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CG Power to Acquire 55% Stake in GG Tronics for ₹319 Crore

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Synopsis:

CG Power will acquire a 55% stake in GG Tronics for ₹319 crore by August 2024. The acquisition involves equity and preference shares. Recently, CG Power reported a Q1 profit rise of 18% to ₹241.24 crore on higher revenues.

CG Power News Today

CG Power and Industrial Solutions has announced its plan to acquire a 55% stake in Bengaluru-based GG Tronics for a total consideration of ₹319 crore. This acquisition is anticipated to be finalised by August 23, 2024. Investors keep an eye on the CG share price after the announcement.

Details of the Acquisition

CG Power's acquisition of GG Tronics will be executed through a combination of purchasing equity shares from GGT promoters and subscribing to Compulsorily Convertible Preference Shares (CCPS).

The total investment of ₹319.38 crore underscores CG Power's commitment to enhancing its capabilities in electronic safety embedded signalling systems for railways.

About GG Tronics

GG Tronics specialises in the design, manufacture, supply, and installation of electronic safety embedded signalling systems specifically for the railway transportation sector.

Additionally, GG Tronics provides comprehensive services for system and software verification and validation for railway signalling products and projects. GGT's turnover has shown consistent growth:

  • ₹98.13 crore in FY 2023

  • ₹75.28 crore in FY 2022

  • ₹73.88 crore in FY 2021

Financial Performance

Alongside the acquisition news, CG Power recently reported financial results for the June quarter. The company's consolidated net profit rose by 18% to ₹241.24 crore, driven by higher revenues which increased to ₹2,260.67 crore from ₹1,896.15 crore a year ago.

Stock Performance

CG Power share price has given a gain of 1.13% in one month, 75.21% in one year, and 55.68% year-to-date. On Wednesday, CG Power stock price closed at ₹699.95 on the NSE.

Strategic Implications

The acquisition of GG Tronics aligns with CG Power's strategic objective to diversify and strengthen its presence in the railway transportation segment. The integration of GG Tronic's specialised expertise in electronic safety signalling systems is expected to enhance CG Power's product offerings and market reach.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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