TD Power Systems

Company Overview:

• Started as a manufacturer of AC generators in India, catering to power generation needs across industrial and utility sectors.

• Over the years, it evolved into a niche global player supplying high-capacity generators and motors for gas, steam, hydro, and wind turbine applications.

• Operates a diversified product portfolio including AC generators (1–200 MW), induction and traction motors, and specialized 2-pole generators for high-speed applications.

• Serves a wide range of industries such as power, oil & gas, metals, cement, data centers, railways, and nuclear power, with 70%+ revenue from international markets.

• Exports to 60+ countries with manufacturing hubs in India and strategic presence in Europe and Asia, maintaining a pricing and quality edge through Indian production.

• Actively expanding into emerging sectors like data center backup power, grid stabilization for renewables, and geothermal energy, while delivering 40%+ YoY order book growth.

Industry

• AC Generators

  • Convert mechanical energy from turbines/engines to electrical energy

  • Used in steam, hydro, diesel, gas and wind power setups

• Electric Motors

  • Convert electrical energy into mechanical energy for industrial processes and transportation

• Global Trends

  • Gas power plants in the U.S.

    • 80 new plants by 2030 (+46GW, size of Norway’s electricity system) 

    • Driven by AI/data center power demand; need for cheap, uninterrupted power

  • Data centers for AI: electricity demand expected to 3x in the next 3 years

  • Grid stabilization: renewables need backup gas engines that start instantly when solar/wind power drops

Business Segments

• Generators

  • Ranges from 1 MW to 200 MW

  • Applications: Gas, Hydro, Wind, Steam turbines

  • Domestic = 27%, Export = 73%

• Induction and Traction Motors 

  • Focused on high-capacity motors (250MVA+)

  • Customers: Indian Railways, Nuclear Corporation of India 

• Turkey Operations

  • Manufacturing center for large generators

  • All orders denominated in Euros to stay immune from local inflation 

  • Filed termination notice but used Turkey as export hub till now

• Specialized Products

  • 2-pole generators

    • Spins very fast, for high-performance applications like turbines + ships

    • Need to pay royalty to Siemens

  • Nuclear Power plant work 

    • Inside dome = more risk → more complexity (qualification required)

    • Inside the dome = Nuclear fission heats water to produce steam (via the reactor). Some pumps, valves, sensors, and heat exchangers sit inside here.

    • Outside the dome = Steam is sent to a turbine connected to a generator. The turbine spins the generator, producing electricity.

Growth Drivers

• Export demand - large export orders for hydro, gas engine, gas turbine generators

• Domestic demand - steel and cement industries (large power plants up to 100 MW)

• Data center boom - Ai-related data centers needing reliable backup power

• Grid stabilization - rise in renewable energy requiring fast-response gas engine generators

• Operating leverage - margin growth forecasted faster than sales growth (3-4% higher)

• New plant - second plant becoming operational with hiring and training starting Q4FY25

Management Guidance

• FY25 Sales of 1250 Cr

• Margins: Base GP margin consistent at ~33%, with management guiding for margin growth to outpace revenue growth by 3-4% due to operating leverage

• Export Situation: 

  • U.S. Currently ~8% of topline. 

  • Export jobs will start by Q3 FY26 but the full swing will start really in FY27, both for the German and U.S. market

• Order book is still international dominated but the domestic market has been improving

• Note on U.S. Tariffs: 

  • “The products we are exporting to manufacturers over there have a 2-year qualification, which is required for any other generator manufacturer to, let's say, replace us in the event that duties do come in”

• Margin expansion: moving from out of dome to inside the dome for nuclear

Valuation

Risks

• Input material price dependence (e.g., recent copper price increase to ~$11,000)

• Cyclical demand in end-user industries - demand for generators linked to capex of end-user industries