CGPOWER - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Rating: 3.6

CG Power and Industrial Solutions Ltd. is a high-growth, low-debt player in the electrical engineering space, but its current valuation metrics suggest caution for long-term investors. Here's a detailed breakdown

✅ Strengths for Long-Term Investment

Exceptional Profitability

ROCE: 37.5% — very efficient use of capital

ROE: 27.6% — strong shareholder returns

Debt-Free Structure

Debt-to-equity: 0.01 — virtually no leverage risk

Consistent Earnings

PAT Qtr: ₹267 Cr vs ₹272 Cr — stable profits

EPS: ₹6.56 — decent earnings base

Institutional Confidence

DII holding up 2.75% — domestic investors are bullish

⚠️ Valuation & Technical Concerns

Overvaluation Risks

P/E: 104 vs Industry PE of 57.2 — extremely expensive

PEG Ratio: 9.54 — suggests poor value relative to growth

Dividend Yield: 0.20% — not attractive for income investors

Momentum Weakness

RSI: 41.9 — nearing oversold territory

MACD: -2.75 — bearish crossover

Price near 200 DMA (₹659) — trend reversal possible

📈 Ideal Entry Price Zone

To reduce valuation risk, consider accumulating in the ₹600–₹630 range

This zone is closer to support levels and offers better margin of safety

RSI and MACD suggest weakness — wait for stabilization or reversal signals

🧭 Exit Strategy / Holding Period

If you're already holding the stock

Holding Period: 3–5 years to benefit from sector tailwinds and margin expansion

Exit Strategy

Partial Exit near ₹850–₹875 (52-week high) if valuation remains stretched

Hold if ROE stays above 25% and PEG drops below 2.5

Monitor quarterly PAT and EPS — any stagnation may warrant trimming

Would you like a peer comparison with other electrical equipment or industrial automation stocks to benchmark CG Power’s potential?

Edit in a page