Semiconductor stock falls 5% after company’s net profit decreases by 8.71% QoQ

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Semiconductor stock falls 5% after company’s net profit decreases by 8.71% QoQ

This semiconductor company, which operates in the dropped around 8% in the day’s trading after it was trading around 2% up after they released their Q2FY25 results and Board to raise Rs. 3,500 through the QIP route.

Price Action

With a market capitalization of Rs. 1,18,725.31 Crores, the shares of CG Power and Industrial Solution were trading at Rs. 776.75 per equity share, down 5 percent from its previous day’s close price of Rs. 818.80.

Q2FY25 Results

The company announced its Q2FY25 results and the revenue from operations stood at Rs. 2,413 crore which is up by 8.30% QoQ from Rs. 2,228 crore in Q1FY25. Their Net profit in Q2FY25 stood at Rs. 220 crore which is down 8.71% QoQ from Rs. 241 crore in Q1FY25.

The Analysts estimated was around Rs. 258.50 crores and the disappointment in results had an impact on the stock price. The EBITDA Margin fell to 12.20% in Q2FY25 from 15.40% in Q1FY25.

Order Backlog as of 30th September 2024 from Industrial systems stood at Rs. 2,700 crore, power systems stood at Rs. 5,131 crore.

The power systems contribute around 35.04%, Industrial systems contribute around 64.69% and the remaining 0.27% from others in Q2FY25. Despite revenue growth, the profits from Power systems saw a de-growth that might have contributed to the profit decline for the quarter.

Capex Plans & Fundraising

In their recently released quarterly report, they mentioned following the earlier approval to expand Power Transformer capacity from 25,000 MVA to 35,000 MVA, the Board has now approved an additional Rs. 26.64 crores investment to increase capacity to 40,000 MVA while addressing anticipated demand growth. The current capacity utilization is around 85% and the expansion is expected to be implemented within 18 months funded through internal accruals.

CG Power will acquire Renesas Radio Frequency Components business for approximately USD 36 million which marks its entry into the Semiconductor Design. The entities established by the Company will complete the acquisition after meeting customary conditions and obtaining regulatory approvals.

The Company has completed the acquisition of G.G. Tronics India Pvt Ltd for a 55% stake for a total consideration of an approximate value of Rs. 319 crore.

The company is looking forward to raising Rs. 3,500 crore through Qualified Institutional Placement (QIP).