After delivering a stellar 48% return in 2026, CG Power & Industrial Solutions may still have room to climb higher. Global brokerage Nomura has reiterated its bullish stance on the electrical engineering major, raising its target price to ₹1,100 from ₹1,050, implying an additional 17-18% upside from current levels.
The brokerage believes CG Power is entering a multi-year growth phase, driven by booming domestic demand, rising exports, capacity expansion, and increasing investments in power infrastructure and data centers worldwide.
Export Opportunity Could Become the Next Big Growth Driver
While strong domestic demand has powered the company’s recent performance, Nomura believes the next leg of growth will come from exports.
According to the brokerage, CG Power is uniquely positioned to benefit from an unusual global situation. Transformer and switchgear manufacturers in the US and Europe are facing severe capacity shortages, with delivery lead times stretching into years as investments in electricity grids and data centers surge.
At the same time, CG Power is significantly expanding its manufacturing capacity, allowing it to step in and capture these opportunities.
Nomura said the company sits “at the nexus” of supply constraints in Western markets and its own capacity expansion, creating a compelling long-term export opportunity.
Massive Capacity Expansion Underway
CG Power currently has its entire transformer manufacturing capacity committed to meeting robust domestic demand.
However, the company is increasing transformer capacity by 1.7 times to 110 GVA, providing significant room for future growth.
Nomura estimates that 25-30% of this expanded capacity will be dedicated to exports, particularly to the US market.
Initially, the company is targeting the non-utility segment in America, where sales cycles are shorter. Utility projects typically require regulatory approvals that can take one to three years, making commercial and industrial customers a faster route to market.
This strategy allows CG Power to begin benefiting from export demand immediately while positioning itself for larger utility opportunities over time.
Data Centers and Grid Investments Creating a Multi-Year Opportunity
The global power equipment industry is witnessing unprecedented demand.
Rapid construction of AI-driven data centers, modernization of aging electricity grids, renewable energy integration and electrification are all driving massive investments in transformers, switchgear and other power equipment.
With Western manufacturers struggling to meet demand, Indian manufacturers like CG Power are increasingly becoming preferred suppliers.
Nomura believes exports could significantly expand the company’s total addressable market while also supporting healthier margins.
The brokerage expects exports to account for 25% of Power Systems order inflows by FY29, transforming the business mix over the next few years.
Power Systems Expected to Deliver Strong Growth
Nomura expects the company’s Power Systems business to remain the primary growth engine.
It forecasts the segment to deliver:
- 41% revenue CAGR
- 37% EBITDA CAGR
between FY26 and FY29, driven by both domestic infrastructure spending and export opportunities.
The combination of higher volumes and improved product mix is also expected to support profitability.
Industrial Systems Business Also Strengthening
Beyond transformers, CG Power is expanding its Industrial Systems portfolio.
The company is addressing product gaps through in-house development while increasing its focus on high-value products.
Management plans to increase the share of premium high-efficiency motors and introduce several new drive products over the coming years.
These initiatives should help improve margins while strengthening its competitive position in industrial automation and energy-efficient equipment.
Railways Business Offers Additional Growth Avenue
CG Power is also working to expand its presence in the railway segment.
Rather than relying solely on supplying new equipment, the company is focusing on generating recurring service revenue from existing traction motors.
Management is simultaneously investing in new railway technologies, which are expected to begin contributing to revenues over the next few quarters.
This could create an additional long-term revenue stream alongside its core power equipment business.
Earnings Outlook Remains Robust
Given the stronger export outlook, Nomura has increased its earnings estimates.
The brokerage has raised its FY28 and FY29 EPS forecasts by 4% and 5%, respectively, reflecting expectations of improved margins as exports become a larger contributor.
Overall, Nomura expects earnings per share to grow at a CAGR of 33% between FY26 and FY29, highlighting the company’s strong operating leverage and expanding global opportunity.
Investment Takeaway
CG Power’s impressive share price rally has been supported by strong fundamentals rather than speculation. While domestic demand continues to remain robust, the emergence of exports as a meaningful growth driver could significantly expand the company’s addressable market over the next several years.
Capacity expansion, increasing global shortages of power equipment, rising investments in AI data centers and electricity grids, product innovation, and improving profitability together create multiple growth levers for the company.
Nomura believes these factors justify further upside despite the stock’s strong run, making CG Power one of its preferred plays on the global power infrastructure investment cycle.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Investors should conduct their own research or consult a qualified financial advisor before making any investment decisions.
