CG Power hits new high on heavy volumes; stock surges 18% in one month

Shares of CG Power and Industrial Solutions hit a new high of Rs 319.10 on the BSE in Tuesday’s intra-day trade on the back of heavy volumes in an otherwise subdued market. The stock of the Murugappa Group company surpassed its previous high of Rs 315.50, touched on January 16, 2023.

In past one month, the stock has rallied 18 per cent, as compared to less than 1 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter jumped over 15-fold on the BSE today. A combined 4.75 million shares representing 0.31 per cent of total equity of the company changed hands on the NSE and BSE till 12:10 PM.

CG Power is engaged in the business of power conversion equipment which includes a wide spectrum for all industrial applications of Medium and Low Voltage Rotating Machines (Motors, Generators, Alternators), Drives and Stampings for all industrial applications. The company is a reputed supplier of equipments & solutions to the Indian Railways for rolling stock, railway electrification, coach and signalling segments for more than three decades.

All the businesses of the company performed significantly well in October-December quarter (Q3FY23) registering a 70 per cent growth in profit before tax (PBT) year-on-year (YoY). Sales (Rs 1,645 crore) and PBT (Rs 274 crore) recorded in the quarter were highest in recent times.

The earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 50 per cent YoY to Rs 295 crore. EBITDA margins improved 440 bps at 18 per cent. Margins were higher on account of better price realisation, higher volumes, favourable product mix, moderation in input costs and procurement efficiencies, the company said.

Meanwhile, the board of directors has approved a proposal to expand the manufacturing capacity of Transformers at its plants in Bhopal and Malanpur with an investment of Rs 126 crore.

According to CG Power, all the businesses of the company have multiple opportunities for growth. The Industrial Business, given the massive investments in the infra sector and the starting of the Capex cycle, is expected to have a sustained organic growth. Besides, the electric vehicle (EV) segment is another big opportunity to cater to for the next several years, the company said in FY22 annual report.

In the Railways Business, the Ministry of Railways has unveiled the roadmap for the next decade with significant outlay. The introductions of Vande Bharat trains, setting up dedicated freight corridors, and measures to improve passenger safety, etc., are all new business opportunities for the company, it added.