TD Power Systems Q1 FY26: How This Powerhouse Defies Tariffs & Fuels Future Growth
TD Power Systems Limited (TDPS) has kicked off FY26 with a bang, delivering a robust performance in Q1 that signals continued momentum. As a leading player in power generation equipment, TDPS’s latest earnings call and investor presentation provide crucial insights into how it’s navigating global market dynamics, including geopolitical headwinds, while maintaining an impressive growth trajectory. The numbers are certainly compelling, but what truly stands out is the management’s proactive strategy to future-proof its business.
A Flood of Orders: Powering Future Growth
The lifeblood of a B2B capital goods company like TDPS is its order book, and the latest figures are nothing short of impressive. In Q1 FY26, TDPS recorded an Order Inflow of ₹3,918 Million, marking a strong 32% Year-on-Year (YoY) growth compared to Q1 FY25. This isn’t just a fleeting spike; it reflects sustained demand for its specialized generators and motors.
A significant highlight is the composition of these orders: 66% stemmed from exports, totaling ₹2,573 Million. This emphasizes TDPS’s robust global footprint and competitiveness. The company’s Order Book, as of June 30, 2025, stands at a healthy ₹14,679 Million, providing substantial revenue visibility for the coming quarters.
Order Book Diversification (as on 30th June 2025)
| Segment | Value (Rs. in Mn) | % of Total |
|---|---|---|
| Exports including Deemed Export | 6,377 | 43.4% |
| Domestic | 4,418 | 30.1% |
| Railways (Domestic) | 2,813 | 19.2% |
| Railways (Exports) | 668 | 4.5% |
| Spares and Aftermarket | 289 | 2.0% |
| Turkey | 114 | 0.8% |
| Total | 14,679 | 100% |
Key Project Wins in Q1 FY26:
- Energy Transition: A landmark commissioning of an 18.7MW generator for Energy Dome, Italy, marks TDPS’s entry into the long-duration energy storage (LDES) space with the world’s first operational CO2 Battery project. This is a forward-looking move aligning with global energy trends.
- Data Centers: Multiple orders for high-inertia generators from a leading European gas turbine OEM to power data centers in the US highlight TDPS’s capture of a booming segment.
- Hydro Refurbishment: Securing orders for the Gandhi Sagar hydro-refurbishment project in India, replacing generators from global giants, indicates growing domestic confidence and capability.
- Railways: A new contract for traction motor parts with a prominent US locomotives OEM for New York City subway cars further diversifies their revenue streams.
The consistent order inflow, especially from high-growth segments like data centers and renewables, coupled with strategic diversification into hydro refurbishment and railways, paints a promising picture for future revenue conversion. The management’s ability to convert previous guidance into concrete orders suggests a strong execution capability.
Sales Momentum Accelerates
With a strong order pipeline, it’s no surprise that sales performance has followed suit. TDPS reported a 36% YoY increase in Revenue from Operations to ₹3,739 Million in Q1 FY26, up from ₹2,742 Million in Q1 FY25. This robust growth reflects the efficient conversion of their expanding order book into realized sales.
The consistency of sales growth, building on a strong FY25 where total revenue reached ₹12,911 Million (21.4% CAGR over FY21-25), positions TDPS as a compelling fast-grower in the industrial manufacturing space. The growth appears to be volume-driven, fueled by higher demand across both domestic and export markets, which is a healthier indicator than purely price-led growth.
Earnings Power: Margins on the Rise
The true test of operational efficiency lies in earnings, and TDPS passes with flying colors.
- EBITDA soared by 45% YoY to ₹708 Million in Q1 FY26.
- Profit After Tax (PAT) jumped by 40% YoY to ₹500 Million.
What’s even more encouraging is the expansion of profitability margins. EBITDA Margin improved by 110 basis points to 18.9%, and PAT Margin expanded by 40 basis points to 13.4%. This suggests not only top-line growth but also effective cost management and potentially better pricing power.
Q1 FY26 Consolidated Profit and Loss Account Snapshot
| Particulars | Q1 FY26 (Rs. in Mn) | Q1 FY25 (Rs. in Mn) | Y-o-Y (%) | Margin Q1 FY26 | Margin Q1 FY25 | Change (bps) |
|---|---|---|---|---|---|---|
| Total Income | 3,739 | 2,742 | 36.4% | |||
| Gross Profit | 1,319 | 987 | 33.7% | 35.3% | 36.0% | -70 |
| EBITDA | 708 | 488 | 45.1% | 18.9% | 17.8% | +110 |
| Profit After Tax (PAT) | 500 | 356 | 40.4% | 13.4% | 13.0% | +40 |
While Gross Profit Margin saw a slight dip, the significant expansion in EBITDA and PAT margins indicates that fixed costs (employee, other expenses) are being leveraged effectively as revenue scales, leading to higher operating leverage. This pattern aligns with a fast-growing company that is also improving its operational efficiency.
Given its consistent top-line growth (21.4% CAGR over FY21-25) and even faster PAT growth (41.2% CAGR over FY21-25), TDPS firmly fits the description of a “Fast Grower”. Its ability to grow earnings at a higher rate than revenue underscores its strong management and operational capabilities.
Navigating Tariffs: The Ingenious Turkey Play 🇹🇷
Perhaps the most compelling story from the earnings call is TDPS’s strategic response to the recently imposed additional 25% US tariffs on products from India, bringing the total duty to a steep 50%. Rather than lamenting, TDPS has a proactive “Plan B”: leveraging its Turkish facility.
By moving a portion of its production to Turkey, TDPS can qualify products as “Made in Turkey,” attracting a more favorable 15% duty (the rate negotiated between the EU and US). The company revealed that 75% of its US sales are already routed through European OEMs who re-export the generators as complete turbine/gas engine sets, already attracting the lower 15% EU-US duty. The remaining 25% of direct US exports (which is only 4-5% of TDPS’s overall business) will now be diverted through the Turkish operation.
This strategic agility demonstrates remarkable foresight and customer alignment. Customers are reportedly aware and committed, suggesting that demand for TDPS’s specialized products is inelastic enough to absorb these additional costs, particularly since power plant equipment is a small percentage of overall project costs. This mitigation strategy minimizes financial impact and ensures market share protection, a true testament to the management’s capability to adapt to external shocks.
Capacity Expansion & Future Readiness
TDPS is not just managing current demand but is also investing for the future. The third plant is set to come on stream progressively in Q2 and Q3 FY26. This expansion is critical to fulfilling the increasing orders across its operational sectors and will boost capacity to ₹2,000 crore, with potential for further optimization to ₹2,300-2,400 crore without large additional investments for the next two years.
The planned Capital Expenditure (CapEx) for FY26 is around ₹40-45 crore, which appears manageable and is likely geared towards growth rather than just maintenance, given the new plant and strategic investments like the UK design center for larger generators. This future-oriented CapEx, funded potentially by internal accruals (given strong cash position of ₹230 crore and minimal finance costs), sets the stage for continued long-term growth.
An Upward Revision: Future Outlook Shines Brighter ✨
Management’s confidence in their strategy and market position is reflected in their revised outlook.
- The initial FY26 Consolidated Top Line Guidance of ₹15 Billion INR is now expected to be exceeded.
- The FY27 Consolidated Guidance of ₹18 Billion INR is also expected to be exceeded.
This bullish update, driven by strong order inflows and OEM forecasts, suggests that the market tailwinds (energy transition, data centers, AI infrastructure, global power equipment shortage) are significantly strong, and TDPS is well-positioned to capitalize on them. Margins are expected to be maintained at current healthy levels, with minimal fluctuation.
Key Takeaways
TD Power Systems Limited has delivered a stellar Q1 FY26 performance, marked by robust growth in orders, revenue, and profits. The company’s strategic foresight in navigating US tariffs through its Turkish operations is a standout feature, demonstrating impressive agility and resilience. With a healthy and diversified order book, expanding capacity, and strong demand drivers in energy transition, data centers, and critical infrastructure, TDPS is set for continued growth.
For investors, TDPS represents a compelling “fast grower” that not only executes well on current opportunities but also strategically positions itself for future market shifts. The upcoming upward revision in guidance will be a crucial event to watch, reaffirming its promising trajectory.
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