CG Power Shares Rise 4% as Company Launches Semiconductor OSAT Facility

On Friday, the CG Power shares rose by 3.9 percent, touching a day’s high price of Rs 689.90 on NSE after they announced a major advancement by launching its Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat, positioning itself at the forefront of India’s evolving semiconductor ecosystem. The OSAT facility, established as a joint venture between CG Power (Murugappa Group), Renesas Electronics Corporation of Japan, and Stars Microelectronics of Thailand, marks a milestone both for the company and for India’s drive toward technological self-reliance. CG Power, as the principal stakeholder, is investing a significant portion of the over Rs 7,600 crore earmarked for the project, with support from its experienced global partners.

The JV has structured the equity distribution with CG Power holding around 92.34 percent, Renesas 6.76 percent, and Stars Microelectronics 0.9 percent. The project is proceeding under India’s Modified scheme for semiconductor and assembly facilities, with the government anticipated to provide a 50 percent capital expenditure subsidy for eligible projects. The OSAT facility aims to offer comprehensive third-party semiconductor packaging and testing services, filling a vital gap for indigenous chip manufacturing and boosting supply chain self-sufficiency.

Financially, CG Power delivered robust results for the quarter ended June 30, 2025. Consolidated revenue surged 29 percent year-on-year to Rs 2,878.05 crore, while profit after tax (PAT) was up 11.6 percent at Rs 269.23 crore. Revenue growth was driven by strong performance across segments, with the power systems division leading gains. The company’s EBITDA for Q1FY26 rose 16.51 percent year-on-year to Rs 381 crore, with margin compression to 13.2 percent due to input cost pressures. Nonetheless, management expects blended operating margins to normalize within the 14 to 15 percent range through corrective actions and improved segment mix.

Within its semiconductor vertical, central to the new OSAT facility, CG Power has achieved notable profitability, with profit before tax margins estimated in the 14 to 15 percent range, closely tracking the company’s best-performing lines as per various sources. The acquisition of Axiro Semiconductor Private Limited, recently completed, is expected to add nearly Rs 400 crore in annual revenue and provide further operational leverage. These strategic moves are backed by proceeds from a successful qualified institutional placement (QIP), ensuring capital for facility ramp-up and potential new ventures.

The OSAT facility’s operationalization not only diversifies CG Power’s portfolio but also strengthens its position as an integrated player in the global semiconductor value chain. With commercial scale targeted by 2026–27, the company stands to benefit from both capacity expansion and a rapidly growing domestic demand for advanced semiconductor packaging and testing services. Continued investment in skill-building, capital equipment, and industry partnerships will further cement CG Power’s leadership in this space. As a result, CG Power emerges as a key catalyst for India’s semiconductor ambitions, poised for sustained financial and strategic gains.