Motilal Oswal Financial Services has raised its target price for CG Power to Rs 940, seeing an upside of more than 13% and maintaining a ‘Buy’ rating on the stock. The surge in price target came on the back of robust power systems performance, capacity expansion, a strong order book, and other factors.
Exceptional performance in power systems
The power systems division delivered a strong performance in FY26, with revenue growing 46% YoY and PBIT increasing 68% YoY. This led to a significant margin expansion to 21.9% due to strong execution and operating leverage. Motilal Oswal has tweaked its future estimates upward to bake in these better-than-expected margins.
Massive capacity expansion
The company is aggressively expanding its transformer capacity through brownfield and greenfield initiatives. Total capacity is expected to reach 110,000 MVA by the end of CY26, up from approximately 65,000 MVA at the end of last year. This commissioning is viewed as a primary aid for future growth.
Robust order book and inflows
Consolidated order inflows for FY26 stood strong at Rs 19,600 crore, which was up 34% YoY, primarily driven by the power systems division. As of March 31, 2026, the company holds a record unexecuted backlog of Rs 17,100 crore, up 61% YoY, providing high revenue visibility for the coming years.
Improving outlook for the semiconductor (OSAT) business
While currently weighing on consolidated margins, losses from the OSAT division are expected to narrow starting in FY28. The second phase of capacity expansion is slated for completion by the end of CY26, and the business is projected to achieve EBITDA breakeven by FY28.
Pricing power and cost mitigation
In the Industrial Systems segment, CG Power successfully implemented cumulative price hikes of approximately 17.5% during the year to offset raw material (RM) cost inflation. Their ability to pass on these costs while maintaining market leadership in motors demonstrates strong pricing discipline and resilience against commodity volatility.
CG Power share price performance
The share price of CG Power has risen more than 5% in the last five trading sessions. The stock has given a return of 24% in the last one month and over 17% in the last six months. CG Power’s stock price has raised investors’ wealth by almost 42% over the previous 12 months.