1. 🧠 At a Glance
CG Power has transformed from bankruptcy junk to Murugappa Group’s crown jewel. With 27% ROE, 37% ROCE, and zero debt, it’s the poster boy for turnarounds. But with a PE of 110x, the Street is pricing in a Tesla-like future from a company that still sells transformers.
2. 🎬 Introduction with Hook
Once upon a time (read: FY20), CG Power was drowning in fraud allegations, bankrupt management, and rating downgrades. Then came the Murugappa Rescue Squad, cleaned house, and made it profitable again.
Fast-forward to FY25:
- ₹9,900 Cr revenue
- ₹1,300+ Cr profit
- ₹3,000 Cr fresh QIP raised
- 📈 135% stock CAGR in 5 years
But now the real question: is this valuation justified or has the Street short-circuited?
3. ⚙️ Business Model – WTF Do They Even Do?
CG Power operates in two major segments:
| Segment | Description | FY25 Share |
|---|---|---|
| Power Systems | Transformers, switchgears, substation solutions | ~55% |
| Industrial Systems | Motors, alternators, drives for industrial use | ~45% |
They’re also pivoting towards automation, EV ecosystem, and smart infrastructure (read: buzzword buffet).
4. 💰 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 2,964 | 5,484 | 6,973 | 8,046 | 9,909 |
| Net Profit (₹ Cr) | 1,280 | 913 | 963 | 1,428 | 973 |
| OPM (%) | 4% | 12% | 14% | 14% | 13% |
| ROE (%) | 9.7 | 27 | 28 | 27.6 | 27.6 |
Yes, PAT dipped in FY25 — blame base effect and some non-operating volatility. Margins remain solid.
5. 📊 Valuation – Is It Cheap, Meh, or Crack?
- P/E: 111x 😵
- P/B: 26.6x
- M-Cap to Sales: 10.6x
- 5Y Profit CAGR: 34%
- Stock CAGR (5Y): 135% 💥
This is not “undervalued PSU” — this is priced like a SaaS stock with transformers.
Valuation Verdict: Crack. The Street is pricing FY28 dreams in FY25.
6. 🍿 What’s Cooking – News, Triggers, Drama
- 💸 ₹3,000 Cr QIP in July 2025 at ₹660/share (2.8% discount)
- 🤝 Murugappa looking at global JV partnerships in power automation
- 📉 Promoter stake down by 1.7% QoQ due to QIP
- 🧾 7,000 ESOP shares allotted recently = reward or dilution?
7. 🏗️ Balance Sheet – How Much Debt, How Many Dreams?
| FY | Borrowings (₹ Cr) | Networth (₹ Cr) | D/E |
|---|---|---|---|
| FY21 | 1,484 | -352 | Negative |
| FY23 | 16 | 1,790 | Practically 0 |
| FY25 | 41 | 3,844 | 0.01 ✅ |
They’ve deleveraged like a boss. After the QIP, it’s sitting on cash — zero-debt, future-capex-ready avatar.
8. 💵 Cash Flow – Sab Number Game Hai
| FY | CFO (₹ Cr) | Capex (₹ Cr) | FCF |
|---|---|---|---|
| FY23 | 947 | -21 | ₹926 Cr ✅ |
| FY24 | 1,028 | -1,294 | -₹266 Cr |
| FY25 | 944 | -568 | ₹376 Cr ✅ |
Capex-heavy FY24 behind them. FY25 stabilized. Future: infrastructure expansion + automation projects incoming.
9. 📐 Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE (%) | 61 | 47 | 37.5 ✅ |
| ROE (%) | 28 | 27.6 | 27.6 |
| Working Capital Days | 4 | 9 | 16 ⬆️ |
| Cash Conv. Cycle | 15 | 21 | 35 ⬆️ |
| D/E | 0.003 | 0.005 | 0.01 ✅ |
Efficient machine, but working capital stretch is worth watching post-QIP expansion.
10. 💸 P&L Breakdown – Show Me the Money
| FY25 (₹ Cr) | Amount |
|---|---|
| Revenue | 9,909 |
| Op Profit | 1,319 |
| Other Income | 162 |
| Interest | 21 |
| Depreciation | 112 |
| PBT | 1,348 |
| PAT | 973 |
⚠️ PAT dipped vs FY24 — due to lower other income. Core margins still intact.
11. ⚔️ Peer Comparison – Who Else in the Game?
| Company | P/E | ROE (%) | OPM (%) | D/E | M-Cap (₹ Cr) |
|---|---|---|---|---|---|
| CG Power | 111x | 27.6 | 13 | 0.01 | ₹1,05,116 |
| ABB India | 65x | 28.8 | 18.9 | 0 | ₹1,22,030 |
| Siemens | 59x | 17.6 | 12 | 0 | ₹1,10,996 |
| BHEL | 168x | 2.1 | 4.3 | 0.01 | ₹90,098 |
| Hitachi Energy | 215x | 13.7 | 9.3 | 0.02 | ₹82,795 |
CG is solid, but ABB and Siemens offer similar growth + global ops — at better P/E. 🔍
12. 🧾 Miscellaneous – Shareholding, Promoters
- 🏛️ Promoter: Tube Investments / Murugappa Group
- Promoter Holding: 56.38% (↓ from 58% post QIP)
- FIIs: 12.7%, DIIs: 16.3%, Public: 14.6%
- Shareholders: 4.93 lakh 👀 retail love is real
- No pledge, no drama — pure institutional darling right now.
13. 🧑⚖️ EduInvesting Verdict™
🔌 CG Power is not a turnaround story anymore. It’s the real deal —
- 13% OPM
- 27% ROE
- 0.01 D/E
- Solid FCF
- High promoter pedigree
But is it worth paying 110x earnings?
Let’s be honest — this transformer is pricing in flying cars.
🎯 Fair Value Range (EduInvesting POV):
₹360 – ₹440 per share
(Assuming FY26 EPS of ₹12–14 and a justifiable P/E of 30–35x for a high-quality cap goods player)
📌 Tags: CG Power share analysis, Murugappa group stocks, capital goods India, transformer stock India, CG QIP analysis, high PE stocks 2025, EduInvesting
✍️ Written by Prashant | 📅 12 July 2025
