CGPOWER - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | CGPOWER | Market Cap | 94,054 Cr. | Current Price | 597 ₹ | High / Low | 798 ₹ |
| Stock P/E | 78.0 | Book Value | 48.7 ₹ | Dividend Yield | 0.22 % | ROCE | 35.8 % |
| ROE | 26.0 % | Face Value | 2.00 ₹ | DMA 50 | 631 ₹ | DMA 200 | 672 ₹ |
| Chg in FII Hold | -1.00 % | Chg in DII Hold | 1.26 % | PAT Qtr | 337 Cr. | PAT Prev Qtr | 307 Cr. |
| RSI | 48.0 | MACD | -19.2 | Volume | 1,62,83,271 | Avg Vol 1Wk | 98,88,775 |
| Low price | 518 ₹ | High price | 798 ₹ | PEG Ratio | 2.53 | Debt to equity | 0.01 |
| 52w Index | 28.3 % | Qtr Profit Var | 38.1 % | EPS | 7.60 ₹ | Industry PE | 35.4 |
💹 Financials: CG Power demonstrates strong efficiency with ROE at 26.0% and ROCE at 35.8%, reflecting excellent capital productivity. Debt-to-equity at 0.01 indicates a virtually debt-free balance sheet, enhancing financial stability. Quarterly PAT rose from 307 Cr. to 337 Cr., showing a 38.1% growth, highlighting robust earnings momentum. EPS at 7.60 ₹ supports earnings visibility.
📊 Valuation: The stock trades at a P/E of 78.0, significantly higher than the industry average of 35.4, suggesting premium valuation. The P/B ratio is ~12.3 (597/48.7), which is steep. PEG ratio of 2.53 indicates valuations are stretched relative to growth. Dividend yield at 0.22% is negligible, offering little income return.
🏢 Business Model & Advantage: CG Power operates in the electrical equipment and engineering sector, specializing in transformers, switchgear, motors, and industrial systems. Its competitive advantage lies in strong brand recognition, diversified product portfolio, and leadership in power equipment manufacturing. Demand is supported by infrastructure growth, industrial expansion, and government initiatives in energy and electrification.
📈 Overall Health: Financially robust with strong profitability, minimal debt, and consistent growth. RSI at 48.0 suggests neutral momentum, while MACD at -19.2 indicates mild bearish sentiment in the short term. Long-term fundamentals remain intact, supported by sectoral demand and operational efficiency, though valuations are demanding.
🎯 Entry Zone: Attractive entry around 560–580 ₹ range, near support levels. Current price of 597 ₹ is slightly above fair value. Long-term investors may accumulate gradually, but caution is advised due to premium valuation multiples.
Positive
- Strong ROCE (35.8%) and ROE (26.0%) indicate superior capital efficiency.
- Virtually debt-free balance sheet (Debt-to-equity: 0.01).
- Quarterly PAT growth of 38.1% highlights strong earnings momentum.
- DII holdings increased by 1.26%, reflecting domestic institutional support.
Limitation
- High P/E (78.0) compared to industry average (35.4).
- High P/B ratio (~12.3) suggests stretched valuation.
- PEG ratio of 2.53 indicates expensive valuation relative to growth.
- Dividend yield at 0.22% offers negligible income return.
Company Negative News
- FII holdings decreased by -1.00%, showing reduced foreign investor confidence.
- Short-term technical indicators (MACD negative) suggest weak momentum.
Company Positive News
- Quarterly PAT rose from 307 Cr. to 337 Cr., showing strong earnings growth.
- DII holdings increased by 1.26%, reflecting domestic institutional support.
- Strong brand recognition and leadership in power equipment manufacturing.
Industry
- Electrical equipment industry benefits from infrastructure growth and industrial expansion.
- Industry P/E at 35.4 indicates CG Power trades at a premium valuation compared to peers.
Conclusion
CG Power remains a fundamentally strong company with robust profitability, superior return ratios, and minimal debt. However, high valuations limit upside potential. Entry around 560–580 ₹ is advisable for long-term investors, with cautious accumulation recommended given premium multiples.