TD Power Systems Limited

TD Power Systems delivered a robust performance in FY25, with consolidated total income growing 28% year-over-year to INR13.02 billion. Consolidated Profit After Tax (PAT) saw an even stronger increase of 50% to INR1.734 billion. This growth was primarily fueled by exceptional export order inflows, which reached INR4.13 billion in Q4 FY25, marking the highest quarterly inflow in the company's history and representing 43% QoQ and 41% YoY growth. The full-year export and deemed export order inflow surged by 67% to INR9.85 billion.

The company's total order book as of March 31, 2025, stood at INR14.79 billion, a substantial increase from INR10.51 billion in the previous year. Exports continue to be the backbone of the business, constituting 68% of the quarterly order inflow. While the domestic market's growth moderated to 4% in FY25 and is expected to remain at that level for FY26, the company is actively pursuing opportunities in refurbishment jobs for hydro projects and specific orders from the Nuclear Power Corporation (NPCIL).

TDPS is strategically expanding into high-growth segments such as gas turbines, engines, motors for fracking, data centers, AI server farms, and grid stabilization units. The company is developing its own designs for larger machines up to 100 megawatts and is setting up a design center in the U.K. to leverage specialized talent. New opportunities in grid stabilization, particularly in Europe, are emerging due to increased awareness of renewable energy intermittency, with Germany alone calling for 20 gigawatts of gas power for grid stability.

The company is on track to commission its third plant, with the first, second, and third sheds, along with equipment and trials, expected to be operational by H2 FY26. This expansion is crucial to meet the strong order inflow and achieve future revenue targets. Management indicated that the company would not require new capacity additions until existing capacity utilization reaches INR22 billion, emphasizing optimization of current facilities.

TDPS maintains a strong cash position of INR1.99 billion, which it plans to utilize for future growth investments and capacity expansion, funding these through internal accruals. The company's dividend payout ratio for FY25 was around 11%, and management stated a commitment to steadily increasing dividends by 10-12% annually. However, growth investments remain the primary capital allocation priority, with the aim of generating higher returns for shareholders.

A key concern is the 'very bleak' outlook for the Turkish market due to over-regulation, which may lead to the cessation of local manufacturing operations. While this is a significant operational change, the financial impact on the balance sheet is expected to be minimal. The domestic market remains challenging, with management adopting a conservative stance on its recovery. Despite these challenges, the company is confident in exceeding its FY26 revenue guidance of INR15 billion and targeting INR19-20 billion by FY27, driven by strong export demand and new market opportunities.