CG Power shares rise 9% in two days, Morgan Stanley initiates coverage; here are the key reasons

CG Power and Industrial Solutions shares rose 4.5% intraday on NSE today. The stock is witnessing strong traction for the second consecutive day. On Friday, the stock closed 4.5% higher after the company’s subsidiary, CG Semi Private Limited, launched its first semiconductor assembly and test (OSAT) facility in Sanand, Gujarat.

With this launch, it has become India’s first full-service OSAT provider, offering solutions across both traditional and advanced packaging technologies. As per the company's management, its G1 facility will have a capacity of around 0.5 million units per day.

CG Semi is a joint venture (JV) between the Murugappa Group-owned CG Power and Industrial Solutions, along with Japan-based Renesas Electronics and Stars Microelectronics. This JV plans to invest over ₹7,600 crore in the next five years to set up two state-of-the-art facilities, G1 and G2, in Sanand, Gujarat. The G1 facility has launched the first Made in India semiconductor chip, while the G2 facility is still under construction and expected to be operational by 2026.

Morgan Stanley has a positive view on CG Power and Industrial Solutions, as the brokerage firm expects 30% CAGR growth in the company’s earnings between FY25 to FY28, driven by robust capacity additions across key business segments and an increase in new order wins.

CG Power’s traditional business segments like Industrial Systems and Power Systems, which are further divided into motors, drives, consumer products, transformers and switchgears, are expected to perform well due to underlying strong growth potential.

Meanwhile, the company is also diversifying into new segments like semiconductor chip manufacturing and increasing railway order inflow. In the June quarter, the company’s subsidiary, G.G. Tronics India Private Limited, received a prestigious order towards the station train collision avoidance system (TCAS), also referred to as Station “KAVACH” worth ₹148 crore.

However, Morgan Stanley also highlighted some key risks, including rising competition within the key business segments, like the transformer business, and execution failure of new segments like the semiconductor business.

CG Power Q1FY25 results

CG Power and Industrial Solutions reported a consolidated net profit of ₹267 crore in the first quarter of the current financial year (Q1FY26), marking an increase of 11% from ₹241 crore during the same period last year. Meanwhile, its revenue from operations rose 29% YoY to ₹2,878 crore from ₹2,228 crore in the year-ago period.

Segment-wise, the Industrial Systems segment sales rose 16% YoY to ₹1,574 crore, while aggregate sales of the Power systems for the quarter were higher at ₹1,070 crore with a growth of 43% YoY.

The operating cash flow generated by the company for the quarter was ₹441 crore, which was 165% of the net profit. During the quarter, the company’s order intake saw 62% YoY growth to ₹5,138 crore, while unexecuted order backlog was at ₹13,072 crore as of 30 June 2025.