CG Power: ₹9.2tn grid capex lifts order visibility 2032

Transmission investment estimate puts spotlight on suppliers

India’s Ministry of Power has estimated that evacuating electricity from the planned addition of 600 GW of renewable capacity by 2032 will require transmission investments of about ₹9.2 trillion (₹9.2 lakh crore). That scale of capex has kept power equipment suppliers in focus, particularly companies with established positions in transformers, switchgear and grid-connected products. In this backdrop, CG Power and Industrial Solutions has been positioned by some brokerages as a potential multi-year growth story. The central argument is that transmission expansion can drive sustained order inflows and a longer runway for order-book expansion. At the same time, the stock’s valuation and the sector’s evolving demand-supply balance have also drawn caution from other analysts.

Why CG Power is being framed as a multi-year growth story

The transmission buildout offers room for growth in CG’s power systems business, which reported an EBIT margin of 22% in FY26. That compares with a 9% EBIT margin for its industrial systems segment, highlighting why incremental demand skewing towards grid equipment can be margin supportive. Nomura Global Markets Research, in a report dated 2 June, added another angle to the demand outlook: the likely boom in data centres in India. The report suggested this could extend growth opportunities beyond the commonly discussed national transmission capex cycle. For investors, the debate is no longer only about utility-driven grid spending, but also about private-sector capacity addition that requires reliable, high-spec power infrastructure.

Data centres add a second engine alongside transmission capex

Nomura said CG Power has emerged as a direct beneficiary of rising data centre investments in both India and the United States. As an example of traction, the brokerage cited a ₹900 crore transformer export order secured in January 2026 from US-based Tallgrass Integrated Logistics for a hyperscale data centre project. Nomura also estimated that transformers and switchgear are critical components in every hyperscale data centre project and account for 15% to 20% of total capital expenditure in both traditional and AI-focused data centres. The same note argued that suppliers are seeing premium pricing because data centre projects demand higher reliability, greater customisation, faster delivery schedules, certifications and on-site engineering support compared with traditional commercial and industrial projects.

Capacity expansion: EHV circuit-breaker facility commissioned

CG Power has also moved on the manufacturing side. The company commissioned a new extra-high-voltage (EHV) circuit-breaker facility that boosted capacity for the product by 80%. For a market where delivery timelines and qualification requirements can be stringent, incremental capacity can matter for conversion of enquiries into executable orders. In the context of simultaneous demand from grid capex and data-centre-led power infrastructure, supply readiness is a recurring theme in brokerage notes across the sector. The facility commissioning was cited as part of the company’s efforts to strengthen its existing growth drivers while it works on additional engines.

Semiconductor venture adds an additional valuation lever

Alongside its core electrical equipment portfolio, CG Power has an additional narrative through its semiconductor venture, CG Semi Pvt. Ltd. This has been referred to as a potential extra valuation lever relative to peers. The presence of this optionality is one reason CG Power is sometimes discussed differently from other electrical equipment names, even when near-term drivers overlap. Separately, CG Power’s 2024–2025 turnaround across transformers, MV/LV motors and switchgear, and the entry into semiconductor assembly and test with Renesas and Stars Microelectronics, were highlighted as part of a broader repositioning.

Peer set and valuations: ABB India and Siemens also in the frame

CG’s peers, including ABB India and Siemens, are also expected to benefit from rising investments in transmission and data-centre businesses. Based on Bloomberg consensus estimates cited in the provided material, all three stocks trade at 66-69 times FY27 earnings. At the same time, CG Power’s trailing 12-month P/E is stated to be over 115 times, which is described as a steep premium versus its own history and the wider electrical equipment industry. For context provided alongside that comparison, ABB India’s P/E is around 93 times and Siemens India’s is approximately 67-94 times.

Q4 FY26 performance and the free cash flow trade-off

CG Power and Industrial Solutions reported strong financial results in the fourth quarter of FY26, with substantial revenue and profit growth, supported by capital spending. But the same context also flags that expansion can strain free cash flow. For capital goods companies, working capital intensity and project execution cycles can create a gap between reported earnings and cash generation, particularly during capacity build-outs. The market’s willingness to pay a high multiple therefore hinges on continued execution, sustained order conversion and a supportive pricing environment.

What brokerages are saying: targets and growth expectations

Nomura set a target price of ₹1,050 for CG Power, implying an upside potential of 19.4% from the referenced level in the note. It also expects CG Power to deliver a 31% earnings per share CAGR between FY26 and FY29. On the other side of the spectrum, Ambit Institutional Equities has been more cautious on the sector’s risk-reward after a strong run, arguing that parts of the electrification theme are now reflected in valuations. Ambit Capital initiated ‘Sell’ ratings on CG Power, Siemens and Siemens Energy India, while placing ABB India at the top of its preferences with a ‘Buy’ rating.

Market impact: what changes for investors and the sector

For investors, the key market impact is that transmission capex is no longer the only demand pool being priced into order visibility. Data centre construction, including AI-focused capacity, adds a second channel for high-spec transformers and switchgear, and could influence product mix and pricing. That said, valuation is explicitly flagged as a risk: a trailing P/E over 115 times leaves limited room for execution misses or a slowdown in orders. Competition is another variable, with Ambit pointing to rising intensity from global players such as Schneider, Eaton, Nidec and Delta Electronics in LV and MV switchgear and LV motors.

Analysis: visibility is improving, but so is the debate on peaks

The growth case for CG Power rests on two pillars presented in the material: a long-dated grid buildout linked to renewables, and a nearer-term acceleration in data centre power infrastructure. The margin differential between power systems and industrial systems explains why incremental transmission and data-centre-linked orders are watched closely. But Ambit’s caution highlights the other side of the cycle: it expects order growth for high-voltage transformers and switchgears to peak by FY26-27 and potentially plateau from FY28, citing front-loading of orders and the effect of battery energy storage systems reducing the need for incremental infrastructure. Ambit also referenced the National Electricity Plan indicating a more than 30% decline in high-voltage transmission installations between FY27 and FY32 compared with FY22-27, suggesting deceleration risks even if execution delays smoothen the trajectory.

Conclusion: strong visibility, expensive pricing, and diverging calls

The Ministry of Power’s ₹9.2 trillion transmission investment estimate, combined with data-centre-led demand, has strengthened the narrative around sustained order visibility for CG Power’s core business. Nomura’s positive view is anchored in data-centre exposure, premium pricing dynamics and a higher target price, while Ambit remains cautious on valuation, margin normalisation and competitive intensity. The next set of data points investors are likely to track include order inflows, execution pace, and how incremental capacity such as the new EHV circuit-breaker facility translates into deliveries and profitability over FY27.