 "CG Power shares rise 4% as arm launches OSAT facility; Buy or sell?")
CG Power and Industrial Solutions, heavy electrical equipment company, shares rose 3.6 per cent on Friday, logging an intra-day high at ₹688.95 per share on BSE. At 10:47 AM, CG Power’s share price was trading 3.36 per cent higher at ₹685.3 per share. In comparison, the BSE Sensex was up 0.16 per cent at 80,210.26.
The market capitalisation of the company stood at ₹1,07,994.18 crore. The 52-week high of the stock was at ₹874.5 per share, and the 52-week low was at ₹518.35.
In one year, CG Power shares have lost 5 per cent, as compared to Sensex’s decline of 2.5 per cent. FOLLOW STOCK MARKET LIVE UPDATES
Why were CG Power shares in demand?
The buying interest on the counter came after the company arm CM Semis announced the launch of its first Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. With this launch, CG Semi becomes one of India’s first full-service OSAT providers, offering solutions across both traditional and advanced packaging technologies, according to the filing.
CG Semi is investing over ₹7,600 crore ($870 million) over five years to develop two facilities (G1 and G2) in Sanand, Gujarat. The G1 facility will operate at a peak capacity of approximately 0.5 million units per day.
Besides, the G2 facility is under construction and expected to be completed by the end of the calendar year 2026. Once operational, G2 will scale up to a capacity of approximately 14.5 million units per day. Together, the two facilities are projected to generate over 5,000 direct and indirect jobs in the coming years. ALSO READ | RIL AGM: How to trade group stocks; check strategy here
Nomura’s view on CG Power
Global brokerage Nomura has maintained ‘Buy’ with a target of ₹840 per share, which translates to 26.5 per cent upside from the previous close of ₹663.65 per share. The brokerage values CG’s Industrial Systems and Power Systems businesses at 60x Mar’27F, largely in line with its average traded P/E multiple since the acquisition by Murugappa Group (unlisted) at ₹760 per share, and the OSAT business at ₹80 per share based on discounted cash flow (DCF).
Given that the larger G2 facility is expected to be completed by the end of CY26E, Nomura expects its
production to start from CY27F. Thus, “meaningful revenue from the OSAT business is likely to come from FY28F onwards, with negligible contribution in FY27F,” the brokerage noted.
It added: Any preponement of commissioning or faster-than-expected ramp-up in production will act as upside risks to our estimates.