CG Power hits over 2-year high ahead of board meet for preferential issue

The board is scheduled to be held on Thursday, March 25, to consider issue of equity shares on preferential allotment basis to Standard Chartered Bank (Singapore)

Shares of CG Power and Industrial hit an over two-year high of Rs 67.95, frozen in the 5 per cent upper circuit, band on the BSE on Wednesday ahead of the firm's board meeting to issue equity shares to Standard Chartered Bank (Singapore) on preferential allotment basis. The stock was trading at its highest level since May 2018 and has been locked in the upper circuit for the third straight day.

"A meeting of the board of directors of the Company is scheduled to be held on Thursday, March 25, 2021, to consider amongst other businesses, issue of equity shares on preferential allotment basis to Standard Chartered Bank (Singapore) Limited, a Qualified Institutional Buyer (QIB) as settlement of guarantee issued by the Company,” CG Power said in an exchange filing on Monday, March 22.

The counter saw huge trading volumes with 15.77 million equity shares, representing 1.2 per cent of total equity of CG Power, changing hands on the NSE and BSE till the time of writing of this report. There were pending buys orders for 770,000 shares on both the exchanges at 02:55 pm, data shows.

In the past six months, the stock has rallied 213 per cent as compared to a 35 per cent rise in the S&P BSE Sensex. Meanwhile, in the past one year, it has zoomed 1,135 per cent, as against a 85 per cent surge in the benchmark index.

Last month, rating agency India Ratings and Research (Ind-Ra) had upgraded the company's long term issuer rating to 'IND AA-' from 'IND D', with stable outlook.

"The upgrade reflects the successful implementation of a restructuring programme for CG Power, leading to the settlement of claims; a change in the company’s promoter and the infusion of long-term funds in the company, which will result in an improvement in its credit profile," the agency had said.

It added: The upgrade reflects a change in the company’s ownership and managerial structure, infusion of long-term funds by Tube Investments of India (TIIL) and TIIL’s commitment to Ind-Ra to provide a need-based financial support to CG Power in a timely manner.

Ind-Ra derived comfort from CG Power’s new promoter (Murugappa Group) who has a demonstrated track record of successful value creation and turning around businesses, and extending continuous support to them. Further, the group's domain expertise and operational experience in managing engineering companies and financial flexibility by being a part of the Murugappa Group conforted the rating agency.