The shares of the Large-cap company, which specializes in electrical engineering, particularly in the design, manufacturing, and maintenance of a wide range of electrical equipment and systems, have been in focus as they are consolidating in the same range despite getting the Highest ever order of Rs. 641 crore.
With a market capitalization of Rs. 1,04,486.79 crores on Wednesday, the shares of CG Power and Industrial Solutions Ltd declined by upto 2 percent, making a low of Rs. 678.80 per share compared to its previous close price of Rs. 692.75 per share.
CG Power and Industrial Solutions Ltd, engaged in electrical engineering, particularly in the design, manufacturing, and maintenance of a wide range of electrical equipment and systems, is currently in a long-term consolidation phase and has declined despite receiving its highest-ever order. Here are the key factors to know:
- High Price-to-Earnings (P/E) Ratio: The stock is trading at a P/E ratio of around 105–109, which is significantly higher than the industry average P/E of about 59. This suggests investors are paying a premium for its earnings relative to peers.
- High Price-to-Book (P/B) Ratio: The P/B ratio is about 27–34, compared to the sector average of around 6–17 for major competitors. Such a high multiple indicates the market is valuing the company’s net assets at a much higher price than its actual book value.
- Earnings Growth Not Matching Valuation: Despite strong recent performance, the company’s earnings per share (EPS) are currently ₹6.37–6.38, and while revenue and profit have grown, the valuation multiples have expanded even faster, making the stock look expensive on a fundamental basis.
- Market Sentiment and Speculation: The company’s share price has shown high volatility, sometimes driven by market sentiment, speculation, or news flow rather than purely by fundamentals.
- Peer Comparison: When compared to peers like ABB India (P/E ~68), Siemens (P/E ~63), and Havells India (P/E ~65), CG Power’s valuation multiples appear stretched.
Technical Overview
The stock is currently trading in a consolidation phase, having faced strong resistance at the Fibonacci 0.5 level drawn from the recent high to the recent low. It is positioned above its 50-day moving average (50 DMA) and is finding support at the 200-day moving average (200 DMA). Trading volumes have been decent in recent days, and the Relative Strength Index (RSI) is at 52, indicating that the stock is neither overbought nor oversold at this stage.
Financials & Others
The company reported a 25.59 percent YoY increase in revenue from Rs. 2,192 Crore in Q4FY24 to Rs. 2,753 Crore in Q4FY25. On a QoQ basis, the company reported an increase of 9.41 percent in revenue from Rs. 2,516 Crore in the previous quarter.
Their Net profit saw an increase of 17.09 percent YoY from Rs. 234 Crore to Rs. 274 Crore for the same period. On a QoQ basis, the company reported an increase of 15.12 percent in Net profit from Rs. 238 Crore in the previous quarter.
CG Power and Industrial Solutions Limited is a leading Indian engineering company that operates primarily in the power and industrial equipment sectors. It was originally part of Crompton Greaves but rebranded after a corporate restructuring.
The company manufactures and supplies a wide range of products such as transformers, motors, switchgear, and railway traction systems, catering to both domestic and international markets. CG offers Power Transformers in the range of 25 kVA to 1500 MVA, and 11kV to 765kV class, and Reactors in the range of 10 MVAr to 125 MVAr, and 33kV to 765kV class.
Conclusion
CG Power and Industrial Solutions Ltd has shown strong revenue growth and business expansion, but its high valuation multiples and technical resistance have likely contributed to the recent fall in its share price. Investors may be booking profits after a sharp rally, and concerns about future profitability and execution risks in new ventures could be adding to the pressure.
Written By Sridhar J
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