CG Power hits new high

about 18 days ago
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CG Power is undoubtedly the buzzing stock on the market today, consistently hitting new highs. The stock, rose over 4% to hit a new 52-week high today at Rs.231 on the back of more than 4.4 times jump in volumes.

There is a lot of positive buzz around the stock as it will be declaring its Q1FY23 earnings on 27th July and the expectations are that the numbers will be very good.

Our Editor, Mr SP Tulsian had given ‘buy’ call on CNBC TV 18 at Rs. 15 on 19th August 2020, with targets of Rs. 100 in 1 year, which is now Rs. 231 in less than 2 years.

Promoter converted all Warrants into equity on 18th May, hiking their stake to 58.12% from 55.64%, coupled with good consolidation seen in last 1 month, making trend of the stock highly bullish for the next 3 months. Present issued equity shares now stands at 152.71 cr shares of Rs. 2 each. Company turned net debt free in Q4, with surplus cash of Rs. 177 cr.

In our Big Gems section, our opinion - company has gained market share in FY22, in power transformer, distribution transformer, Industrial motors (both low tension and high tension) while seen confident of gaining market share in FY23E, as also, Vande Bharat train is seen a Large Opportunity. CG Power is developing a proto type & will be ready to participate in the tenders inless than 2 years, competing with Siemens, Alstom etc. - order contracts for Vande Bharat are likely to continue even after the order for these 400 trains (of Rs. 100 cr each) are awarded. Vande Bharat Train (semi-high speed trains) built in India, with only 15% imported component, successfully runs 6 days a week, without breakdown. Govt plans 400 trains at Rs. 100 cr each, being far cheaper than their foreign counterparts, i.e. Rs. 40,000 cr spend in 3 years, India needs many Vande Bharat trains for both passengers and goods. Expect company to get now compared with ABB, Siemens in FY 23 itself, which will also give better and rich valuations from hereon.

229.15 (-2.75)

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