TD Power Systems Limited

TD Power Systems delivered robust financial results for H1 FY26. On a standalone basis, total income increased by 33% year-on-year to INR 7.64 billion, up from INR 5.77 billion in the previous year. Profit after tax and comprehensive income also saw significant growth, rising 37% to INR 989 million compared to INR 720 million in H1 FY25. Consolidated figures mirrored this strong performance, with total income growing 42% to INR 8.33 billion and PAT increasing 45% to INR 1.108 billion.

The company's order book for the manufacturing segment stood at INR 15.87 billion as of September 30, 2025, with generator business contributing INR 12.35 billion and motor business INR 3.16 billion. Order inflow during Q2 FY26 was INR 5.24 billion, marking a 45% quarter-on-quarter increase. For the entire H1 FY26, order inflow reached INR 9.16 billion, a 39% increase over the previous H1. Exports and deemed exports accounted for a significant 76% of the H1 order inflow, totaling INR 6.95 billion.

TD Power Systems is proactively managing its capacity to meet surging demand. The third plant is expected to be fully commissioned in Q3 FY26 and achieve full operational capability by mid-January 2026, which will significantly ramp up production and sales in Q4. Management stated they can push capacity beyond INR 2,400-2,500 crores with incremental investments and do not anticipate major capital expenditures until FY28, leveraging existing infrastructure with 25% extra space in each building.

Demand in the gas turbine and gas engine business is described as 'extremely high', with a 'very large uptick' in orders, exceeding expectations. The steam turbine business continues its steady growth at 10-12% in both captive power plants and exports. The hydro segment has achieved 'excellent order inflow', with FY27 projected to be one of the best years in the company's history for hydro, primarily driven by international markets like Nepal and Vietnam.

The company has been building its international brand since 2012-13, with acceptance growing significantly since 2018-19. In the current market, where many large generator manufacturers are at full capacity, TDPS is gaining market share due to its capacity and ability to deliver faster. They are offering high-quality products at competitive prices, addressing a larger part of the market with a single-digit global market share, indicating substantial growth potential.

Despite strong revenue and profit growth, the company's CFO to EBITDA conversion for H1 FY26 was less than 10%. Management explained this is a direct result of rapidly ramping up production, which necessitates significant investment in inventory and raw materials. While this impacts short-term cash flows, it is a strategic decision to support high growth without external borrowing, using retained earnings for working capital.

TDPS is making progress on its large generator initiative (50-150 MW), with a machine expected to be offered to customers by December/January. This represents a multi-hundred crores opportunity, with larger orders anticipated by H2 FY26 after testing and qualification. For the railway business, trial units for both US and European markets are expected to be handed over by Q3, with qualification in Q4 and volume production commencing in Q1 next year.

The company is closely monitoring the US-India trade deal, expected to materialize in November/December. If the deal does not go through, potentially leading to 15-20% import duties, TDPS has a contingency plan to shift US-bound production to its Turkey facility. This preparation, involving a minor cost of INR 1-2 crores, ensures business continuity and competitive pricing for US customers.