CG Power's Lock-Up Expiry: Navigating Liquidity Dynamics and Price Implications

The recent IPO of CG Power and Industrial Solutions Ltd., which opened on August 29, 2025, has drawn significant attention due to its strategic expansion into India’s semiconductor ecosystem and the impending expiry of its lock-up period. As the lock-up for 45,454,545 equity shares set to expire on September 2, 2025, investors are scrutinizing how this event might reshape liquidity and pricing dynamics in the stock. The interplay between historical IPO lock-up patterns and CG Power’s unique positioning in the energy and semiconductor sectors offers a compelling case study for market participants.

The Mechanics of Lock-Up Expiry

Lock-up periods, typically enforced to prevent immediate dumping of pre-IPO shares, often create a liquidity vacuum that can distort market pricing. For CG Power, the 60-day lock-up (July 4–September 2, 2025) restricts early selling by promoters and anchor investors. Historical data from global markets reveals mixed outcomes: in Hong Kong, controlling shareholders often retain shares post-lock-up, mitigating downward pressure [3], while U.S. markets have seen negative abnormal returns due to insider sales [3]. India’s experience, however, remains less studied. The expiry of CG Power’s lock-up coincides with a broader wave of IPO-related liquidity releases, including USD 20 billion in shares becoming tradable between August 25 and November 27, 2025 [3]. This confluence raises questions about whether CG Power’s stock will face competitive pressure from other newly liquidated assets.

Analyst Optimism and Structural Resilience

Despite these risks, analysts remain bullish on CG Power. Morgan Stanley has initiated coverage with an “Overweight” rating and a price target of ₹799, citing the company’s dual focus on motors and semiconductors [1]. The average 12-month price target of ₹756.67, with a range of ₹739–₹930, reflects confidence in the firm’s 34% CAGR in profit after tax (PAT) during FY25–FY28 [1]. This optimism is partly driven by CG Power’s recent inauguration of India’s first outsourced semiconductor assembly and test facility, a ₹7,600 crore investment that underscores its strategic alignment with India’s “Make in India” agenda [3].

Balancing Liquidity and Valuation

The key challenge for CG Power lies in balancing the influx of liquidity with valuation stability. While the company’s lock-up expiry could theoretically increase supply and depress prices, its strong fundamentals and sectoral tailwinds may counteract this. For instance, the semiconductor sector’s growth trajectory, coupled with CG Power’s first-mover advantage in India, could attract institutional buyers even as retail investors sell. Additionally, the staggered lock-up structure—where 50% of anchor investor shares are released after 30 days and the remainder after 90 days [2]—may mitigate sudden liquidity shocks.

Conclusion: A Calculated Opportunity

CG Power’s lock-up expiry on September 2, 2025, represents a pivotal moment for the stock. While historical precedents suggest volatility, the company’s strategic investments, analyst endorsements, and sectoral momentum position it to absorb the liquidity shock. Investors should monitor trading volume and bid-ask spreads in the days following expiry, as these metrics will reveal whether the market perceives CG Power as a resilient growth story or a victim of broader IPO sell-offs. For now, the data suggests a calculated opportunity for those willing to navigate the short-term noise.

Source:
[1] Morgan Stanley initiates coverage on CG Power, sets Rs 799 target [https://m.economictimes.com/markets/stocks/news/cg-power-share-price-rises-4-as-morgan-stanley-initiates-coverage-with-rs-799-target/articleshow/123627008.cms]
[2] Lock-in Period Details for Anchor Investors in IPOs - 2025 [https://www.chittorgarh.com/report/anchor-investor-lock-in-end-dates/156/all/?year=2025]
[3] CG Power Jumps After Inaugurating India's First Chip Test Facility [https://stocktwits.com/news-articles/markets/equity/cg-power-jumps-after-inaugurating-india-s-first-chip-test-facility-sebi-analyst-targets-800-on-breakout/chtTepvRdZt]