CG Power Shares Surge 4.61% Following Semiconductor Facility Launch

Shares of CG Power and Industrial Solutions experienced a notable increase of 4.61%, reaching ₹694.60 after the company announced the launch of its first Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat. The facility marks a significant milestone for India’s ambitions in semiconductor manufacturing, contributing to the country’s goal of technological self-reliance.

The stock opened at ₹676.95 and fluctuated between ₹668.25 and ₹698.30 during trading, with a total trading volume of 9.6 million shares valued at approximately ₹6,665 crore. With this latest surge, CG Power’s market capitalization now stands at around ₹1.09 lakh crore.

Expansion Plans and Production Capacity

The newly inaugurated G1 facility is designed to reach a peak capacity of around 500,000 units per day, handling all stages of semiconductor assembly, packaging, testing, and post-test services. The company plans to expand further with a second facility, G2, which is projected to be operational by 2026. Once completed, G2 will boost production capacity to an impressive 14.5 million units per day.

CG Power has committed to investing over ₹7,600 crore (approximately $870 million) over the next five years to support the establishment of these two OSAT facilities. This investment is expected to create over 5,000 direct and indirect jobs, enhancing India’s manufacturing ecosystem.

The facility features state-of-the-art manufacturing systems, a modern Manufacturing Execution System (MES) for automation and traceability, and in-house reliability testing labs. CG Power is currently working towards obtaining ISO 9001 and IATF 16949 certifications, with commercial production anticipated to commence in 2026 once customer qualifications are finalized.

Market Response and Analyst Outlook

The announcement of CG Power’s significant investment in semiconductor manufacturing has generated considerable enthusiasm among investors. With a P/E ratio of 108.92 based on trailing twelve months earnings per share (EPS) of ₹6.37, the stock trades at a premium compared to the sector P/E of 82.68. This reflects a bullish sentiment regarding the company’s growth potential, despite a year-on-year decline in EPS of 33.54% indicating short-term profitability pressures.

Industry analysts have rated CG Power shares as a ‘Buy’ on platforms such as Moneycontrol, highlighting the stock’s considerable upside potential as the company positions itself as a key player in the electronics supply chain. The stock’s 52-week high stands at ₹874.70, while its low is ₹517.70, illustrating the volatility experienced over the past year.

Investors should note that CG Power’s price-to-book (P/B) ratio is 30.99, with a modest dividend yield of 0.19%. The stock’s 20-day average trading volume is 2.58 million shares, and it has a beta of 1.37, indicating higher volatility compared to the broader market.

CG Power’s strategic move towards semiconductor manufacturing is viewed as a landmark event for India, which has historically depended on imports for its chip needs. The company’s endeavors are supported by both central and state governments and collaborations with global partners.

As CG Power embarks on this ambitious path, investors may find the current valuations high; however, the long-term growth narrative within India’s semiconductor industry presents a compelling case for investment.

In conclusion, the launch of the OSAT facility not only strengthens CG Power’s market position but also represents a significant step forward for India in establishing a robust semiconductor manufacturing ecosystem.