 15,719 crores, which is 59% up versus the last year. Now moving to the sector-wise or the segment-wise performance, starting with Industrial Systems. While performance for Q4 continued on a sequential upward trajectory despite volatility and rising commodity costs. The aggregate sales for the quarter Q4 was at INR 1,643 crores, which is 5% up with robust double-digit growth in the motors which for the last few quarters, you must be hearing me saying that we have stabilized a lot and the team is doing a fantastic job to stabilize that. So that has started showing the reserves there. PBIT was at INR 157 crores, 9.6% of sales as against INR 176 crores to 11.2% of the sales in Q4 '25. Margin deviation is due to the exchange and the competitive pricing in railway business as well as higher MSR promoter due to commodity impact. But the disciplined pricing, along with focused efforts on efficiency gains, via cost and productivity programs over the last few quarters helped partially mitigate this adverse impact business continues to prioritize margin expansion through ongoing cost initiatives, structural improvements, pricing and the mix shaping. We have improved margins by 20 basis points sequentially, and the order intake for the quarter was INR 1,478 crores and [indiscernible] order backlog towards the closure of the financial year was INR 3,075 crores. Healthy growth in orders and order backlog in motors and price [indiscernible] and when we come to the full year performance, the sales for the year was INR 6,197 crores, which is 6% up with a healthy growth, primarily in motors. And PBIT was at INR 613 crores, which is 9.9% of the sales [indiscernible] in the previous year. But that's the margin deviation that we see here is due to the mix change and the competitive packing in [indiscernible] become a [indiscernible] slowing down because of the tariff impact from some countries that we have. So that was [indiscernible] disciplined pricing long over the port on efficiency gain by our cost and productivity program over the last few quarters had partially committed those impact and business continues to prioritize the margin expansion to ongoing initiatives and structural improvements in pricing and mix shaping. The order intake for the year was INR 6,355 crores and our unexpected order backlog as of close of the year was INR 3,075 crores and the [indiscernible] last quarter. Now if I go to the other segment, which is the Power Systems, the performance continued upward trajectory with a sustained margin and continues to be underscoring the robust market dynamics with disciplined execution. The negligence sales for the quarter was at INR 1,487 crores with a jump of 50% year-over-year, reflecting strong execution discipline [indiscernible] was at INR 354 crores at 23.8% of sales as against INR 208 crores, which was at 21% of sales in Q4 '25, a significant 287 basis points margin expansion underpinned by efficient order execution and strong operating discipline. Order intake for the quarter was INR 3,027 crores, which is 72% growth year-over-year, and I mean we give backlog as on 31st of March '26 was INR 1,644 crores, 91% up year-over-year, offering revenue visibility spanning several future quarters. When we [indiscernible] full year performance for Power, the aggregate sales for was higher at INR 5,138 crores with a rise of 46%, reflecting a strong execution discipline. PBIT was at INR 1,143 crores, 21.9% as against [indiscernible] which was 19% of sales in financial year '25, which again comes to 281 basis points of margin expansion and underpinned by the efficient order execution and strong operating leverage. Order intake for the year was at [indiscernible], 69% growth year-over-year and unexecuted backlog as of 31st March was [indiscernible] crores, which is 91% up year-on-year, offering revenue visibility spanning several future quarters. With this, we can go deep time into our stand-alone performance, and I will now move to the consolidated performance. And as you know, the authority results include the performance of our subsidiaries in Sweden. Germany, Netherlands, CGN product and CG Semiconductor Sami, G.G. Tronics, Exego and other nonoperating subsidiaries. Starting with Q4 performance. Aggregate sales for the quarter were up at INR 3,442 crores and a growth of 25% year-over-year. Profit after tax was 32% higher at [indiscernible]. It is 10.5% of sales for the quarter as against [indiscernible], which was 10% of the sales in Q4 last year. Our margin gains are driven by strong performance were offset by continued investment in talent pool for semiconductor business -- semiconductor segment impact of INR 38 crores, which is 110 basis points. It is [indiscernible] partly more than 61% year-over-year at [indiscernible] and when we consider our full year consolidated performance, aggregate sales for the year was [indiscernible] with a growth of 25%. PAT was at 27% at [indiscernible] year as against [indiscernible]. Margin gains are driven by strong stand-alone performance and were offset by continued investment of [indiscernible] mentioned before. And the return on capital employed for the year was at 20%. Order intake for the year was INR 19,616 crores, 33% growth and [indiscernible] as on 31st March, 61%, up at INR 7,107 crores. Now moving to the key events for the last financial year. As you would have seen, we have announced that we have back orders for the supply and servicing of 765 kV transformer packages from the large customer power jet operation. that order value was about INR 641 crores is the highest single order domestically received in across our business in CG. The order is expected to be completed between 18 to 36 months. And also [indiscernible] single largest order of INR 244 crores for ASV business from Techno for supply of [indiscernible] and also launched successfully and completed IP for equity shares and raised INR 3,000 crores. [indiscernible] closed on 3rd of July. It was over [indiscernible] saw participation from both Indian and global marquee investors. PGS, a subsidiary of CG unveiled one of India's first end to end [indiscernible] facility in [indiscernible] Gujarat. And with this launch of G1 facility, CGM becomes one of the first [indiscernible] providers offering solutions across both traditional and advanced packaging technologies. This marks a major step in strengthening India semiconductor capabilities and supporting the treasury's goal of becoming self-reliant, while also serving global markets. The [indiscernible] will operate at a key capacity of 0.5 million units per day, which we are trying to even increase that output over the next few months or quarters, we should be in that situation and G2 facility located about 3 kilometers from G1 is under construction, expected to be completed by end of 2026 whilst operational G2 will start on the capacity of approximately 4.5 million ships per day. Together, the 2 facilities are projected to generate about 5,000 direct and indirect jobs in the coming years. The CG Semi is also eligible for capital assistance has further scheme for setting up OSAT facility launched in India [indiscernible] ISL under the history of Electronics and Information Technology approval dated 8 March 2024. The approval recovers the 5-year period from financial year '24, '25 to '28, '29 for a total project cost of INR 7,584 crores with central domestic of INR 3,501 crores, and additional state [indiscernible] support equating to 40% of the central government assistance coming to about INR 1,400 crores. The fiscal support agreement was signed on January 17, 2025, and the trust and retention account agreement was signed on September 15, 2025. The Board of Directors on 29th October '25 approved a greenfield expansion for switchgear business with an investment of INR 748 crores. Net of taxes, the expansion is proposed considering the expected increase in demand for medium voltage and extra high voltage circle bakers, instrument transformers, gas and [indiscernible] switch gears for domestic and also to the exports market. 3G secured about [indiscernible] order, which was a substantially large one. It's for the data center in the United States. The order was [indiscernible] on 16th of January '26, and is the largest single order [indiscernible] by CG for supplier power trial store. And under this contract, CG will supply the transformer specifically engineered to meet the stringent reliability, efficiency and uptime requirements of hyperscale data center applications. this order will be executed for a delivery period of 12 to 20 months with the delivery terms of SAS Mumbai port as [indiscernible]. The Board of Directors of the company at its meeting held on January 27, 2026 considered an approved payment of interim dividend of 1.3 per equity share, that is 65% of the face value of INR 2 per share for financial year '25, '26. With this, I conclude my opening remarks and audited financial statements with detailed loans are available as part of stock exchange filing and on our company website. Thank you so much for listening in, and over to you Renu for Q&A.

[indiscernible] can you open the session for Q&A, please.

[Operator Instructions] The first question is from the line of Ankur Sharma from HDFC Life.

I have 3 questions. First, it's good to hear that we're finally seeing double-digit growth in motors. Just wanted to understand how much is volume growth and how much is price led. Also, given the current inflationary environment, how much more of price hikes would you intend to take in the motor side of the [indiscernible]

Ankur, I think great question. So on the motor side, I would say it was a combination of the price increase that we got from there. From the customers and the combination, I would say about 50% of [indiscernible]. So the volume hike is almost in sync with the market growth that we are seeing, but also we can let our pricing leakage also to happen there.

Okay. Okay. And how much more do you think you may have to take? I mean how much to cover the costs.

It certainly depends on -- because we keep a laser sharp eye on focus on the commodity inflation, the way it is happening because it's a little tricky for motors or drive business versus some of the large long lead item because where -- so we keep a little sharp focus on how it is going on the actions on that and basis that we take the decision case-to-case basis, it's not required. But what we are also pulling our skills on is the pricing discipline. How do we make sure that we are not having the leakage for -- by giving additional discounts. So I think that's another thing that we are working closely on.

Okay. A second question, sir, would be on the power product orders. While it's very, very strong, given you got this INR 900 crores order for the data center. But if I exclude that, as I look at the domestic order that's up about 20% of that data center orders was up about 16% last quarter. Sequentially, we're in that INR 2,000 crores, INR 2,200 crores ballpark. So just trying to, is this like the most sustained kind of growth rate that we should be kind of expecting in that 15%, 20% ballpark as we head into next year. Obviously, [indiscernible] also starts catching up. Is this your thought on your overall trajectory of the domestic comes from -- of our products business?

So I think, Ankur, if I had to give a short answer, the game has just started. So INR 900 crores is what we had to report because it was a substantial order that we have. But after that, also the map is open. And as we put our feet on the ground outside India as well. Anything we touch, it just opens up. So there's so much of opportunity available for everybody. You just need to know how to encash on it, how to make sure that you execute with the right quality, right standards, right reliability. I think that's what will be the differentiation, nothing else. And you should have the appetite on that. So I'm not going deeper, whether it's transformer or switch gear, but I think overall for power, we see -- still see a huge demand all over the world.

I understand [indiscernible] of India is what I was talking about, how would you see the Indian power new market shaping up as you had in the next couple of quarters?

No, that's also growing at a very, very fast pace. In fact, as we are a thing if you see just 1 year back, we were at some 17,000 MVA capacity for transformer. Today, we are almost close to 65,000 MVA that I don't think anybody has done that kind of increase and still, we feel, as we be the large customers or given the government companies in the utility sector, what we keep hearing give us more, give us more, nobody saying stop it. So I think it's a [indiscernible] for power sector in India as well.

Okay. And just one last one is on the balance sheet. I see this item called other financial assets totaling almost INR 3,000 crores in Q4. Can you just help us understand what is that?

This is [indiscernible] money we had come up. So it is parked into the different asset class.

The next question is from the line of Mohit Kumar from ICICI Securities.

My first question is can you help us with the G.G. Tronics order inflow. And how did the year pan out in terms of revenue EBITDA and PAT? And how do you see the order outlook in the segment here?

Yes, Mohit. So I think G.G. Tronics, if your question is specific to the order book, I think it's pretty strong right now. I think we should have a -- we should have the -- I think the order backlog should be the tool of close to INR 1,000 crores approximately. So right now, the second question might come for when do we start executing. We are at the last leg of the cool process, which is the passenger trials, which is already going on. So thereabout as [indiscernible] have already been completed. And so I think maybe another month, [indiscernible] all these suppliers should be done. So then we start [indiscernible]

And what was the last year revenue EBITDA and PAT, the number is available with you -- available? .

You for GGT or...

G.G. Tronics, yes.

What is your question, sorry?

My question is, what was the revenue and profitability for the G.G. Tronics especially [indiscernible]

So they are at, I think, INR 100 crore at a full year basis. And they are making money. They are not ruling the money. They are at least around INR 4 crores to INR 5 crores PBT number.

My second question is, can you help us with the understand the receivable jump in [indiscernible], which was INR 2,000 crores last year. I think it has jumped to INR 2,900 crores, if I'm not wrong. So it's up by around maybe 50%, while the top line is up by 20% odd.

No, you are talking about the trade issue?

Yes, yes.

So you look at that the growth, which is coming mainly in the power segment, right? So if you look at even that the return of capital employed on the power side is more than 100% plus, the reserves which are there today that is more is coming from the power side. And the average credit period is ranging between 90 to 100 [indiscernible]

The next question is from the line of Harshit Patel from Equirus Securities.

Sir, firstly on motor, what would be the mix of IPI and above in our overall FY '26 volume where do you see that growing in the next 2 to 3 years? Does this change in mix help our margins or this changing mix will be margin?

So specific, I'm not allowed to give exact numbers of IC [indiscernible] numbers, but I can tell you it's not very substantial at this point of time because even though we talk about [indiscernible], but Indian market is a bit slow on adoption of ICI IFI technologies. So -- but I'm sure it's going to pick up in the next couple of years as government is tightening and the need for energy is increasing further. So -- and our R&D and development is also accelerating the same to complete the -- to have a complete portfolio of ICI promoters. So that is progressing that. So to your question, to be specific, it's not very big in terms of the percentage of the overall portfolio because our market size, not because we can also [indiscernible]

Secondly, on the DI, we were in the development space for 4K. So if you could share an update on its commercialization and also the development plan for 765 kV?

So [indiscernible], you want to pick up that question?

So thank you for that question. So for 400 kV GIS, the plan is exactly on the schedule there. We have already tested the Phase 1 of our [indiscernible] schedule between quarter 2 and quarter 3 yes. Once we have the type has done in any of these international labs, this should be all with our commercialization [indiscernible] further to that, 765kV is on the conversation there. Yes. So 2020 financials would see the commercialization having for [indiscernible]

Lastly, if you could share an update on the Drive business, in terms of how much sale assembly value addition, localization that we are now doing in India? .

So drives, I think there's a series of new product launches that is planned from April onwards. It's already started getting launched, it's called [indiscernible] which is a next-generation drive. And again, low-voltage rights and medium voltage, the percentage is not so high, but [indiscernible] is almost 100% indigenous.

The next question is from the line of Sumit Kishore from Axis Capital.

Phenomenally strong results in Power Systems. Could you give us an update on the power transformer capacity expansion, how that's panning out? And what are the sort of time lines as you add capacity and increase your target? The second question is on the export business within CG. So what has been the scale or size of exports overseas revenue separately for Power Systems and Industrial Systems in FY '26. And what is your outlook for growth through FY '27? What are the opportunities that you are pursuing? Those are my questions.

So Ajay, if you can take the first question in terms of transform capacity and turn it back to me for the export side at [indiscernible]. .

Regarding the transformer capacity addition, we have completed the brownfield expansions, both in [indiscernible]. The Gwalia facility has now capacity increased from INR 6,000 to INR 10,000 and the [indiscernible] facility. So there, we have done CapEx and for the CapEx plan, the capacity has increased to 40,000 [indiscernible] and then we have our green plant. We worked along with the [indiscernible]. And this capacity has grown to further 65% NVA at the end of the last year. Now for the forthcoming additions and capacity was weakened expansion in greenfield plant [indiscernible] is in progress and we hope to commission the plant somewhere between July and August. And initially, we will be starting with the capacity of around [indiscernible]. And by the end of this calendar year, we will be touching the peak of [indiscernible] So as of now, the total loan between value and [indiscernible], we have a capacity of 75,000 NVA and another 45,000 NVA to be added by the end of this year. So this will be around 10,000 by the end of the -- during the year. So over to you, Amar.

Okay. Thanks, Ajay. And I think, Sumit, on your other question, we will not give the split of exports by [indiscernible]. But yes, exports and services is a focus area for us. And the only thing I can talk about is both the areas, we have more than doubled our order bookings between last year and this year. So -- and we have much larger stations so more to come. So [indiscernible] it exports and services will stay as our key focus areas. .

The next question is from the line of Atul Tiwari from JPMorgan.

My question is again on the motors and drive business. So since the start of the [indiscernible] we understand is SME and FME. So how has the demand been for that part of your business where you sell stuff to open anything?

So let's see [indiscernible] motors, our export is not substantial today. So I'm keeping out our European business for drive because that is primarily the European plant, which supplies to Europe as well as the U.S., that is going on in that geography. So there's not any specific dip or anything that we see from these regions because [indiscernible]

But what about in India? I mean, I believe you will be selling to small industries quite a bit, right? Is the demand holding up in? Or is there an impact on demand because of [indiscernible]

So we don't see that dip on that. In fact, with our GTM getting activated now with the clear leaders in place, in fact, we see improvement in the order intake.

And sir, my last question is on, again, the transformer capacity. So currently, operational -- how much of it will be 400 per plus capacity? Or is it fungible across all the [indiscernible]

Across all the ratings that you have, even up to 765. In fact, we are now getting the new plant coming in up to [indiscernible]

The next question is from the line of Amit Mahawar from UBS.

I have 2 quick questions. First is on the power...

Sorry to interrupt. Amit, sir, your voice was very low. Can you just get the headset and [indiscernible]

First of all, congratulations on grids of Brazil. On the Power business, when you check the American market beyond data centers for American grid utilities.

Yes. Amit, I couldn't hear you. You come close to the mic.

The line for Mr. Amit has been dropped. I'll move to the next question. The next question is from the line of Aditya Mongia from Kotak Securities.

Congratulations to the entire team on a fairly strong set of results once again. The first question that I had from my side was, if you could give us a sense of the addressable market on the GIS side in the 475 kV category domestic overseas whichever we want to think through today, how do you [indiscernible]

I think Gaurav, if you want to answer that, of course, not going too specific into the ratings, but you can generally talk about GIS market [indiscernible]

Yes. So not to get into any specifics of the details of DIS today. If you see the overall [indiscernible] today would stand close to about INR 12,000-odd crores as a market total rate of which I believe around 24%, 30% still would be [indiscernible] so that's the quantum possibly a potential addressable market that we could also be aiming at in the future.

Sure. understood. And I assume this is the domestic part. Is that also an overseas part that you believe can fall inside [indiscernible]

Yes. [indiscernible] mentioned, I think exports as well as service commands are key focus. So whatever we are developing or whatever is under the plan is both for domestic as well as exports for product development, whether it's a 145 GIS ranging to [indiscernible] 100 are under plan for both domestic and international markets now.

Understood. One of your peers was talking about in the similar zone that you are in terms of capabilities was talking about moving on the HVDC side of things. Is there a plan that the company has? And what are the key milestones certain have to achieve to kind of reach that level of capabilities?

Yes. So it's still at the infancy stage. We have laid down a bit of road map on that, but the plan is not fully mature. So when we are ready for it, we'll surely share.

Sure. Maybe the final question from my side, which is more on the semiconductor part. You made a recent investment of INR 50 crores inside [indiscernible]. Could you talk a little bit more about that and how to think through investments inside semiconductor design from there on? Maybe a little bit more on the medium-term basis there?

This is just one of the steps that is into this direction, you must have heard me every quarter in the earnings call or any of the interactions that -- can you hear me?

Yes, sir. Yes. Yes.

Okay. So let me repeat. So what I was saying is that so these investments, as you would have heard me in the last couple of quarters that we are looking at the retail pipeline of candidates on potential M&A to keep building on our design capability. So the first step was on the our design capability, but that's what we are actually stops. So the investment that you see is just one step forward in that direction and especially with AI coming in, that's so much every day the technology is changing. So you will see more and more of these investments coming into even the start-ups or these kind of companies where we will get to have the latest in the world that is happening. So more to come on that.

The next question is from the line of Rahul Gajare from [indiscernible]

I have a question on motors. So on the motor, is it fair to say that the worst is behind and we can see improvement in growth and margins from here? And also, I think you've talked about this earlier, where you've taken some price hikes but through the last entire, how much price side did you actually take? And your comments on competitive intensity and market share in the motors? That's the first question. .

Okay. Super. So I think to start with the question was how much price increase we take, is about all put together, it was 5.5%, 7.5%, so total of 17.5% price increase that we did in the last 3 to 4 quarters and the decent realization. The good news also is that the team that [indiscernible] who reached this business is they have kind of maintained their market share in spite of such a steep price hike. I generally say that we have less to be the market leader. So the moment we do something like this, so everybody has followed us. So that's what has happened in that direction.

And to quantify that, that will be in the range of 33-odd percent market share?

Yes, it depends on different types. So if you look at overall LT motor side, we will be approximately 38%, 39%. Approximately, if I go to larger industrial motors, it will be around 19%, 20% approximately.

Okay. And fair enough. So that's on the motors. Now on the Power, I want to understand the order that you've got from the data center, that actually indicated that delivery time anywhere between 12 months to, I think, 18 or 20 months. Is that the quickest you can deliver or transform into the U.S. market? Or you think you can do it much faster?

Yes, as for the question. I see the delivery of transfer for the U.S. market basically depends upon the delivery of the components like [indiscernible] than that, but we will always be dependent on the casino deliveries, which come from Germany, and they are anywhere between 9 to 12 months. So as of now, we are constrained, we can deliver from 1 month onwards only because of this [indiscernible]

Okay. Because I understand Korean can actually deliver in closer to 10 months. That's the reason of this question. Fair enough. My last question is on the semiconductor business. While you did indicate that the chip revenue will start in 2 quarters. The INR 500 crores, which is currently booked into the financials, all of that is design-led revenue or there is some other part in that revenue. That's my last question.

The line for the management has been disconnected. Mr. Rahul, you can go ahead with the last question again, please?

Yes. I don't know if you heard the question or I will repeat the question.

Yes, please. [indiscernible]

Yes. So my last question was on the semiconductor. Now you have indicated that the semiconductor chip revenue essentially will start in 2 quarters or so. So I want to understand, the INR 500 crores, which is booked into the financials, all of that is design-led revenue or if there is something else in that INR 500 crore.

Which [indiscernible] you're talking about.

The segmental breakup that you all gave of the revenue over there for the full year, the number is INR 500 crores. So I just wanted to be sure what exactly is that number?

This is the one which is coming that the company what we bought from [indiscernible]

So RF and design. These are the 2 things?

Not 2 things. [indiscernible] is the name of the company that we created. RF business is what we bought from [indiscernible] and that is what has started generating the revenues. So I think it's about INR 65 million a plan, so which comes to about INR 500 crores, yes, right? So yes, [indiscernible] a running operational company. So that is the number you would have seen there.

The next question is from Amit Mahawar from UBS.

My first question is on the power system exports. How do you see the time line for the readily approvals for us now that we have data center orders basis, maybe with a quicker time line. How soon can we expect the grade utility turnaround for us on others? That's the first question.

[indiscernible] mean in terms of supply or approval process?

In terms of approval and potential orders from the American [indiscernible] is it more like 6 to 12 months or a longer period and some composes around that?

It purely depends on what we're talking about, like Americas works very differently than the way we work in India. So America, there are 478 utility companies because every area is divided. And even if I take top 100 utility companies that amounts to about 70%, 75% of the total revenue. So every utility is pretty independent. So -- and everybody has different time lines. So you cannot categorize 6 months or 1 year or 3 months or 5 years, it will very solid rate utility. .

Sure. And the second question is on Industrial segment. We have a very, very formidable competition from maybe the likes of [indiscernible], et cetera. Some of them are very, very aggressively expanding their footprint in India. So my question is more on I think the delta for us on profitability and growth is more on the rail part of Industrial as we execute the preparations and G.G. Tronics book. How do you think industrial motors also will contribute significantly the profitability or that area that [indiscernible] we're still not hopeful on the motor profitability. Some color on industrial versus rail profitability will be different.

No, I think it's -- these are different verticals under the segment of industrial, really a separate vertical, which is led by range, I think is doing some good work there to turn it around to make sure that's coming to a much bigger number. The way tinted turnaround for the motors business, so which is doing fairly well. So I'm sure it is also in the next few months or quarters should be inching upwards. So it's a commission of both. And to your question on competition with the BTs and all, and that's fine. I think competition is always healthy because that keeps us on the toes. So we are just putting our skills on keep building NPDs, build our design capability. and also make sure that we are cost competitive, not cheap, but cost competitive so that we continue to continuously keep elevating the waste from the system. So that's the ongoing [indiscernible]

The next question is from the line of Girish from Morgan Stanley.

I had a question on railways G.G. Tronics. So what's been the growth rate in revenues for FY '26? And also if you can share any outlook on this piece of the business. And second, I wanted to understand the pipeline for U.S. transformers, if you can share any qualitative color around how things are? I know you've spoken about it in the past, but any L1 status here? Or how does it work there? Like what's the size of the opportunity that you're looking at in the medium term? And the final question was on CapEx, if you can just color what will be the FY '27 and '28 CapEx numbers?

I think it was supposed to be limited to 2 questions, 3, 4 questions, Girish. But anyway, let me go one by one. So which one do you want me to answer first?

So you can take up railways and then transformer for U.S. and then CapEx.

So railways is -- so your question was specific to G.G. Tronics. So G.G. Tronics...

G.G. Tronics, what's the growth, sir? And the outlook for that? G.G. Tronics?

The question [indiscernible] what is the question? .

Yes, except G.G. Tronics, excluding G.G. Tronics.

[indiscernible]. It's part of industrial business. So we are not allowed to give the breakup of each of the businesses. .

So I was asking [indiscernible] for growth rate, sir, and outlook.

So we don't go specific to each of the business lines in the business. So if you talk about industrial something, then we can talk about it. But we don't go deeper into each of the businesses. .

Okay. If you can share some perspective on railways outlook.

Yes. So railways, I think maybe [indiscernible] if you can give us a flavor of how do you look at the market and your key 1 or 2 initiatives there without getting too deeper into [indiscernible]

So on railways, yes, we see a sizable potential with some of the new products that we are working through. And in addition to that, we also see some good opportunities on the export side, which we are still to explore, a long way to go. And then on the service side is another area where we see good potential for high double-digit growth there. And then, of course, helps us improve our profitability and margins on that.

The next question is from the line of [ Parikshit Kandpal ] from HDFC Securities.

Congratulations on a great quarter. So my first question is on the margins. So are we facing any impact of the geopolitical issues currently there on the margins. I [indiscernible] able to pass on the commodity price impact to the customers. Any impact on the [indiscernible] impact on margin or [indiscernible] if you can give some color on the margin in the Power Systems business. And going ahead, how do you look for FY '27 and we see further expansion in this business margins?

Thanks for the question. I think a lot of your questions have already been answered. One is the numbers. If you look at Power Systems, if there was stress on the margin, then it would have shown up in the numbers, right? So if we are doing better by 200 to 300 basis points on each of these segments. So that means the margin picture is taken care of. And this margin pressure is not only on what we get from the customer. It's also how operationally efficient we are becoming. So I think that's the critical thing, and that's the edge that we have from a 3G point of view. So -- and so that's one. So what is the second question?

How largely -- how the commodity in specialties are doing [indiscernible] So is it entirely pass-through [indiscernible] some impact in Q1 coming in on the residual order book which we have, which means that [indiscernible] because of economic inflation?

So that is simply a different business in a different area. So like I talked about motors, we discussed just now a few minutes back, as most of it we have been able to pass on with the steep increase in the pricing. For other large businesses, it's really not a problem from a transformer or rest of the large businesses because you always have the price variation clause with the customers. So whenever commodity goes up and down, it gets passed on to the customer.

The next question is from the line of [ Sharon Kapur ] from Jefferies.

Just had a question. So exports, while you don't give the breakup between industries and Power Systems, could you share what is the overall contribution to your consolidated sales of exports this year?

Right now, I think it's very small. It's about 5% approximately. But again, the [indiscernible] is to be in a much larger, right? As I said, we're kind of more than doubled in this previous year. And this year, we are taking much more ambitious targets. So [indiscernible] on that.

So last, I mean, FY '25, we saw exports contributing about 10%. You're saying it's small above 5%, 6% now. So did we see some kind of thing?

[indiscernible] It was 11%.

In the overall consolidated mix?

Yes. So if you include [indiscernible] in Netherlands, it can go up to 8% to 9%. So to talk about [indiscernible] to be around 5% to 7%.

And just my second question is on your railways business, while you highlighted that you don't give the breakup between railways and nonrailways, could you give some direction in terms of margins on the radar business because you've been mentioning some kind of pressures because competitive in the competitive railway business? So how do you see margins tracking going ahead?

Yes. So that's why I said, I think [indiscernible] a bit on how we prioritize prioritizing. And as you know, in railways, you won't be able to get to good margin [indiscernible] efficiency. And second lever that [indiscernible] has already activated as a part of overall theme, I mentioned is services. So service is going to be a big function of us, and we've already created that vertical and is getting driven. So that will give us a substantial increase in our margins. But again, it doesn't happen tomorrow. It takes a bit of time, but he's executing it fairly well. So that's another lever. And the last one I would say is also on the NPD, that's where the activation is on the R&D to get more and more new trucks, that helps us to become more competitive. So these are some of high-level actions are being taken to continuously move this from single-digit margins to double digit. I think that's the math I can reveal to you.

That was the last question for the day. I now hand the conference over to Renu for closing comments. Please go ahead.

Thank you, Jitesh. On behalf of IIFL Capital, I'd like to thank the management of CG Power for taking the time and discussing the results with us. Sir, any closing comments that you would like to make?

So thank you, Renu, and thank you, everybody. I know there's a large crowd here and interesting questions. Thank you [indiscernible] with us. I mean they are exciting days in the months and years ahead of us. So thank you for your time with us and appreciate it. Have a good rest of the day. Jitesh?

Thank you. On behalf of IIFL Securities, thank you. That concludes this conference. Thank you for joining us, and you may now disconnect your lines.