Stock of this Murugappa Group company has zoomed over 100% in 9 months

CG Power hit a new high of Rs 327, surging 5 per cent in the intra-day trade, after MSCI decided to include the Murugappa Group company in India index

Shares of CG Power and Industrial Solutions continued at their upward movement, hitting a new high of Rs 327, as they rallied 5 per cent on the BSE in Friday's intra-day trade. The rally comes after MSCI decided to include the Murugappa Group company in its India index. The changes will take place at the close of February 28, 2023. In comparison, the S&P BSE Sensex was down 0.19 per cent at 60,690 at 11:09 am.

In the past nine months, the market price of CG Power has more-than-doubled, zooming 104 per cent from a level of Rs 160.10 on May 10, 2022. In the past three months, the stock has rallied nearly 30 per cent, as compared to a marginal 0.09 per cent rise in the S&P BSE Sensex.

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.

The company has a strong order book position, with a order intake for Q3FY23 was Rs 2,219 crore, up 21 per cent YoY. Unexecuted order book as at Q3FY23 was Rs 4,136 crore, a 34 higher as compared to Q3FY22.

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.

With an expanding order book, increased manufacturing capacity, and consistent revenue from railway contracts, CG Power is well-positioned to streamline its operations. Future growth is expected to be aided by proposed capacity expansion plans and further improvement in utilization levels, according to analysts.

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.