Shares of CG Power & Industrial Solutions gained as much as 4 per cent to hit a new high of Rs 429.80 on the BSE in Friday’s intra-day trade, in an otherwise weak market, on the back of a strong and promising business outlook. In comparison, the S&P BSE Sensex was down 0.40 per cent at 64,894 at 11:32 am. In calendar year 2023 so far, the stock is up 59 per cent compared to 6 per cent gain in the benchmark index. It is up 9,243 per cent from the level of Rs 4.6 it touched in March 2020. CG Power is engaged in the development and distribution of electrical equipment such as transformers, reactors and other control equipment. It also manufactures industrial motors and pumps and communication systems. For the June quarter (Q1-FY24), CG Power reported a profit before interest of Rs 256 crore, the highest in recent times. Meanwhile, the earnings before interest, tax, depreciation and amortization (Ebitda) margin increased by 360 bps to 15.7 per cent. Profit after tax grew by 56 per cent to Rs 192 crore as against Rs 123 crore in the year-ago quarter. As on June 30, the company’s order book position stood at Rs 4,909 crore, a growth of 39 per cent over the previous year quarter. Since Tube Investments (Murugappa Group) came under majority ownership in November 2020, CG has completed its second full year of operations in FY23. While FY22 marked a period of stabilization in many aspects, FY23 saw a turnaround for the company towards realizing its true potential. With improvements in volume, product mix, capacity utilization and share in target market segments, the company commenced the capital expenditure phase consisting of two rounds of investments, the first aimed at removing bottlenecks and the second aimed at new additions. “While the operating environment remains volatile, the capital goods (incidentally known as CG) sector will continue to be the preferred destination for the manufacturing sector. Ready. In the right position,” the company said in its FY23 annual report. The three clear drivers of positive growth for CG include steady volume growth which will be supported by deeper export focus, continued margin protection arising out of efficiency measures will happen, and the continued expansion of the playing field that will result from new initiatives towards sunrise sectors such as EVs, railways, consumer durables etc.” With a focus on reducing its debt, the company has Have achieved free status. With product diversification and advanced manufacturing facilities, its order book is expected to grow and support growth. The Indian government has announced plans in its budget to increase capital expenditure by 33 percent to Rs 10 trillion for infrastructure development, according to analysts at Geojit Financial Services. This plan is expected to be a key growth driver for the company.


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