Why Morgan Stanley Sees CG Power as a Core Play in India’s Manufacturing Upswing
About CG Power & Industrial Solutions: The company has evolved from a traditional transformer manufacturer into a diversified electrical-equipment and semiconductor-fabrication player. It is a critical beneficiary of India’s industrial-capex revival and the government’s semiconductor push.
Brokerage Overview
Morgan Stanley maintains an Overweight rating on CG Power with a target price of ₹799, citing robust order inflows, a strong export mix, and structural growth visibility through FY27. The note emphasises management discipline and supportive government policy tailwinds.
Financial Snapshot & Key Highlights
| Metric | Latest | YoY / Comment |
|---|---|---|
| Order Inflows | ↑ 81 % | Strongest on record; driven by transformer & switchgear demand |
| Export Share | 20 % | Rising penetration in US & EU markets |
| Capex Plan | ₹7,600 Cr | Includes 64 % subsidy (Centre + State) |
| Semiconductor G2 Facility | To complete by 2026 | 14.5 MU/day capacity expected |
Analyst Commentary
- Growth visibility is supported by a multiyear order pipeline in power equipment and semiconductors.
- Export mix expansion to 20 % reduces dependence on cyclical domestic demand.
- Government subsidy for the G2 plant boosts return metrics and caps downside risk.
- Transformer and switchgear divisions are running near full utilisation, signalling capacity addition ahead.
SWOT Analysis
- Strength: Leadership in electrical equipment; expanding semiconductor capability.
- Weakness: Execution timelines for fab facility remain lengthy.
- Opportunity: India’s electrification & semiconductor missions offer exponential growth levers.
- Threat: Any delay in subsidy disbursement or cost escalation could affect IRRs.
Valuation & Outlook
Morgan Stanley values CG Power at 799 per share, implying about 20 × FY27 EV/EBITDA. The brokerage believes the semiconductor vertical could add a structural rerating once commercial output begins in FY27. Balance-sheet strength and visibility across industrial and export markets justify the premium valuation.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that CG Power’s expansion into semiconductors and consistent orderbook momentum position it as a long-term compounder. Investors may accumulate gradually with a 3-year view while tracking fab-project milestones and export growth.
Discover more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on CG Power
- What does Morgan Stanley’s target imply for CG Power’s valuation?
- How critical is the semiconductor G2 facility for future earnings?
- Will export share continue to rise beyond 20 %?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
