3 Murugappa group stocks with strong growth plans; Capex, capital allocation and more

Synopsis: Murugappa Group companies – Tube Investments, CG Power, and Carborundum Universal are driving growth through disciplined capital allocation, capacity expansion, and strategic bets on semiconductors, mobility, and electrical equipment.

Murugappa Group is one of India’s oldest and most respected business conglomerates, founded in 1900 and headquartered in Chennai. The group operates across diverse sectors, including engineering, electrical equipment, abrasives and ceramics, financial services, agriculture and fertilisers, sugar, and bicycles and mobility solutions. 

Known for strong governance, conservative financial practices, and long-term value creation, the Murugappa Group has built market-leading companies such as Tube Investments of India, CG Power, Carborundum Universal, Cholamandalam Investment & Finance, Coromandel International, and EID Parry. With a focus on innovation, sustainability, and professional management, the group continues to expand its presence in both domestic and global markets.

Tube Investments of India Ltd

Tube Investments of India Ltd (TII) is a major Indian engineering and manufacturing company based in Chennai and part of the Murugappa Group. It produces a wide range of engineered products, including precision steel tubes and strips, automotive and industrial chains, metal-formed components, bicycles, and related mobility products through divisions like TI Cycles, Tube Products of India, and TI Metal Forming. 

With a market capitalisation of Rs. 51,007 cr, the shares of Tube Investments of India Ltd closed at Rs. 2,635.95 per share, up from its previous close of Rs. 2,575.55 per share.

With debt fully repaid and around Rs. 150 crore of investments currently on the books, management highlighted a structured, multi-bucket capital allocation framework. Core standalone capex is guided at Rs. 300 to 400 crore for the coming year to strengthen and expand existing operations.

Alongside this, another Rs. 300–400 crore is planned for growth investments in new and emerging areas such as TI Medical and 3xper, where the actual capital deployed will depend on the mode of entry, with inorganic moves or new manufacturing lines requiring higher upfront investment.

Management also indicated that it is actively evaluating M&A opportunities in related and familiar business segments that can add incremental growth, with Rs. 200–300 crore earmarked for such transactions. Additionally, potential incremental funding for TICM remains under consideration, with a decision expected later in the year.

On the growth outlook, management guided for standalone revenue growth of about 10%, while profit before tax is expected to grow faster at around 12–15%. The company has recently brought new capacities online to support near-term growth.

The Nashik plant has just commenced production of cold-rolled strips, while the Phaltan plant has started commercial production this month. According to management, these additions provide sufficient capacity for at least the next one to two years and are adequate to support the company’s planned growth trajectory without immediate need for further major capacity expansion.

CG Power & Industrial Solutions Ltd

CG Power & Industrial Solutions Ltd is an Indian industrial engineering company with a long history in designing and manufacturing power generation, transmission, and distribution equipment such as transformers, motors, switchgear, and railway signalling products. It now operates as a subsidiary focused on strengthening its core electrical products and industrial solutions businesses as well as expanding capacity and capabilities in key segments.

With a market capitalisation of Rs. 1,05,657 cr, the shares of CG Power & Industrial Solutions Ltd closed at Rs. 670.90 per share, up from its previous close of Rs. 661.65 per share.

The company has undertaken a major strategic push into semiconductors through its OSAT and design platform. CG Semi marked its entry with the commissioning of the G1 factory near Ahmedabad, which is the first step in building semiconductor manufacturing capabilities and has a peak capacity of about 0.5 million units per day. 

The larger G2 plant is under construction and is expected to be operational by the end of next year or early 2027, taking the combined capacity to nearly 15 million chips per day. The project is expected to generate around 5,000 direct and indirect jobs over the coming years and is supported by government incentives under the ISM/MeitY OSAT scheme, with approvals covering FY24–FY29 and significant central and state assistance.

On the design side, Axiro is progressing as planned, with management guiding FY26 revenue of around USD 50 million (approximately Rs. 450 crore) and stating that the business is currently at breakeven. While the consolidated segment reflects losses due to the investment phase at CG Semi, management has emphasised strong growth intent, including expansion beyond radio-frequency technologies, continued hiring, and potential further acquisitions to scale the platform.

Separately, the board has approved a greenfield capex of Rs. 748 crore (net of taxes) for expansion in the Power Systems and Switchgear business. This investment is aimed at meeting rising demand for medium- and extra-high-voltage circuit breakers, instrument transformers, and GIS products across domestic and export markets, strengthening the company’s position in core electrical equipment segments.

Carborundum Universal Ltd

Carborundum Universal Ltd is a diversified materials science and engineering firm under the Murugappa Group that specialises in abrasives, electro-minerals, industrial ceramics, refractory products, and related engineered materials.

The company serves a broad set of industries, including manufacturing, automotive, mining, and infrastructure, and has a global presence with operations and exports across multiple continents, making it a key player in technical materials and industrial consumables.

With a market capitalisation of Rs. 16,262 cr, the shares of Carborundum Universal Ltd closed at Rs. 853.95 per share, up from its previous close of Rs. 850.40 per share. Capital allocation remains firmly on track, with H1 FY26 capex at Rs. 162 crore compared to Rs. 124 crore last year, against a full-year plan of Rs. 350 crore. Standalone capex stood at Rs. 120 crore versus Rs. 69 crore in the previous period, with management stating that investments are “progressing as per the plan.” 

The key capex themes highlighted include the semiconductor ceramics facility, aerospace and defence ceramics, high-performance silicon carbide (HP SiC), and thin wheel relocation, with management noting that a majority of the investments are directed toward newer growth areas in the portfolio.

Several emerging growth platforms are moving closer to commercialisation with clear timelines. The semiconductor fab equipment ceramics facility is progressing in line with plans and is expected to start contributing from next year. 

Investments in aerospace and defence ceramics are on track, with partial contribution expected next year and a more meaningful impact the year after, focused initially on domestic applications such as vehicle and body protection in collaboration with DRDO and CGCRI. The HP SiC pilot plant is also on schedule, though management indicated a seeding period of around two years before it begins to contribute meaningfully to revenues.

Written by Manideep Appana

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