CG Power Shares Surge 20% To All-Time High On Chip Foray Plan

Shares of CG Power and Industrial Solutions Ltd. hit an all-time high on Wednesday after the company announced its foray into the semiconductor space.

It sought approval of the Ministry of Electronics and Information Technology to set up an outsourced semiconductor assembly and test facility, it said in its exchange filing.

CG Power has also applied for a subsidy for the project under the modified scheme for the setting up of compound semiconductors in India.

The subsidiary of Murugappa Group will form a joint venture in partnership with technology providers and anchor customers for the project, it said.

The Murugappa Group's total market capitalisation rose by 8.4% to Rs 3,28,801 crore from Rs 3,03,282 crore on Wednesday.

The market cap of CG Power more than doubled on Wednesday to Rs 25,520 crore, following the news of its new venture.

Apart from CG Power, the group's other subsidiaries' shares rose during the trading session as well. Tube Investment of India Ltd. and Shanthi Gears Ltd. rose by 16.72% and 17.85%, respectively, on Wednesday.

The share of CG Power and Industrial Solutions was locked in the upper circuit limit of 20% at Rs 469.35 apiece, an all-time high level, during the session on Wednesday. This compares with a 0.14% advance in the NSE Nifty 50.

The stock has risen 73.64% on a year-to-date basis. Total traded volume stood at 16 times its 30-day average. The relative strength index was at 75, indicating that the stock may be overbought.

Out of the six analysts tracking the company, four maintain a 'buy' rating and two suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 6.9%.