CG Power and Industrial Solutions Limited (NSE: CGPOWER, BSE: 500093) — formerly Crompton Greaves Limited, incorporated in 1937 and renamed in February 2017 — is one of India’s oldest and largest electrical equipment engineering companies, now controlled by Tube Investments of India Limited, the flagship listed vehicle of the 124-year-old Murugappa Group. The company operates 18 manufacturing units across India and Europe and runs two reporting segments: Power Systems (transformers, reactors, and switchgear spanning medium- and extra-high-voltage circuit breakers, instrument transformers and gas-insulated switchgear) and Industrial Systems (LT/HT motors, generators, drives, railway traction and signalling systems, and consumer/appliance-adjacent products). Power Systems has driven the bulk of recent order momentum, accounting for roughly 80% of the unexecuted order backlog as of FY26-end, riding India’s grid-modernisation and transformer replacement/export upcycle.

The turnaround context matters. CG Power went through severe financial distress under its previous promoter (Avantha Group) between FY17 and FY20 — including a forensic-audit-triggered governance crisis, promoter share pledges invoked by lenders, and a consolidated net loss of ₹1,331 crore in FY20. Tube Investments of India acquired control in 2020, and the company has since executed one of the more notable corporate turnarounds on the Indian market: consolidated PAT recovered from a loss to ₹1,199 crore in FY26, ROCE rose into the 27–61% range across FY22–FY26, and the balance sheet is now almost debt-free (₹118 crore gross borrowings against ₹7,655 crore of reserves as of March 2026).

The newer, higher-optionality leg of the story is semiconductors. Through its subsidiary CG Semi Private Limited — a joint venture with Japan’s Renesas Electronics (~6.76%) and Thailand’s Stars Microelectronics (~0.9%), with CG Power holding ~92.34% — the company has built India’s first full-service Outsourced Semiconductor Assembly and Test (OSAT) facility at Sanand, Gujarat, under an investment plan exceeding ₹7,600 crore over five years across two plants (G1, operational with commercial production commencing in mid-2026 and inaugurated by the Prime Minister; G2, under construction, targeting a scale-up toward an eventual annualised run-rate in the billions of chips). The project qualifies for the India Semiconductor Mission’s capital subsidy (reported at up to 50% of eligible project cost). A separate subsidiary, Axiro Semiconductor, acquired 100% of Tosil Systems Private Limited for ₹16.44 crore in August 2026, adding design/testing capability to the semiconductor cluster.

Alongside this, CG Power is expanding legacy capacity meaningfully: a new 45,000 MVA transformer plant at Sehore (Madhya Pradesh) with a ₹792 crore outlay (first transformer rolled out 4 September 2026), and a ₹748 crore greenfield switchgear facility to roughly double medium- and extra-high-voltage switchgear capacity. Recent large order wins — a ₹900 crore export order for transformers supplying US hyperscale data centres (the company’s largest-ever single export order), and a ₹433 crore KAVACH railway-signalling order via subsidiary GG Tronics — illustrate both the export optionality and the railway-safety adjacency the company is building around its core electrical equipment franchise.

CG Power’s consolidated financials show a five-year re-rating story: revenue has compounded at roughly 33% over five years (21% over three years/TTM) and profit has compounded at roughly 70% over five years, though on a smaller and more volatile FY21 base coming out of the turnaround. FY26 (year ended March 2026) was a record year on revenue, order intake and order backlog, though free cash flow turned negative on the back of heavy simultaneous capex across the semiconductor OSAT project, the Sehore transformer plant and the switchgear expansion.

Balance sheet & cash flow (FY26): Net worth of ₹7,970 crore (Equity capital ₹315 crore + Reserves ₹7,655 crore) against gross borrowings of just ₹118 crore — a company screened by Screener.in as “almost debt-free.” Operating cash flow was ₹702 crore, but investing outflow surged to ₹3,605 crore (OSAT + transformer + switchgear capex), funded partly by ₹2,794 crore of financing inflows (capital raise), leaving free cash flow marginally negative (–₹72 crore) for the year — a deliberate, growth-capex-driven dip rather than an operational weakness. Working capital days have crept up from ~31 to ~70 over the past year as the business has scaled, and ROCE has moderated from a post-turnaround peak of 61% (FY23) to 27% (FY26) as a larger capital base (new plants, OSAT investment) has come onto the books ahead of full revenue contribution — a trend worth monitoring as capacity utilisation ramps.

Order book: unexecuted order backlog stood at approximately ₹17,100 crore (consolidated, up ~61% YoY) as of FY26-end, with FY26 order intake of approximately ₹19,600 crore (up ~33% YoY) — providing roughly 1.3–1.4x of FY26 revenue in forward visibility. Q1 FY27 (June 2026 quarter) sales grew 14% YoY to ₹3,281 crore and net profit grew 16% YoY to ₹313 crore, a step down in the growth rate from FY26’s 21–25% quarterly pace, partly reflecting a high base and partly the semiconductor business still ramping toward meaningful revenue contribution.

We run a 10-year FCFF DCF using a WACC of 12% and a terminal growth rate of 5% (Zumedha standard assumptions). The base case assumes revenue growth stepping down from 22% (FY27) to 7% (terminal year) as the current order backlog is executed and semiconductor revenue ramps gradually; EBITDA margin expanding from ~13.5% to a 16% steady state as OSAT utilisation improves and operating leverage kicks in; and capex intensity that stays elevated (10–12% of sales) through FY27–FY29 to fund the OSAT G2 facility, the Sehore transformer plant and the switchgear expansion, before normalising to ~4% maintenance capex thereafter.

Reading the gap: even the bull-case DCF value (~₹280/share) sits well below the CMP of ₹911. This is a standard feature of pure cash-flow DCF applied to a stock priced for a multi-year, still-unproven semiconductor optionality on top of an already-cyclical capex-heavy electrical equipment business — the market is discounting a great deal of future success (both execution and re-rating) that a conservative discounted-cash-flow lens, by construction, does not fully capture. We weight this method modestly in the final synthesis for exactly that reason, and lean more heavily on relative valuation and SOTP, which are discussed next.

CG Power sits in India’s heavy electrical equipment / capital goods pack alongside ABB India, Siemens, Siemens Energy India, Hitachi Energy India, GE Vernova T&D India and BHEL — a peer set that, as a whole, currently trades at unusually rich multiples (P/E of 50x–150x+) on the back of India’s power transmission & distribution and grid-modernisation capex supercycle. This makes CG Power’s ~111x TTM P/E look less like a company-specific anomaly and more like a sector-wide phenomenon.

Excluding CG Power, the peer set’s average P/E is roughly 86x (median also ~86–88x, with Hitachi Energy a clear outlier at 142x). CG Power’s own TTM P/E of ~111–115x already sits above this average — priced closer to Hitachi Energy’s premium band than to the ABB/Siemens/BHEL cluster, reflecting the market’s willingness to pay up for CG’s superior recent growth trajectory and its semiconductor call option.

Applying the sector-average multiple (excluding Hitachi Energy’s outlier premium) to CG Power’s TTM EPS of ₹7.94 gives a relative-valuation fair value of roughly ₹690/share — meaningfully below CMP — while a full re-rating to Hitachi Energy’s premium band would justify a price above ₹1,100. The wide spread itself is the key takeaway: CG Power’s current price already assumes it deserves to trade at (or above) the richest end of an already expensive peer group.

CG Power’s FY26 book value stands at ₹50.6/share (net worth of ₹7,970 crore across ~157.5 crore shares), against which the stock trades at ~18x book — a very large premium, typical of an asset-light engineering/assembly business whose real value drivers are order backlog, brand, technology licensing (Renesas/Stars Microelectronics tie-ups) and execution capability rather than the replacement cost of its 18 manufacturing units.

Even generously marking up the fixed-asset base (land, plant & machinery across 18 sites plus the under-construction OSAT and transformer facilities) by 1.5–2.0x book to reflect replacement cost and strategic scarcity value (India’s first full-service OSAT line), an adjusted NAV of roughly ₹75–100/share still sits nowhere near the CMP of ₹911. The conclusion for this lens is straightforward: at current prices, there is essentially no downside protection from the asset base alone — the entire valuation rests on the earnings and growth story holding up.

EPV isolates the value of the business’s current, no-growth earnings power — a useful discipline check against how much of today’s price is really a bet on future growth. Using TTM EBITDA of ₹1,638 crore, normalised D&A of ₹207 crore, a 26% tax rate and the same 12% WACC used in the DCF (with no growth/reinvestment assumed beyond maintenance capex):

The gap between EPV (~₹69/share) and CMP (₹911/share) is the market’s estimate of CG Power’s “franchise + growth value” — everything the market believes the company will build beyond its current earnings run-rate, spanning both the legacy electrical-equipment growth trajectory and the semiconductor optionality. On this framework, roughly 92% of the current share price is a bet on future growth materialising rather than a reflection of today’s earning power — an unusually growth-dependent valuation even for a high-quality, well-run business.

CG Power today is best understood as three distinct businesses bolted onto one balance sheet: a high-growth, high-margin Power Systems franchise; a steadier, commodity-exposed Industrial Systems business; and an early-stage, high-optionality semiconductor OSAT venture. We value each separately (segment revenue splits are approximate, derived from FY26 standalone order-intake disclosures in the absence of granular segment-revenue reporting).

Even valuing the OSAT venture generously as a call option worth roughly its own invested capital plus a strategic premium, SOTP arrives at a fair value near ₹325/share — a level well above the DCF and EPV figures (reflecting the segment-level growth and semiconductor optionality that pure cash-flow methods underweight), but still under 40% of the CMP. This is the clearest quantitative signal in this report that CG Power’s parts, valued individually against reasonable comparable multiples, do not yet add up to its current market price.

Combining DCF, relative valuation, SOTP, EPV and NAV in the weighted synthesis (detailed in the Verdict section), we frame a buy range well below the current market price — appropriate given how much of today’s price already reflects flawless multi-year execution across two growth engines simultaneously (core electrical equipment + semiconductors).

A fresh accumulation case for CG Power strengthens materially if any of the following play out: (a) a broad correction in India’s richly-valued capital-goods/power-equipment complex pulls CG Power toward the ₹550–700 band without any change in its own fundamentals; (b) the OSAT venture demonstrates a credible, disclosed path to profitability with signed anchor customers and utilisation ramp visibility, which would justify moving weight away from the conservative EPV/DCF lens toward the SOTP and bull-case figures; or (c) a sharp, sentiment-driven sell-off (e.g., a weak quarter, an order-book miss, or sector-wide de-rating) creates a temporary entry point closer to intrinsic value while the medium-term order-backlog and export story remains intact. Investors already holding a starter position purely for long-duration exposure to India’s grid-capex and semiconductor-localisation themes may choose to average in on any of these dips rather than chase strength.

The current market price of ₹911 already sits inside our “Reduce” zone, close to the stock’s 52-week high of ₹980.90 — reinforcing a cautious stance for anyone sitting on substantial unrealised gains from the multi-year re-rating.

The case for trimming or exiting strengthens if: (a) OSAT commercialisation disappoints — delayed customer qualification, cost overruns beyond the ₹7,600 crore envelope, or a slower-than-guided ramp toward meaningful revenue, which would remove the main justification for CG’s premium-to-peer multiple; (b) order intake growth decelerates meaningfully from the 30%+ pace seen in FY26 (Q1 FY27’s slowdown to mid-teens growth is an early signal worth tracking); (c) working-capital days continue rising (already up from ~31 to ~70 days over the past year), pressuring free cash flow further even as reported profit grows; or (d) a broad de-rating hits India’s capital-goods sector (e.g., a slowdown in government/private capex cycles, competitive pricing pressure from new entrants such as GE Vernova T&D or global OSAT players). Given the stock is already priced closer to the sector’s richest multiples than its average, even modest disappointment on any of these fronts could trigger an outsized correction.

Promoter holding has drifted down slightly from 58.12% (Sep 2023) to 56.36% (Jun 2026) — this decline coincides with periodic ESOP-driven equity issuance rather than any disclosed active promoter selling, and should be read as technical dilution rather than a confidence signal. The more striking trend is the swap between foreign and domestic institutional ownership: FII holding has fallen from 16.74% to 11.97% over the same period, while DII (domestic mutual fund) holding has more than doubled from 7.83% to 18.23% — strong, sustained domestic institutional buying even as foreign investors have trimmed exposure. The public/retail shareholder base has nearly tripled, from about 1.84 lakh to 5.34 lakh accounts, reflecting intense retail enthusiasm for the turnaround-and-semiconductor narrative — a pattern that can also amplify volatility on any disappointment.

Top institutional / fund-house holders (approximate, entity/scheme-level, may lag the live quarter):

Note: figures combine AMC-level and scheme-level disclosures sourced from company shareholding filings and third-party aggregators across recent quarters; they may not all reflect the same reporting date and can lag the live quarter. Investors seeking scheme-wise or FPI-wise granular detail should refer to CG Power’s latest shareholding pattern filings on BSE/NSE.