TD Power Systems Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

2 Kumar, Nikhil (MD), Varalakshmi, M. N. (CFO)

Analysts

21 Agarwal, Aman, Anwani, Amit, Balakrishnan, Mythili, Baviskar, Juili, Desai, Salil, Goenka, Kushal, Gupta, Gazal, Jain, Soumil, Kamdar, Abhishek, Kunal, Mahawla, Alisha, Malu, Suraj, Patel, Samvit, Rajagopalan, Ganeshram, Rane, Prathamesh, Shah, Dipen, Surana, Mohit, Tapadia, Arpit, Vincy

Financials & KPIs

Geographic & Segment Commentary

• Generators & Motors (core): Order book ₹1,929 crores; strong demand from gas turbine/engine OEMs and AI data centers. Exports dominate (93% of inflows), with domestic demand subdued at 10-12% growth.

• Railways: Order book ₹211 crores; no fresh orders being taken. Segment sustainability under review at year-end; production capacity will be redeployed to generators/motors once Indian Railways contract completes.

• Spares & Aftermarket: Order book ₹22 crores; service revenue remains 5-6% of sales (₹35-40 cr per quarter), growing with installations but not scaling as a percentage due to low service requirements in first 10 years for generators.

• Turkey Subsidiary: Order book ₹46 crores; executing ~€3.5 million orders this year. No significant pipeline for next year; facility retained as service insurance for European installed base.

Company-Specific & Strategic Commentary

• Capacity Expansion: Debottlenecking and efficiency investments of ₹50 crores in FY27 and FY28 will lift capacity to ~₹32 billion for FY28; further investments planned for FY29-30 to move toward ₹40+ billion. Management will disclose detailed plans in next quarterly call.

• Large Generator Entry: Close to signing agreements for generators above 100 MW, a new high-value segment; announcement expected in August 2026. This opportunity is over and above current sub-100 MW business.

• Market Demand: Despite media skepticism, order inflows remain "extraordinarily strong" driven by AI data centers, grid stabilization, and power generation investments in geothermal, hydro, and waste-to-energy. There is a global shortage of power generation equipment.

• Product-Led Growth: Growing unit volumes and increasing average megawatts per generator; management sees growth from both volume and realization. No significant new OEM client additions; focus is on deepening existing relationships.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Revenue Potential & Capacity

• Question: Can we exceed ₹3,000 crores of revenue without new capex? (Mohit Surana, Monarch)

• Answer: We are building capacity to ~₹32 billion for FY28 with ₹50 crores debottlenecking. For FY29-30, we need larger additions to reach ₹40+ billion. Details in next call. (Nikhil Kumar, MD)

• Question: What will be the closing order book growth for FY27? (Nishita, Sapphire)

• Answer: Expect ~₹700 crores per quarter in inflows, totaling ~₹2,800 crores for the year. (Nikhil Kumar, MD)

Pricing & Margins

• Question: Have price increases been implemented? (Soumil Jain, Lucky)

• Answer: Price variation clauses are implemented wherever applicable. Overall gross margin maintained within ±1% via pricing, cost reductions, mix, and FX gains; we don't break down individual contributions. (Nikhil Kumar, MD)

• Question: Why still guide 18-19% EBITDA when service revenue could help? (Amit Anwani, PL Capital)

• Answer: Generators require minimal service in first 10 years; service remains ~5-6% of sales. Growth keeps service growing at same rate, so no margin uplift from this yet. (Nikhil Kumar, MD)

Large Generator Expansion

• Question: When will larger generator revenue show up? (Aman Agarwal, Nuvama)

• Answer: Not in FY27 guidance; production lead time is 18-20 months. Announcement on agreements expected in August; we cannot elaborate until then. (Nikhil Kumar, MD)

• Question: How big is TAM for >100 MW? (Mohit Surana, Monarch)

• Answer: Very large segment dominated by big players; will provide details post-August announcement. (Nikhil Kumar, MD)

Demand Sustainability

• Question: Are supply chain/geopolitical issues disrupting demand? (Alisha Mahawla, Trust Mutual)

• Answer: No disruption in order inflow; customers are taking deliveries despite potential execution delays. Products go to multiple sites/customers, so no single-project holdup. (Nikhil Kumar, MD)

• Question: Confidence on FY29-30 demand given AI market volatility? (Ganesh Ram, Unifi Capital)

• Answer: Our OEM customers have received significant non-refundable advances from their buyers; that underpins our confidence. (Nikhil Kumar, MD)

Turkey & Domestic

• Question: Turkey plans if 100% tariff on imports is announced? (Amit Anwani, PL Capital)

• Answer: Not aware of such tariff; 3.5 million euros of execution this year. Facility kept as service insurance for Europe; no major pipeline next year. (Nikhil Kumar, MD)

• Question: Why is domestic order book only 5-6% of inflows? (Dipen Shah, Six Senses)

• Answer: India's power demand growth is 10-12%, focused on large coal plants (600-800 MW) with players like BHEL, L&T booked out. No meaningful AI/hyperscaler data centers in India due to gas/water constraints; domestic demand likely to remain subdued. (Nikhil Kumar, MD)

Financials & Fundraise

• Question: Working capital and fundraise rationale? (Kushal Goenka, Mangal Keshav)

• Answer: Payment terms with customers are fixed and cannot be altered significantly without risking business; working capital will rise with growth. Fundraise details will be disclosed post-board meeting; no comments before. (Nikhil Kumar, MD)

• Question: Customer advances in current liabilities? (Abhishek Kamdar, Value Plus)

• Answer: Yes, rising customer advances and tax provisions due to higher volumes; working capital expected to remain in line. (CFO M. N. Varalakshmi)

Units vs Value

• Question: Will growth be volume- or value-led? (Juili Baviskar, Ashika)
• Answer: Both; unit counts and megawatts per generator are increasing. Long-term unit targets (13,000-15,000) not guided; we'll take year-on-year view. (CFO M. N. Varalakshmi)

Tariff Refunds

• Question: Any refunds of US tariffs paid? (Mohit Surana, Monarch)
• Answer: We are not the importer of record (products sold ex-India), so no refunds. (Nikhil Kumar, MD)

Key Takeaway

TD Power Systems delivered a stellar Q1 FY27 with standalone revenue up 74% YoY to ₹630 crores and PAT up 81% to ₹85.3 crores, driven by relentless demand from gas turbines, data centers, and grid stabilization globally. Order inflow jumped 87% to ₹734 crores, with exports contributing 93% of bookings, reflecting India's muted power demand (10-12% growth) and the company's export-led strategy. Management raised FY27 guidance to ₹2,600 crores (with upside) and outlined a path to ₹32 billion capacity by FY28 via ₹50 crores debottlenecking, followed by larger investments to reach ₹40+ billion in FY29-30. Strategic moves include entry into large generators (>100 MW, announcement due in August 2026) and a review of the railways segment, while Turkey is retained as a service hub for Europe. Margins held at 19.34% despite freight inflation, aided by price variation clauses and operating leverage. Key watchpoints: working capital pressure (receivables at ₹785 crores), a planned fundraise (details post-board meeting), and the sustainability of AI-driven demand, though management cites non-refundable customer advances and inelastic power demand as buffers. Forward focus remains on execution, capacity alignment, and margin defense.