CG Power shares gain 4% on Rs 7,600 crore OSAT facility investment in Gujarat; Nomura predicts 26% upside

Shares of CG Power and Industrial Solutions jumped 3.8% to their intraday high of Rs 688.95 on the BSE on Friday after its subsidiary, CG Semi, unveiled one of India’s first end-to-end Outsourced Semiconductor Assembly and Test (OSAT) facilities in Sanand, Gujarat.

Following this, global brokerage firm Nomura issued a note, predicting a 26.5% upside potential for the stock.

CG Semi, part of the Murugappa Group, announced that it is investing over Rs 7,600 crore (~USD 870 million) over the next five years, backed by central and state government support and in collaboration with global players Renesas and Stars Microelectronics. The investment will cover the development of two advanced OSAT facilities, G1 and G2, in Sanand.

The project marks a major step in strengthening India’s semiconductor manufacturing ecosystem and advancing the country’s technological self-reliance.

The G1 facility, inaugurated on Thursday, will operate at a peak capacity of around 5 lakh units per day. It is designed for comprehensive chip assembly, packaging, testing, and post-test services.

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Equipped with high-yield equipment, a cutting-edge Manufacturing Execution System (MES) for automation and traceability, and in-house labs for reliability analysis, the facility is currently undergoing ISO 9001 and IATF 16949 certification. Commercial production is scheduled to begin in calendar year 2026, following customer qualification runs.The G2 facility, located about 3 km from G1, is under construction and expected to be completed by end-2026. Once operational, it will significantly scale up production to 14.5 million units per day. Combined, the two facilities are projected to create over 5,000 direct and indirect jobs in the coming years.Speaking at the launch, Vellayan Subbiah, Chairman of CG Power, said, “This facility represents more than a milestone for me or for CG Semi; it is a national milestone. It shows how the Government and Industry can come together with conviction, capital, and scale to achieve the vision set by our Honourable Prime Minister. Every chip we make here is a step toward India’s technological sovereignty.”

To support operations, CG Semi has assembled a team of industry veterans with more than 1,000 years of combined experience in semiconductors. It has also invested in workforce development by sending Indian engineers, operators, and technicians to Malaysia for hands-on training, ensuring readiness for high-volume operations.

Post this update, global brokerage firm Nomura, in a report, stated that they maintain a ‘buy’ rating on the stock with a target price of Rs 840, indicating an upside potential of 26.5%, from its closing price on Thursday.

“Given that the larger G2 facility is expected to be completed by end-CY26E, we expect its production to start from CY27F. Thus, meaningful revenue from the OSAT business is likely to come from FY28F onwards with negligible contribution in FY27F, in our view,” said Nomura in its report.

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That said, Nomura also noted that any preponement of commissioning or faster-than-expected ramp-up in production will act as upside risks to its estimates.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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