CG Power

As expected, the company’s performance for Q2FY13 was disappointing. YoY, consolidated topline rose by 8% and QoQ by 4% at Rs.2924 crore but net profit at Rs.42 crore was down 51% YoY and 64% QoQ. Power segment continued to drag it down, with EBIT from this segment coming at a paltry 0.56%, compared to 2.57% in Q1FY13 and 5.28% in Q2Fy12. Consumer Products segment, sequentially, showed a 11% drop in revenue and its EBIT at 9.59% was down from 13%. Industrial Systems segment, QoQ, showed a 19% drop in revenue but its EBIT margin at 14.5% was better than 9% of Q1FY13.

The company’s poor performance continues and the current impasse in the power segment is leaving a trail of devastation in its numbers. It earns almost 60% of the revenue from its domestic operations and balance from overseas. The company has made out a four-point plan for the future - develop and sell high-value 765-kV and 1,200-kV transformers, better sourcing of raw materials, expand manufacturing facility and consolidate European manufacturing units. But at this point of time, given the poor performance, this plan seems far from reach and one has to wait and hope for the power sector to improve. For now, the market will not be kind on the stock, that’s for sure.