Shares of CG Power and Industrial Solutions, part of Murugappa Group, witnessed a substantial surge, hitting the 20% upper circuit at ₹469.35 apiece in Wednesday’s trading session. This surge can be attributed to the company’s strategic move to dive into the semiconductor business.

The company today filed an application with the Ministry of Electronics and Information Technology (MEITY), Government of India, seeking approval to set up an Outsourced Semiconductor Assembly and Test (OSAT) facility and requested a subsidy for the said project under the Modified Scheme for setting up Compound Semiconductors, Silicon Photonics, Sensors Fab, Discrete Semiconductors Fab, and Semiconductor Assembly, Testing, Marking, and Packaging (ATMP)/Outsourced Semiconductor Assembly and Test (OSAT) facilities in India.

“It may be further noted that subject to the project and the subsidy being approved, the company proposes to implement the same as a joint venture in partnership with technology providers/anchor customers, which are under discussion,” the company said in today’s regulatory filing.

“The estimated investment on the project over a period of five years is $791 million, and the same is expected to be funded by a combination of subsidy, JV Partners equity contribution and debt, as required,” the company further added.

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CG Power and Industrial Solutions is a global enterprise providing end-to-end solutions to utilities, industries, and consumers for the management and application of efficient and sustainable electrical energy. It offers products, services, and solutions in two main business segments: power systems and industrial systems, for the year ending March 31, 2023.

The company’s shares have witnessed an impressive performance this year, marking a remarkable return of 77% as they surged from ₹265 apiece to ₹469.35. This upward trend in share value is part of a consistent pattern, with the stock delivering robust returns over the past few years.

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In CY20, it recorded an exceptional gain of 314%, and the momentum continued in subsequent years with a spike of 335% in CY21 and an additional 38% in CY22.

For the September-ending quarter (Q2FY24), the company reported a 37% surge in its consolidated net profit to ₹242 crore, while the revenue from operations improved to ₹2,002 crore in Q2FY24 from RS 1,675 crore in Q2FY23, reflecting a growth of 20% YoY.

The revenue from industrial systems surged 17% YoY to ₹1,283 crore, while that from power systems improved by 25% YoY to ₹619 crore. As of September 30, 2023, the company’s order book stood at an impressive ₹5,229 crore, marking a substantial 44% increase compared to the same period in the previous year, as per the company’s Q2 earnings report.

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Murugappa Group is one of the leading business conglomerates in India, with a history spanning over 100 years. The group has a diverse range of businesses, including engineering, abrasives, finance, farm inputs, bio-products, bicycles, auto components, and plantations.

The group owns brands like BSA, Hercules, Montra, Mach City, Ballmaster, Ajax, Parry’s, Chola, Gromor, Shanthi Gears, and Paramfos. It has a strong presence in major countries across the world, including the USA, UK, Germany, China, and Australia.

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