Buzzing stock: CG Power locks in at upper circuit again!
On Wednesday, the shares of buzzing stock, CG Power and Industrial Solutions again locked in at its upper circuit of 5 per cent on BSE. The stock has skyrocketed, gaining by more than 135 per cent in the last one month.
The company has been under the scanner for more than a year now after the spotlight was thrown on the presence of financial irregularities in the company involving money being siphoned out of the company to other group companies, by promoter Gautam Thapar and other key executives. Further, CG Power’s lenders, a consortium led by State Bank of India were reluctant to extend fresh loans, except for operational purposes to the cash strapped and loss-making company. These issues had wiped off investors’ confidence, which caused the stock price to fall to a low of Rs 4.69 per share on BSE.
Recently it was announced that Murugappa Group company, Tube Investments of India (TII) will make an investment in CG Power of Rs 550 crore in equity shares and Rs 150 crore in convertible warrants over the next 18 months, thus acquiring 51 per cent stake.
CG Power offers power and industrial equipments & solutions and has a strong and healthy order book but its ability to execute orders is restricted due to liquidity issues. The investment by Murugappa Group in GC Power will result in better corporate governance practices and a beneficial injection of funds would benefit the latter’s growth. Not only is CG Power assumed to benefit from the stronger parent company but TII will also get a larger business and growth opportunity.
The stock of CG Power has gained by 79 per cent on a YTD basis while the stock has doubled since the beginning of August alone. Currently, the stock touched its fresh 52-week high on BSE and locked in at its upper circuit at Rs 19.60 per share as its share price gained by 4.98 per cent or by Rs 0.93 per share.