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TD Power Systems
Our verdict on TD Power Systems isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management maintained the FY26 target of INR 18 billion but upgraded the FY27 guidance from 'over INR 20 billion' to a specific '22 Billion INR'. (1 revised across 1 tracked commitment)
“Based on the surge in orders in this segment, we increased our guidance this financial year to INR 18 billion and over INR 20 billion for next financial year.”
Gross profit margins for FY26 fell short of the 35% target, ending the year at 33.6%. (2 missed, 1 in progress across 3 tracked commitments)
“And sir, on the gross margin side... we should expect this gross margin to sustain here at around 35%? Nikhil Kumar: Yes.”
The company expects the domestic steam turbine market to grow at a steady rate of 10% to 12% for the year. — target: 10% to 12% (+3 more commitments)
“So domestic steam turbine market is growing steadily. And as we have told in the presentation, we are expecting 10% to 12% growth.”
The company is developing its own range of larger machines (50MW to 150MW) with a target for commercial impact from 2028 onwards. — target: 50 megawatt to 150 megawatt range
“So, we are developing our own range of products for larger machines, say, 50 megawatt to 150 megawatt, our own design... So this is something for our growth, which we are looking at '28 onwards, but we're building the foundation right now.”
Management is implementing advanced automation and robotics to enhance manufacturing efficiency and accuracy.
“We have implemented advanced automation and robotics in our manufacturing processes to enhance efficiency, accuracy, and consistency.”
See the full cited Management analysis of TD Power Systems
How durable is the business?
This segment is expanding rapidly due to high demand from US and European markets for data centers and AI infrastructure, with management expecting to exceed previous guidance. (5 expanding across 1 engine)
“The massive growth in this segment continues to roll on without pause... we're getting large volume orders and the forecast for next year continue to show strong upward growth.”
The domestic share of order inflow has increased to 34% this quarter, showing a stronger contribution from the home market compared to the previous annual average. (5 expanding)
“79% of our total order inflow for the year is exports, while 21% is domestic.”
The company is expanding its manufacturing scale with a third plant commissioning in Q2/Q3, aiming for a revenue potential of INR 2,300-2,400 crores without further large investments. (5 expanding)
“TDPS has always believed in investing on a world class facility equipped to perform all critical operations in-house, ensuring complete control over the production process.”
The company is expanding its technological moat by investing in large generator capabilities (up to 200MW) and leveraging its UK R&D center for new designs. (1 expanding)
“Signs License Agreement with Siemens to produce 2 pole Generators up to 250MVA. Develops Vertical Hydro Generators with VOITH, Germany.”
The company is actively expanding its scale moat by planning significant capacity additions for larger generators and increasing the use of precision robotics and automation. (1 expanding)
“The push into larger generators will also need significant capacity additions in certain parts of the factory, especially for machining of very large components”
See the full cited Business Model analysis of TD Power Systems
Where does growth come from?
The company is rapidly ramping up production following the operationalization of its third plant on Dec 18. Quarterly sales are projected to rise from INR 450 crores to INR 600 crores by Q1 FY27, representing a significant step-up in execution capacity. (1 accelerating, 3 new trend, 1 steady across 5 signals, 2 leading indicators)
“The push into larger generators will also need significant capacity additions in certain parts of the factory, especially for machining of very large components. These decisions will be taken in the next 3 months.”
Demand from the US and Europe for gas engine and gas turbine generators is described as 'extremely high,' specifically driven by the AI and data center boom. (5 accelerating across 5 signals, 1 leading indicator)
“Gas Turbine and Gas Engine business. The massive growth in this segment continues to roll on without pause... Growth is expected since our engine and turbine customers are also adding capacity, and these incremental numbers are resulting in demand for more generators.”
The company is developing its own range of larger machines (50MW to 150MW) through a new UK design center to address a much larger global market from 2028 onwards. (1 new trend across 1 signal, 1 leading indicator)
“Received a breakthrough prototype (NPI) order from a global OEM, creating a pathway for long-term platform business.”
The order book remains robust with significant year-on-year growth in inflows, providing high revenue visibility. The manufacturing segment specifically holds INR 14.68 billion. (5 accelerating across 5 signals, 1 leading indicator)
“Order Book on 31st March 2026 ₹ 19,729 Million... FY’26 - 51% YoY Growth ₹ 22,385 v/s ₹ 14,783 Million.”
Management expects to exceed previous guidance for this year and next due to the strength of the gas turbine/engine segment, despite new US tariffs. (3 accelerating, 2 steady across 5 signals, 1 leading indicator)
“79% of order inflow in Q4 FY’26 is from Exports. 80% of order inflow in FY’26 is from Exports.”
See the full cited Future Growth analysis of TD Power Systems
What could break the thesis?
EMERGING. Management has now confirmed the need for 'significant capacity additions' for machining very large components, with decisions due in 3 months. (1 emerging, 1 stable)
“So we are basically coming into this capacity expansion thing on our larger generators a little bit late compared to others. We have to wait. So the earliest that we can put in our complete capacity would be something like in calendar '27.”
EASING. Management reports they have a pipeline of lower-priced copper booked and are successfully renegotiating prices with customers to pass on increases. (1 easing, 1 insufficient_data, 1 high-severity)
“So one is increase in commodity prices. It's been pretty drastic on copper. So our hedges are now running out... there is no doubt that commodity prices are like -- say, copper at $14,000 is high.”
The risk is stable as the company continues to secure large orders in these sectors (e.g., 140 MW for steel plants in India). However, they are actively diversifying into Gas Turbines and Hydro segments to mitigate this. (2 stable)
“Secured multiple large volume orders from a leading Indian OEM across industrial sectors including steel, cement, sugar”
EMERGING. The company is entering the 50MW-150MW segment with a new design center in the UK, but faces established global multinational competitors. (1 emerging)
“But there is also domestic competition. There's BHEL, there's Crompton and there are also imports. So it's not like that we have a monopoly in this sector. It's competitive.”
The risk is stable but management is successfully diversifying into new high-growth areas like Data Centers and Long-Duration Energy Storage (LDES) to reduce reliance on traditional industrial steam turbines. (1 stable, 1 easing)
“Successfully commissioned the 18.7MW... generator for Energy Dome, Italy. This is the world’s first operational CO2 Battery project—marking TDPS’s entry into the long-duration energy storage (LDES) space.”
See the full cited Risk analysis of TD Power Systems
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