Shares of CG Power and Industrial Solutions Ltd. rose over 2% in Monday’s trade, hitting ₹710 on the NSE, after global brokerage firm Morgan Stanley initiated coverage on the Murugappa Group company with an “overweight” rating.

Price targets and upside potential

Morgan Stanley has set a base case target price of ₹799, implying a potential 15% upside from Friday’s close. Its bull case target stands at ₹1,044, signaling an upside potential of 50%.

The brokerage highlighted CG Power’s strong positioning in India’s transformer and switchgear segments, while noting the company’s aspirations to expand into semiconductors and railways.

Growth drivers

According to Morgan Stanley, three major factors support the company’s outlook:

  1. Motors division – Key exposure to India’s manufacturing sector, backed by a dominant franchise and capacity-led growth in power systems.

  2. Railways – Expanding product portfolio in younger business segments like railways.

  3. Semiconductors – Incubation of a semiconductor assembly and testing (OSAT) facility.

Shares had already surged 5% on August 29, after CG Power’s subsidiary launched its semiconductor assembly and testing unit in Gujarat, a move seen as aligning with India’s manufacturing and electronics ambitions.

Earnings outlook and risks

Morgan Stanley expects CG Power’s earnings to grow at a 30% CAGR between FY25–FY28, driven by capacity additions and increased railway orders. By FY28, the brokerage estimates the EBIT contribution of the power systems business will rise to 57%, up from 48% currently.

However, it also flagged risks including:

  • Rising competitive intensity in transformers

  • Weak prices and demand in motors

  • Slow execution in railways

  • Delays or margin weakness in the OSAT business

Analyst sentiment

Out of 13 analysts covering CG Power, 10 have a “buy” rating, while three recommend “sell.”

India’s broader manufacturing push and rising renewable energy penetration are expected to drive demand for CG Power’s solutions, with Morgan Stanley calling the stock a beneficiary of structural sector growth.

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