TD Power Systems Q1 FY27 earnings call

TD Power Systems Limited delivered a robust Q1 FY27. Standalone total income reached INR6.3 billion, marking a 74% increase year-over-year from INR3.63 billion. The standalone EBITDA margin stood at 19.34%, an improvement from 18.7% in the prior year. Consolidated sales also saw significant growth, rising 71% to INR6.43 billion from INR3.76 billion, while consolidated Profit After Tax (PAT) increased 72% to INR860 million compared to INR500 million last year.

The company's manufacturing segment boasts a strong order book of INR22.08 billion as of June 30, 2026. This includes INR19.29 billion from generator and motor manufacturing, INR2.11 billion from railway business, INR0.22 billion from spares and aftermarket, and INR0.46 billion from the Turkey business. Quarterly order inflow surged 87% quarter-on-quarter to INR7.34 billion. Direct and deemed exports constituted a significant portion of this inflow, accounting for INR6.84 billion (93% of total quarterly inflows), with the remaining 7% being domestic orders.

TDPS is actively pursuing capacity expansion to meet growing demand. The company plans to invest INR50 crores in FY27 for debottlenecking, aiming to achieve a revenue capacity of around INR32 billion by FY28. Looking further ahead, the company is assessing investments to expand capacity to over INR40 billion for FY29 and FY30. Additionally, the management expects to announce unique opportunities in the large generator segment (above 100MW) in August, which are incremental to their current business.

The steam turbine market continues its steady growth at 10-12%, driven by captive power plants, biomass, and waste-to-heat recovery. The gas engine and gas turbine segments are experiencing massive and sustained growth, leading to large volume orders. The hydro segment is also expected to have a busy year, with TDPS actively involved in refurbishment business in India and abroad, securing several high-value orders. The company is not taking fresh orders in the railway segment and will review its sustainability, intending to reallocate production capacity to generator and motor products after existing contracts are completed.

The company aims to maintain its gross contribution margin within approximately plus/minus 1% and an EBITDA margin of 18-19%. Management attributes margin stability to a combination of factors including price increases, cost reductions, product mix optimization, and exchange rate gains. They emphasized that demand for power generation equipment, especially for critical applications like data centers, is highly inelastic, allowing them to pass on commodity price increases effectively.

TDPS maintains a strong cash position of INR2.4 billion. The company's working capital is expected to remain in line with current levels, despite significant growth. Current liabilities have increased, primarily due to customer advances and provisions for taxation, reflecting the increased volume of business. Management stated that while they have fixed payment terms with customers, they prioritize business continuity and customer satisfaction, making dramatic alterations to payment terms impractical.