India’s semiconductor ambitions are moving beyond announcements and into execution. The domestic semiconductor market, estimated at around ₹4.2 lakh crore in FY25, is expected to more than double to around ₹9.5 lakh crore by 2030.
To capture this opportunity, the government first launched the India Semiconductor Mission (ISM 1.0) in December 2021 with a ₹76,000 crore outlay. This budget supported semiconductor fabrication, display manufacturing and chip design. The policy has already attracted more than ₹1.55 lakh crore of investments from companies including Tata Electronics, CG Power, Kaynes Semicon and the HCL Foxconn joint venture.
The momentum has now accelerated with the approval of ISM 2.0, backed by a much larger ₹1.27 lakh crore allocation. Unlike the first phase, ISM 2.0 broadens the opportunity across the semiconductor ecosystem. The new phase extends support to chip design, advanced packaging, semiconductor equipment, specialty materials, chemicals and gases.
Shifting Focus: From Fabrication to Ecosystem Support
This wider policy focus is important because the investment opportunities may not be limited to chip manufacturers. As India builds its semiconductor ecosystem, companies operating across this value chain could emerge as key beneficiaries alongside the chip manufacturers themselves.
Against this backdrop, two companies from the Murugappa Group are positioning themselves to benefit from India’s expanding semiconductor value chain. Although we already know about CG Power, which is at the forefront in the semiconductor business, there is another company that could benefit from India’s semiconductor push. But first, let’s start with CG Power.
#1 CG Power: Direct semiconductor play through OSAT and chip design
CG Power has ventured into the semiconductor sector through 2 subsidiaries: CG Semi Private and Axiro Semiconductor. CG Semi operates outsourced semiconductor assembly and Test (OSAT) facilities, and Axiro deals in chip design, radio frequency, and high-tech applications.
Renesas Partnership and G1 Facility Ramp-Up
On 4 July 2026, CG Semi commenced commercial production at its G1 OSAT facility in Sanand, Gujarat. The current operational focus is on ramping up the G1 facility to full installed capacity while preparing plans for a second plant (G2 facility). Of the total capacity, Renesas has committed to approximately 50% of the offtake capacity at the combined G1 and G2 plants.
Axiro’s Strategic Role in Power Electronics
Business development is ongoing with additional customers, though specific client identities remain confidential per industry standards. This provides immediate capacity utilisation visibility. On the other hand, Axiro focuses on radio frequency (RF) and satcom applications.
It is expanding into power electronics to align with CG Power’s core industrial and power businesses. Through this, Axiro can also benefit from demand from group companies. Axiro is already revenue-generating with double-digit growth and receiving order inflows.
Management expects the order backlog to double if the current execution pace continues. Furthermore, management is reviewing the Indian Semiconductor Mission 2.0 policy guidelines for potential subsidies. However, business and product development will be independent of government subsidy timelines.
Q1FY27 Financials: Core Growth Absorbs Semiconductor Costs
Because the business is still in its early stages, the semiconductor business impacted CG Power’s consolidated margin by ₹43 crore or 132 bps. Nevertheless, CG Power’s actual EBITDA grew 17% to ₹481 crore in Q1FY27, while margins expanded +50 bps to 14.7%.
Revenue grew 14% to ₹3,281 crore, while net profit increased 16% to ₹308 crore. Consolidated order book grew by 45% to ₹18,965 crore. The order book provides revenue visibility of about 1.5 years. Strong growth in the power business drove the overall growth.
#2 Carborundum Universal: Indirect semiconductor play through advanced ceramics
Now, let’s come to the relatively unknown potential winners of the semiconductor opportunity. Carborundum Universal, which is also part of the Murugappa Group, manufactures advanced materials, industrial components, and consumer products. The abrasives segment accounted for ₹2,271 crore of FY26 revenue, followed by electrominerals (₹1,632 crore) and ceramics and refractories (₹1,268 crore).
Carborundum’s Strategic Pivot: Supplying the Semiconductor Wafer Fabrication Chain
The semiconductor business is part of the emerging business, which falls under the ceramics sub-segment. The overall ceramics segment is broadly divided into two distinct areas: Industrial Ceramics (57%) and Refractories (43%). The industrial ceramics are further categorised into core and emerging businesses.
The emerging business category targets high-growth applications in semiconductors, aerospace, and defence. In the semiconductor sector, Carborundum is focusing on manufacturing advanced structural ceramic components used directly in semiconductor wafer fabrication equipment. Carborundum already has a product qualification that takes approximately four to six years.
The products have now been approved for serial production by key global Original Equipment Manufacturers, notably including the major industry players. In H1FY26, it commissioned the first module of an exclusive, newly built plant dedicated to this product line.
This facility has end-to-end capabilities, handling everything from preparing high-purity ceramic powders to precision machining and final cleaning of components. Additionally, the company is working on producing High Purity Silicon Carbide (HPSiC) for semiconductor applications.
Decoding the ₹66 Crore Capex and FY29 Revenue Timeline
The initial capex for this semiconductor plant was ₹66 crore. However, management views this as just a starting point. As the company completes Phase-1 of its rollout, it plans to quickly expand to Phase-2. It expects these investments to potentially scale to three to four times the initial outlay. Carborundum is transitioning directly into the production phase.
Serial supplies of the qualified products will commence in FY27. Carborundum will start supplying its key customers, with capacity utilisation gradually improving over time, given the semiconductor industry’s long lead times. Management expects that substantial revenue generation from the semiconductor segment will begin around FY29.
Advanced Electronic Components and 5N-Purity HPSiC
Moreover, Carborundum is working to secure customers for its 5N-purity HPSiC (more on this later) in FY27. It is already developing a pilot-scale facility to achieve 6N-purity HPSiC for future advanced applications. It is also venturing into advanced electronic components, including Active Metal Brazed and Direct Bonded Copper substrates, as well as brazed assemblies for power electronics.
These are high-performance ceramic-metal substrates used in power electronic modules (such as in Electric Vehicles and renewable power systems) to handle high power, high voltage, and thermal heat dissipation. The prototype submissions and qualification programs are scheduled for completion during FY27.
Defence Armour and Clean Energy SOFC Expansion
Carborundum is building these capabilities in collaboration with major tech partners and has completed a technology transfer agreement. Moreover, it has also entered the aerospace and defence business. The company has commissioned a dedicated plant to manufacture advanced ceramic components for vehicle and personnel ballistic protection.
It has achieved STANAG Level 4 qualification for vehicle armour, and BIS Threat Levels 5 & 6 for personal protection. It is awaiting approval to expand export/commercial sales and is working with anchor customers. Carborundum also has exposure to clean energy and data centres through its position in the Solid Oxide Fuel Cell (SOFC) and Solid Oxide Electrolyser Cell (SOEC) value chain.
Management states that SOFCs are a market leader in the clean energy sector to power data centres. Carborundum produces customised engineered ceramic parts and plates for major global SOFC equipment manufacturers. Demand is driving strong growth. The engineering ceramics segment grew by 30% in FY26, driven by strong demand from global SOFC makers.
Valuation Check: Return Ratios vs Price Multiples
CG Power has a higher return on capital employed (ROCE) and return on equity (ROE) due to strong and consistent growth. Carborundum’s return ratios are low due to ongoing capacity expansion and mainly due to volatile profitability. In terms of valuation, both companies are trading at a premium to the industry median and the historical three-year median.
Particulars | Price-to-Earnings Multiple (X) | Return Ratios | |||
| Company | 3Y Median | Industry | ROE (%) | ROCE (%) | |
| CG Power | 103.0 | 102.3 | 32.5 | 20.5 | 26.7 |
| Carborundum | 78.2 | 61.7 | 68.5 | 6.9 | 10.5 |
| Source: Screener.in (As of 29 July 2026) | |||||
To conclude, India’s semiconductor opportunity is now no longer limited to companies making chips. As ISM 2.0 expands support across the entire ecosystem, suppliers of packaging, advanced ceramics, and power electronics could become equally important beneficiaries.
While CG Power offers direct exposure through OSAT and chip design, Carborundum represents a longer-term play on the semiconductor manufacturing value chain. Keep these companies in your watchlist to analyse how they capture the industry tailwind.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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