Buy CG Power; target of Rs 765: Emkay Global Financial

Emkay Global Financial's research report on CG Power

Industrial business profitability was impacted by rise in copper prices and losses in new businesses that are in investment mode. However, better profitability in Power Systems supported the overall EBITDA margin. The company indicated gaining further market share in the Industrial Motors space due to consistent product launches and go-tomarket strategy. Order book remains healthy at Rs106bn (+66% YoY). The ongoing capex of ~Rs7bn (across segments), in our view, is well timed and perfectly aligned with industry tailwinds, offering multi-year growth prospects. This is also likely to address the company’s plans of boosting exports. CG Power’s recent entry into OSAT provides it an early mover advantage in India’s journey toward building a full-scale semiconductor manufacturing ecosystem.

Outlook

We maintain BUY on CG Power & Industrial Solutions (CGPower) with TP of Rs 765 (unchanged). Q4FY25 results were broadly mixed, with revenue in line with estimates and our PAT seeing a marginal miss. Consolidated revenue/EBITDA/PAT grew 26/28/23% YoY to Rs27.5/3.6/2.9bn, respectively. Both, the Industrial and Power System segments, reported strong revenue growth at 21% and 28% YoY.