Tube Investments of India (TII) is a conglomerate investment that requires sum-of-parts analysis rather than simple PE comparison. The company's most valuable asset is not its own operations — it is the 58% controlling stake in CG Power and Industrial Solutions, a separately listed electrical equipment company with its own ₹50,000+ crore market capitalisation. Add TII's standalone engineering business (precision tubes, cold-rolled strips, metal formed products) at 25%+ ROCE with zero debt, and then throw in the Cellestial EV two-wheeler option, and the question becomes: what is the holding company discount, and is it justified?
The CG Power Stake: The Hidden Value That Changes the Valuation Math
CG Power and Industrial Solutions (formerly Crompton Greaves Power — not related to Crompton Greaves Consumer Electricals) manufactures power transformers, industrial motors, and railway propulsion systems. CG Power's market cap as of FY25: approximately ₹50,000–55,000 crore. TII's 58% stake is therefore worth approximately ₹29,000–32,000 crore. TII's own total market cap: approximately ₹50,000–55,000 crore. The arithmetic is striking: TII's CG Power stake alone accounts for 55–60% of its own market cap — meaning the market values TII's entire standalone engineering business, the Cellestial EV option, and the holding company structure together at only ₹18,000–22,000 crore. That implied valuation for the standalone business — which generates approximately ₹600–700 crore of EBITDA at 25%+ ROCE — is approximately 25–30x EBITDA, a reasonable but not excessive multiple for a quality auto-component supplier. The sum-of-parts analysis suggests TII should trade at a premium to its individual parts if the holding company structure is value-accretive (consolidated synergies, capital allocation discipline). In practice, listed Indian holding companies typically trade at a 20–30% holding company discount to NAV — meaning TII should theoretically trade at ~20–30% less than the sum of: (CG Power stake at market) + (standalone business at fair value) + (Cellestial option value). Use our BBS Stock Scorecard to evaluate TII's standalone engineering business metrics (ROCE, EBITDA margin, debt position) independent of the CG Power stake — this separates the quality of TII's own operations from the passive value of its CG Power holding. Our Bajaj Finserv analysis covers how another listed holding company structure (Bajaj Finserv holding Bajaj Finance + insurance) is correctly valued with the same sum-of-parts methodology.
- CG Power market cap FY25: ~₹50,000–55,000 crore | TII's 58% stake: ~₹29,000–32,000 crore
- TII standalone revenue FY25: ~₹5,500–6,000 crore | EBITDA margin: ~13–15%
- TII standalone ROCE: ~25–28% | Net cash positive (zero debt)
- TII total market cap: ~₹50,000–55,000 crore | Murugappa Group owns ~46% of TII
- CG Power revenue FY25: ~₹8,500 crore | CG Power EBITDA margin: ~14–16% | ROCE: ~30%
- Cellestial EV: early stage, targeting BSA-branded electric two-wheelers in premium segment
The Standalone Engineering Business: Precision Tubes and Auto Supply
TII's core standalone business has three segments: Engineering (precision cold-drawn tubes, cold-rolled steel strips, large-diameter tubes) — approximately 55% of standalone revenue, supplying to Hero MotoCorp, TVS Motor, Bajaj Auto, and auto OEMs for chassis and frame components, as well as to bicycle manufacturers and appliance companies; Metal Formed Products (door frames, window frames, roll-formed sections for railways and auto) — approximately 15% of revenue; and Mobility (bicycle brands — BSA and Hercules, now being repositioned toward EV) — approximately 20% of revenue with declining importance as the mass-market bicycle segment faces margin pressure. The Engineering segment has benefited from the auto two-wheeler volume recovery (post-FY24 channel correction) and EV transition: electric two-wheelers use precision tubes in frame and battery pack structures just as ICE motorcycles do, making TII's auto tubes business relatively EV-agnostic. The ROCE on the engineering business (~25–28%) is impressive for a metals-intensive manufacturing operation and reflects TII's long-standing supply relationships and just-in-time delivery infrastructure at OEM plants. Read our Bajaj Auto analysis for the end-market context — understanding how Bajaj Auto's premium motorcycle mix and export expansion translates into volume demand for TII's precision tube business (Bajaj is one of TII's key customers) connects the supply chain.
CG Power: Transformers, Motors, and the Data Centre Demand Surge
CG Power's business is relevant to TII investors because TII consolidates CG Power's financials (58% stake means full consolidation). CG Power manufactures: power transformers (for state discoms, PGCIL transmission, renewable energy projects), industrial motors (for pumps, fans, compressors, conveyor systems), and railway propulsion systems (traction motors for Indian Railways electric locomotives). All three product lines are in structural demand cycles: power transformers benefit from India's grid expansion (RDSS scheme, renewable energy evacuation infrastructure); industrial motors benefit from manufacturing automation (PLI schemes, new factory construction); railway propulsion benefits from Indian Railways' 100% electrification program completion and new rolling stock procurement. CG Power's own revenue and earnings have grown rapidly since its ownership transfer to TII (CG Power was rescued from Gautam Thapar Group's financial distress in 2020 and brought under Murugappa Group stewardship), with ROCE improving from negative to 30%+ in 4 years — a transformation in capital allocation that mirrors TII's own engineering ethos. Our Cummins India analysis and Siemens India analysis cover direct CG Power peers — the transformer and motor market dynamics are the same environment in which CG Power operates.
🔍 BBS Insight
TII is best valued as NAV (Net Asset Value) rather than PE. The correct calculation: (1) Mark-to-market the CG Power stake at current market price; (2) Value the standalone engineering business at 20–25x EBITDA (justified by 25%+ ROCE and auto supply moat); (3) Assign Cellestial a small option value (₹1,000–2,000 crore if BSA EV gains market traction, zero otherwise); (4) Apply a 20–25% holding company discount to the sum. Compare this NAV to TII's current market cap — if TII trades at a discount wider than 25% to NAV, it is arguably undervalued. Key metrics to watch: (1) CG Power market cap movement — since TII's CG Power stake is 55–60% of TII's own market cap, CG Power's stock moves drive TII's implied valuation more than TII's standalone results; (2) TII standalone ROCE trend — if this sustains above 25%, the engineering business justifies its implied standalone valuation; (3) Cellestial EV milestones — watch for product launch, sales volume, and any fundraising at Cellestial that would establish a market-implied valuation; (4) Murugappa Group capital allocation — the Murugappa Group has a track record of conservative, high-ROCE capital deployment; any large acquisition by TII or CG Power should be evaluated on ROCE accretion, not revenue scale.