CG Power hits all-time high; surges 30% in one month on strong outlook

Shares of CG Power and Industrial Solutions hit an all-time high of Rs 230 as the stock gained 4 per cent on the BSE in Friday’s intra-day trade. In the past two trading days, it has rallied 13 per cent amid heavy volumes. Moreover, in the past one month, it has surged 30 per cent on strong business outlook. In comparison, the S&P BSE Sensex was up 8 per cent during the same period.

Trading volumes on the counter jumped nearly four-fold today relatice to the average daily volume of the past two weeks. A combined 5.4 million equity shares have changed hands on the NSE and BSE till 01:22 PM.

CG Power is a manufacture of electric motors, generators, transformers and electricity distribution and control apparatus. The company also manufactures other electrical equipment.

All the businesses of the company have multiple opportunities for growth. The industrial business, given the massive investments in the infra sector and the starting of the Capex cycle, is expected to have a sustained organic growth. Besides, the electric vehicle (EV) segment is another big opportunity to cater to for the next several years.

“In the Railways Business, the Ministry of Railways have unveiled the roadmap for the next decade with significant outlay. The introduction of Vande Bharat trains, setting up dedicated freight corridors, and measures to improve passenger safety, etc., are all new business opportunities for the company,” CG Power said in its FY22 annual report.

Significant investments are committed in the energy sector. Development of solar parks and ultra mega solar power projects with proposals to set up 25 solar parks targeting over 20,000 MW of solar power over 5 years have been announced. These will result in increased requirement of the Company’s products under the Power Systems business.

CG Power is strongly positioned, both operationally and financially, to grow and seize these potential opportunities. The medium to long-term opportunities and the outlook remains strong. However, in the immediate year, the Company needs to face the consequences of the Russia Ukraine war. The continued disruption in supply chain, high inflation leading to high input costs and margin pressure are challenges to reckon with, the company said.

CG Power further said that it has been identifying areas of synergies with Tube Investments and the Murugappa Group to take the pillars of growth much higher in the next 3-5 years. Among the many growth drivers, EVs, fast moving electrical goods (FMEGs), railways, steel, agriculture, pharma, defence, cement and renewable energy are some of the key focus sectors wherein the company is working to offer world-class and technologically advanced products.

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