Multibagger power stock approaches 52-week high as UBS sees 25% upside

Shares of CG Power and Industrial Solutions Ltd approached their 52-week high after brokerage UBS initiated coverage on the power sector stock with a buy call. The brokerage assigned a target price of Rs 580 to the CG Power stock translating into 25% upside from the previous close. CG Power shares rose 5.20% to Rs 487.75 against the previous close of Rs 463.60 on BSE.  

CG Power stock opened higher at Rs 476.15 on BSE. Market cap of the firm rose to Rs 71,324 crore on BSE. The stock hit its 52-week low of Rs 267.25 on January 6, 2023 and a 52 week high of Rs 501.75 on November 23, 2023. Total 1.66 lakh shares of the firm changed hands amounting to a turnover of Rs 7.91 crore in Friday’s session. The stock has gained 72.84% in one year and risen 131% in two years. During three years, the stock delivered multibagger returns of 961%.  

In terms of technicals, the relative strength index (RSI) of CG Power stands at 58.8, signaling it's trading neither in the overbought nor in the oversold zone. CG Power shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.         

UBS said the firm has three-pillar strategy to drive long-term value and allay investor concerns on gaps. The brokerage expects increased scope for CG Power to incubate & expand into new areas, leveraging its Rs 2500- Rs 3000 crore operating cash flow in FY23-26E. 

"CG Power's competitive edge, domestic and global prospects, and driven leadership team should support long-term compounding of revenue growth and return," UBS stated. The firm also valued CG Power at par with its multinational peers owing to its robust exposure to organic and inorganic growth opportunities in the electrification and industrial markets. 

CG Power is engaged in the providing end-to-end solutions to utilities, industries and consumers for the management and application of electrical energy. The company offers products, services and solutions through two segments: Power Systems and Industrial Systems. Its power systems segment includes transformers, switchgear, automation and turnkey projects. Its industrial systems segment includes electric motors, alternators, drives, traction electronics and supervisory control and data acquisition systems (SCADA).   

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