CG Power Investment Outlook 2025: From Turnaround to Tech-Driven Growth

CG Power and Industrial Solutions Ltd has evolved from a turnaround story to a high-growth, future-ready industrial and technology powerhouse, led by robust financials, diversified business verticals, a debt-free balance sheet, and an expanding export footprint. Since the Murugappa Group’s acquisition in 2020, the company has demonstrated stellar revenue, EBITDA, and PBT growth, a rapidly growing order book, and has forayed into semiconductors, rail safety (KAVACH), and electric vehicles, redefining its long-term growth trajectory.

1️⃣ Financial Performance Overview

🔸 YoY & QoQ Performance (Standalone)

🔸 9M FY25 Cumulative Financials

📌 Key Insight: EBITDA margins slightly contracted due to higher contribution of the lower-margin railway segment in Industrial Systems.

2️⃣ Multi-Year Growth Analysis

📈 CAGR and Turnaround Metrics Post-Acquisition (Murugappa Group)

📍 Turnaround Trigger: Murugappa Group’s acquisition in Nov 2020 — led to stabilization, cash generation, restructuring, and revival of core operations.

3️⃣ Order Book Growth and Execution Capability

🔸 Order Book Size as of Dec 31, 2024

🔸 Order Intake – Q3 FY25

🔸 Historical Order Book Growth

📌 Execution Advantage: Fast-tracked execution in both Industrial Systems & Power Systems; improving delivery times amid scale-up.

4️⃣ Strategic Business Expansion

✅ 1. Semiconductors – CG Semi Pvt Ltd

• New vertical through OSAT (Outsourced Semiconductor Assembly & Testing)
• Sanand, Gujarat OSAT Facility:
  • Mini Factory → FY26 operational
  • Mega Factory → FY27 launch
• Backed by India Semiconductor Mission incentives
• Early mover advantage in domestic semiconductor space

✅ 2. Railway Safety (KAVACH – TCAS Market)

• Majority stake in GG Tronics (acquired in 2023)
• ₹500–₹600 Cr order bagged for KAVACH Train Collision Avoidance System
• Execution in 12 months + 11-year AMC
• Long-term opportunity with Indian Railways’ modernization drive

✅ 3. Power Transformers Capacity Expansion

• ₹712 Cr greenfield capex for 45,000 MVA capacity
• Total capacity will rise to 85,000 MVA by FY28
• Targeting both domestic demand and global export markets

✅ 4. Electric Vehicles (EV Motors & Controllers)

• In-house prototypes developed
• Testing phase ongoing
• Entry into e-mobility ecosystem to open new revenue avenues

5️⃣ Geographical Reach & Export Expansion

🎯 Export focus in: Power Systems, Rail Safety Equipment, Transformers

6️⃣ Debt-Free Status & Financial Strength

💵 Financial Highlights:

✔ No interest cost → Enhanced EPS
✔ Self-funded expansion → Lower financial risk

7️⃣ Future Outlook & Projections

📌 Drivers: Order backlog + OSAT ramp-up + EV component pipeline + transformer expansion

8️⃣ Sectoral Market Opportunities & Risk Landscape

🟢 Opportunities

• Power Sector Growth – driven by renewable integration, infra push
• Railway Safety Upgradation – KAVACH rollout across Indian Railways
• Semiconductor Localization – OSAT under India Semiconductor Mission
• EV & E-Mobility – New segment with growing TAM

🔴 Risks

• Margin contraction in Industrial Systems (railway mix)
• Global semiconductor competition
• Raw material cost fluctuations & supply chain bottlenecks

9️⃣ Regulatory & Market Factors

🔟 Technical Analysis – Support, Resistance & Price Outlook

🔢 Valuation Analysis

💡 Note: Premium justified by strong earnings visibility, sectoral tailwinds, and debt-free structure.

💡 Investment Recommendation – Strategic Points

📈 Short-Term View (1–3 Months):

• Watch for breakout above ₹750 level for momentum entry.
• Target Price: ₹800
• If no breakout, wait for a dip toward ₹650–₹670 zone for accumulation.

📈 Medium-Term View (6–12 Months):

• Accumulate on dips near ₹650-₹680 levels.
• Target Price: ₹850–₹900
• Backed by continued order execution, margin recovery, and OSAT news flow.

📈 Long-Term View (1–3 Years):

• Strong Buy for portfolio investors.
• Target Price Range: ₹1,000–₹1,200
• Driven by:
  • Export-led growth (20% revenue target)
  • Semiconductor business scaling
  • Power transformer expansion
  • Strong earnings & EPS growth
  • Debt-free balance sheet enabling organic expansion

✅ Why CG Power is a Strong Long-Term Investment:

• Robust multi-segment order book
• High RoCE business with low capital risk
• Diversification into semiconductor & railway safety
• Clean balance sheet, high FCF, superior operating leverage
• Structural export opportunity play
• Attractive macro themes: Power infra, Rail Safety, EVs, Semiconductors

🔍 FAQs

📌 1. What is CG Power’s revenue growth in Q3 FY25?

• Standalone revenue reached ₹2,389 crores in Q3 FY25.
• YoY growth: 28% (from ₹1,860 crores in Q3 FY24).
• QoQ growth: 5% (from ₹2,270 crores in Q2 FY25).

📌 2. How has CG Power performed in EBITDA and PBT terms?

• EBITDA: ₹360 crores in Q3 FY25, up 20% YoY and 12% QoQ.
• PBT (before other income): ₹306 crores in Q3 FY25, up 35% YoY and 17% QoQ.
• EBITDA Margin: 15.1%, slightly down from 16.2% YoY due to railway business mix.

📌 3. What is CG Power’s current order book size?

• Standalone Order Backlog: ₹8,952 crores (as of Dec 31, 2024), +61% YoY.
• Consolidated Order Backlog: ₹9,706 crores, +70% YoY.
• Q3 Order Intake: ₹3,636 Cr (Standalone), ₹4,390 Cr (Consolidated).

📌 4. Is CG Power expanding into new business areas?

Yes, CG Power is diversifying into high-growth, future-ready segments:

• Semiconductors (OSAT facility) through CG Semi Pvt Ltd in Sanand, Gujarat.
• Railway Safety Systems (KAVACH) via majority stake in GG Tronics.
• Electric Vehicle Motors & Controllers – prototypes developed and testing underway.
• Power Transformer capacity expansion to 85,000 MVA by FY28.

📌 5. Is CG Power debt-free?

• Yes, the company has been debt-free since FY23.
• Debt-to-equity ratio is zero, resulting in stronger profitability and higher EPS.

📌 6. What is the status of free cash flow and capital expenditure?

• Q3 FY25 Standalone FCF: ₹235 crores, Consolidated FCF: ₹216 crores.
• FCF-to-PAT ratio: 96%, indicating high cash efficiency.
• Capex Allocation: ₹712 Cr (Power transformers), ₹50 Cr (OSAT facility already spent).

📌 7. What are CG Power’s future revenue and profit projections?

• High double-digit revenue CAGR expected over the next 2–3 years.
• EPS for FY25 projected at ₹15, with increasing trend going forward.
• PBT margins expected to stabilize around 13–14%.
• Export contribution targeted to reach 20% of revenue by FY30.

📌 8. What sectors and market opportunities is CG Power targeting?

• Power Sector: Grid expansion, renewable energy, data centers.
• Railway Modernization: KAVACH/TCAS systems adoption by Indian Railways.
• Semiconductors: Rising demand supported by India Semiconductor Mission.
• Global Export Markets: Growing demand in Africa, Southeast Asia, Middle East.
• EV Ecosystem: Emerging vertical through motor/controller development.

📌 9. What are the major risks CG Power faces?

• Margin pressure due to higher railway business mix.
• Global competition in OSAT and transformer markets.
• Supply chain volatility & raw material cost fluctuations.

📌 10. What is the stock’s technical outlook?

• Support Level: ₹550
• Resistance Level: ₹750
• Current Trend: Consolidation phase (₹650–₹750 range)
• Breakout Potential: Above ₹750 → Target ₹800+
• Long-term trend: ₹1,000–₹1,200 range likely in 1–3 years