CG Power, K Raheja Corp ink agreement to develop Mumbai land; stock up 8%

The developer has to complete the entire construction and development of the 'new building'; the company and the developer shall be entitled to an equal share, i.e., 50% in the new building.

Shares of CG Power and Industrial Solutions (CG) hit a new peak at Rs 782.35, surging 8 per cent on the BSE in Friday’s intra-day trade after the company said it has entered into a ‘Development Agreement’ with Skybound Realty Private Limited, a M/s. K Raheja Corp. Group company, for joint development of a land parcel in Mumbai.

On December 14, 2023, CG  had signed a Term Sheet with K Raheja Corp. Group company for the joint development of the company’s property ‘CG House’ situated at Dr. Annie Besant Road, Worli, Mumbai, built on leasehold land admeasuring 4,262.34 square meters.

 

The developer has to complete the entire construction and development of the New Building, in the manner set out in the agreement, and the company and the developer shall be entitled to an equal share, i.e., 50 percent in the New Building, CG said in a regulatory filing.

CG has two business lines - Industrial Systems and Power Systems. It manufactures Traction Motors, Propulsion Systems, Signalling Relays etc., for the Indian Railways, and a wide range of Induction Motors, Drives, Transformers, Switchgears, and other allied products for the Industrial and Power sectors. Recently, the company also made a foray into the business of Consumer Appliances such as Fans, Pumps, and Water Heaters.

The stock of Murugappa Group surpassed its previous high of Rs 735.50 touched on June 24. In the past three months, the stock has zoomed 52 per cent.

With a strong order book, CG said the outlook for the year ahead is strong. Sustainable profitable growth will be driven by continuous efforts to enhance internal capabilities, with particular focus on operational excellence, capacity expansion, modernization / digitisation of its plants, integrating Industry 4.0, LEAN, and deploying disruptive technologies like AI / Gen A.

The company is optimistic about future growth prospects underpinned by its internal strengths which it continues to fortify and augment, combined with India’s growth narrative–driven by several key factors including robust and progressive manufacturing, emphasis on capital investments, innovation, and technological advancements, thrust on infrastructure augmentation, and resilient capital market dynamics, which is further buoyed by positive external factors such as the widespread adoption of the China + 1 strategy by global corporations. All this heralds a promising business outlook for the company.

CG in its FY24 annual report said that the company stands to benefit from numerous sectoral opportunities. In the infrastructure sector, significant investments are planned under the National Infrastructure Pipeline (NIP), with outlays in Energy, Roads, Railways, and Urban Development. Additionally, increased allocations in the Interim Union Budget for 2024-2025 indicate a positive trend.

In agriculture, advancements supported by government schemes and investments in infrastructure present opportunities. The growth of the cement industry, driven by economic growth and infrastructure thrust, requires various motors for production, creating opportunities.

The sugar sector's modernization and increased ethanol demand offer growth prospects. The expanding Data Centre sector, driven by digital economy growth, presents opportunities for motors. Besides, in oil and gas, India's energy demand projections drive investments and present opportunities for the company's motors business, CG said.