The 11 March announcement pushed shares up 2.7%, even as the stock remains down 17.11% over six months. Yet, its long-term trajectory remains strong, having surged 32.65% over the past year on the back of strategic expansions.
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CG Power’s big bet on railway modernization and India’s semiconductor ambitions cements its role as a key player in the country’s industrial evolution. With a swelling order book, aggressive acquisitions, and a push into high-tech manufacturing, the company is laying the groundwork for sustained growth.
A strong foothold in railways
The latest contract, awarded by Kinet Railway Solutions Ltd, cements CG Power’s role in India’s railway expansion. The company will supply propulsion kits, motors, transformers, and other vital components for 10 Vande Bharat trainsets, backed by a 35-year service agreement—a sign of its long-term commitment to the sector.
The deal comes as India doubles down on railway modernization. CG Power, with 86 years of engineering experience, has expanded its offerings to include train collision avoidance systems (TCAS), particularly with its KAVACH technology, designed to enhance railway safety.
Further strengthening its railway business, CG Power acquired GG Tronics for ₹319 crore in 2024, adding advanced electronic safety signalling systems to its portfolio. GG Tronics recently secured a contract from Chittaranjan Locomotive Works for the installation of KAVACH, valued at ₹500-600 crore. The acquisition aligns with India’s push for better railway safety and enhances CG Power’s role in the sector.
Semiconductor venture: A strategic bet
Beyond railways, CG Power is making a high-stakes move into semiconductors, a sector central to India’s ambitions of becoming self-reliant in electronics manufacturing.
The company acquired Renesas Electronics’ Radio Frequency (RF) components business for $36 million, securing a foothold in the semiconductor design market. The acquisition, cleared by the Committee on Foreign Investment in the United States (CFIUS), provides CG Power with critical intellectual property and expertise to serve industries such as automotive, 5G, and consumer electronics.
To cement its presence, the company has launched a subsidiary, CG Semi Private Ltd, and is investing ₹7,600 crore in an Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. With a ₹3,501 crore government subsidy, the plant aims to manufacture 15 million chips daily, supporting India’s semiconductor mission and bolstering its role in the global supply chain.
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Partnerships with Renesas Electronics Corporation and Stars Microelectronics further strengthen CG Power’s semiconductor ambitions, offering access to cutting-edge technology and market opportunities. Once operational, the OSAT facility is expected to generate substantial revenue within four years, marking a transformative shift in CG Power’s business model.
Manufacturing expansion fuels growth
CG Power is also aggressively expanding its manufacturing footprint. The company announced a ₹712 crore investment for a new transformer manufacturing facility in western India, expected to be operational by FY28. Simultaneously, it is scaling up its Bhopal plant, increasing distribution transformer production from 6,900 MVA to 9,900 MVA per year, to meet India’s growing energy infrastructure needs.
The company is also expanding internationally, acquiring BTW-Atlanta Transformers India Pvt Ltd. for ₹165 crore through a bidding process on the China Beijing Stock Exchange. This move strengthens CG Power’s transformer business, catering to both domestic and global markets.
To fund its expansion, CG Power is considering a ₹3,000 crore qualified institutional placement (QIP), with IIFL, HSBC, and DAM Capital shortlisted as advisors. The proceeds will support acquisitions and capital expenditure in semiconductors and power infrastructure.
As of 31 December 2024, the company’s order book stood at ₹9,706 crore, reflecting a 70% year-on-year increase, signalling strong market positioning and execution capabilities.
Financial performance and market outlook
Despite market volatility, CG Power has shown resilience.
In Q3 FY25, the company’s sales grew 27.1% year-on-year, driven by strong order intake. Net profit fell 68% to ₹237.85 crore, but this was due to an extraordinary one-time gain from discontinued operations last year. Adjusted for this factor, profit from continuing operations actually rose 21%, underscoring its operational strength.
Brokerages remain optimistic. Geojit Financial Services recently upgraded CG Power to a “buy” with a target price of ₹696, citing robust order inflows. Nomura has initiated coverage with a “buy” rating and a ₹970 target price, implying a 33% upside.
Analysts note CG Power’s diversified business—spanning power systems, industrial solutions, railways, and semiconductors—creates a strong foundation for sustained growth. While short-term market fluctuations persist, the company’s fundamentals remain intact, drawing interest from institutional and retail investors alike.
CG Power’s stock has seen short-term volatility but maintains a strong long-term outlook. Currently trading at a price-to-earnings multiple of 89.95, the stock reflects investor confidence in its future earnings potential.
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Technical analysts note that the stock is forming a bullish breakout pattern above ₹630, with firms such as Choice Broking and Angel One recommending a buy, setting targets between ₹675 and ₹680.
Final thoughts
With railways, semiconductors, and power infrastructure at the core of its strategy, CG Power is positioning itself as a key player in India’s industrial growth. Its ability to secure marquee contracts, execute large-scale acquisitions, and expand manufacturing capacity reinforces its long-term potential.
While short-term market swings persist, CG Power’s diversified expansion strategy and strong fundamentals suggest a compelling investment opportunity.
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As India pushes forward with infrastructure modernization and self-reliance in high-tech industries, CG Power stands poised to shape the country’s industrial future. With its ambitious growth bets across critical industries, CG Power is positioning itself as an industrial powerhouse—one that investors can’t afford to ignore.
About the author: Suchitra Mandal is a proficient financial writer with expertise in delivering well-researched insights and detailed analyses of companies’ performance and market trends.
Disclosure: The author does not hold any shares of CG Power and Industrial Solutions Ltd at the time of writing this article. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.
