Buoyant end-market outlook and swift recovery in business operations have fast-tracked CG Power’s performance ramp-up to Rs50bn sales and Rs5bn PBT within a year vs 3 years targeted initially. After having broadly fixed the legacy issues, management with the help of a consultant will drive operational efficiency initiatives, which will not only improve OPMs and RoCE from FY23 but step-up cashflows for investing back in R&D, technology upgrade, and expansion. To further its long-term aspiration and build a consumer portfolio of similar size as CG, it will launch fans portfolio in FY22 using its existing distribution & reach. The pace of growth and penetration in our view will take longer and depend on building a credible consumer-centric team. We believe CG Power is in a sweet spot, at the cusp of a Capex recovery under a dynamic leadership, but requires close focus on building technological competencies and sustaining its leadership stature over the longer term.
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