..... . VALI disclosures . .....: 28/06/36, Nomura Maintains Buy rating on CG Power

Sunday, June 28, 2026

28/06/36, Nomura Maintains Buy rating on CG Power

Nomura raised its price target for CG Power to Rs 1,100 from Rs 1,050, while maintaining its Buy rating on the stock. The new price target implies an upside of 20% from the current market price. This upgrade in the Murugappa Group company came on the back of robust export potential, increased capacity expansion, and many other factors.

Significant export potential in the US market

There is an acute supply deficit for power transformers (PT) and generation step-up (GSU) transformers in the US, driven by data-centre expansion, electrification, and ageing infrastructure. This has led to lead times of up to 144 weeks, creating a massive opportunity for CG Power to capture market share where imports now meet 80% of US PT demand

Accelerated and increased capacity expansion

CG Power is scaling its transformer capacity to 110,000 MVA by the end of CY26, which is both larger and sooner than the previously guided 85,000 MVA by FY28. This “earlier capacity build” provides the necessary headroom to fulfil high-margin export orders once domestic needs are met.

Capitalising on data centre boom

In January 2026, the company secured a landmark Rs 900 crore order from Tallgrass Integrated Logistics for a large-scale US data centre. Nomura views this as a critical demonstration of CG Power’s ability to win direct, high-value US export business at scale in the demanding hyperscale data centre segment.

Focus on in-house product development

The company is aggressively addressing product gaps in its Industrial Systems (IS) segment through in-house development of high-efficiency motors and new drives. In the railways segment, it is also focusing on technology development and generating higher service revenue from existing products like traction motors.

Upward revision of earnings estimates

Due to a stronger export outlook and higher anticipated margins, Nomura raised its FY28 and FY29 EPS estimates by 4% and 5%, respectively. They project a robust 33% EPS CAGR over FY26–29, which supports a higher valuation multiple.

CG Power share price performance

The share price of CG Power has fallen 2.5% in the last five trading sessions. The stock has given a return of over 7% in the last one month and almost 44% in the past six months. CG Power’s stock price has raised investors’ wealth by 40% over the previous 12 months.

CG Power Q4FY26

The company posted a jump of 32% year-on-year in consolidated net profit to Rs 362 crore in Q4FY26, compared to Rs 274 crore in the same period a year back. The surge in the net profit was driven by strong growth in revenue, order inflows, and continued momentum across its core businesses.

Its revenue from operations increased 25% YoY to Rs 3,442 crore in Q4FY26 from Rs 2,753 crore a year ago, while EBITDA rose 30% YoY to Rs 544 crore. For the whole of FY26, aggregate sales rose 25% year-on-year to Rs 12,418 crore.

Report by Sparsh Bansal, Source:FinancialExpress

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

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..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Sunday, June 28, 2026

28/06/36, Nomura Maintains Buy rating on CG Power

Significant export potential in the US market

Accelerated and increased capacity expansion

Capitalising on data centre boom

Focus on in-house product development

Upward revision of earnings estimates

CG Power share price performance

CG Power Q4FY26

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28/06/36, Nomura Maintains Buy rating on CG Power

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