CG Power & Industrial Solutions Ltd: A Powerhouse in Transformation

CG Power & Industrial Solutions Ltd, a Murugappa Group company, has emerged as one of India’s most dynamic players in the electrical equipment and industrial solutions space. With a legacy in power systems and industrial systems, the company has reinvented itself under its new promoter, Tube Investments of India, and is now positioning for a strong multi-year growth trajectory.

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Business Overview

CG Power operates in two major segments:

1. Industrial Systems (64% revenue share in FY25)

   • Market leader in AC motors, second largest in AC generators and DC motors in India.

   • Product range spans low-tension motors, high-tension motors, and rolling stock solutions for railways (traction motors, propulsion systems, signaling products).

   • Recent launches like Fluxtron high-efficiency MV motors strengthen its technology positioning.

   • Q1 FY26 sales: ₹1,574 Cr (+16% YoY); order backlog ₹2,920 Cr (+19% YoY)【14†source】.

   • Margins were impacted by commodity price hikes and railway business mix, but the company implemented a 5% price increase in LT motors effective July 2025【14†source】.

2. Power Systems (35% revenue share in FY25)

   • Manufactures transformers (distribution & power), switchgears, EHV/MV circuit breakers, instrument transformers, lightning arresters, isolators, and EPC T&D solutions.

   • Expanding aggressively with a greenfield 45,000 MVA transformer project, which will take total transformer capacity to 85,000 MVA by FY28.

   • Q1 FY26 sales: ₹1,070 Cr (+43% YoY); order backlog ₹9,051 Cr (+97% YoY)【14†source】.

   • Secured a record ₹641 Cr order from Power Grid for 765 kV transformers【14†source】.

With 18 manufacturing plants, 9 regional offices, 450+ channel partners, and 500+ service partners, CG Power has a formidable distribution and execution network.

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Value Unlocking Events in the Future

1. Semiconductor Foray: In partnership with Renesas (Japan) and Stars Microelectronics (Thailand), CG Power is investing ₹7,600 Cr to set up a semiconductor plant in Sanand, Gujarat. Mini plant to start production in 2026, main plant in 2027【14†source】. This diversification could be a game-changer, positioning CG Power in a sunrise industry.

2. Capacity Expansion Across Businesses:

   • Low-tension motors (Ahmednagar & Goa): Expanding from 10 lakh to 18 lakh units annually.

   • Transformers (Bhopal & Gwalior): Significant increase in both distribution and power transformer capacities.

   • Switchgears (Nashik): Multi-product expansion.

   • Existing transformer facility to reach 40,000 MVA by Sep 2025【14†source】.

3. Railways & Vande Bharat Opportunity: Orders for supplying traction motors and propulsion systems to 10 Vande Bharat trainsets (worth ~₹400-450 Cr) open up long-term opportunities in Indian railway modernization. Execution has started【14†source】.

4. Strategic Acquisitions:

   • G.G. Tronics (55% stake) – Received ₹148 Cr KAVACH order in Q1 FY26【14†source】.

   • Radio Frequency Components business (Axiro) – Consolidated from Q1 FY26, already contributing revenue【14†source】.

   • BTW-Atlanta Transformers India (90% stake) – Adds 12,000 MVA transformer capacity.

5. Real Estate Unlock (CG House): Joint development with K Raheja Corp will unlock value from its property holdings.

6. QIP Equity Raising: Successfully raised ₹3,000 Cr via QIP in July 2025, oversubscribed 3x with strong global investor participation【14†source】.

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Financial Performance & Outlook

• Q1 FY26 (Standalone):

  • Revenue: ₹2,643 Cr (+25% YoY)

  • PAT: ₹286 Cr (+23% YoY)

  • Order intake: ₹4,764 Cr (+56% YoY)

  • Order backlog: ₹11,971 Cr (+70% YoY)

  • FCF: ₹339 Cr (119% of PAT), ROCE 35%【14†source】

• Q1 FY26 (Consolidated):

  • Revenue: ₹2,878 Cr (+29% YoY)

  • PAT: ₹267 Cr (+11% YoY)

  • Operating cash flow: ₹441 Cr (165% of PAT)

  • Order backlog: ₹13,072 Cr (+82% YoY)【14†source】

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Current Share Price & Valuation

• CMP (Aug 29, 2025): ~₹664

• Market Cap: ~₹1.04 lakh crore

• Valuation multiples:

  • P/E (TTM): ~104x

  • P/B: ~26x

  • Dividend yield: ~0.2%

The stock has seen significant re-rating due to strong promoter backing, turnaround execution, and entry into futuristic sectors like semiconductors. While valuations look expensive on a near-term P/E basis, investors are pricing in long-term growth.

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Future Growth Prospects

1. Industrial Systems Leadership: Demand growth in motors, drives, and rolling stock to be supported by India’s manufacturing push and railway electrification.

2. Power Systems Expansion: Significant transformer capacity expansion positions CG as a top domestic and global player in power equipment.

3. Semiconductors: Entry into this sector offers a potential re-rating catalyst, with production starting 2026–27.

4. Railways & EPC Orders: Large pipeline from Indian Railways and international markets.

5. Service Business Transformation: Plans to move towards long-term service contracts and “motor-as-a-service” models【14†source】.

6. Value Unlock from Acquisitions & Real Estate: Strategic deals and asset development to create shareholder wealth.

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Conclusion

CG Power & Industrial Solutions is no longer just a traditional power equipment company. It is evolving into a diversified industrial and technology leader. With strong promoter support from the Murugappa Group, a robust order book, aggressive capacity expansion, semiconductor foray, and innovative service models, the company is poised for strong growth.

At current valuations (~₹664/share), the stock appears richly valued, but long-term investors may view it as a structural growth story rather than a short-term play. Any correction could provide an attractive entry point.

Verdict: CG Power is well on its way to becoming one of India’s top 5 electrical and industrial solutions companies and a key player in the semiconductor ecosystem – a stock to watch closely for the next decade.