CG Power: From Crisis to Comeback

CG Power, an 86-year-old engineering player in industrial and power systems, has stunned markets with its dramatic turnaround story. A few years ago, the company’s performance had hit rock bottom, plagued by falling revenues, losses, and governance issues triggered by accounting irregularities. The entry of the Murugappa Group in 2020, with a ₹7,000 crore infusion and new leadership, changed the game. Today, Tube Investments holds a controlling 57.9% stake and has set a clear, focused strategy. CG Power's revenue rebounded from ₹51,500 crore in FY20 to nearly ₹99,100 crore in FY25, while net profit jumped from a loss of ₹1,320 crore to a profit of ₹970 crore over the same period. The share price multiplied over 31 times in five years, delivering extraordinary wealth for patient investors. Power and industrial segments drive growth, with the power business boasting superior 22% margins. Although industrial margins recently dipped due to investments and commodity prices, the power segment’s strong margin and volume growth ensured consolidated profits and a stellar return on capital employed of 33% for Q1 FY26. Importantly, CG Power holds a robust order book of ₹1,30,700 crore, providing revenue visibility for about 1.5 years. With significant expansion in its power transformer segment, plans to develop electric vehicle motors, and enhanced export ambitions, the company is positioned for further growth. However, the stock trades at a steep P/E of 117x, significantly above industry norms, reflecting costly valuations. For shareholders, this transformation has clearly created value and restored credibility. As new capacity and order execution play out, long-term prospects look strong, though new investors should weigh current valuations. For existing shareholders, CG Power's revival affirms the power of strong management in fostering sustainable value creation.