TD Power Systems Limited Q3 FY26 Earnings Call Summary

Summary

TD Power Systems Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 10:00 AM

Event Participants

Executives 3 Ms. M N Varalakshmi (CFO), Mr. Nikhil Kumar (MD), Mr. Vinay Hegde (Global Head-Sales & Marketing)

Analysts 6 Ankur Kumar, Basant Bansal, Ganeshram, Garvit Goyal, Kiran, Mohit Surana, Piyush, Rohit, Salil Desai

Financials & KPIs

Geographic & Segment Commentary

• Gas Turbines & Engines: This is the strongest growth segment, driven significantly by the global trend of data centers moving toward captive power to avoid high grid prices. Long-term visibility remains high with OEM forecasts extending to 2030 for grid stabilization and synchronous condensers.
• Hydro: Management expects next year to be the highest in history for this segment, driven by a domestic pickup in small hydro (up to 45 MW) and a growing international refurbishment business. The refurbishment vertical is technology-agnostic regarding the original equipment supplier.
• Railways: Segment is in a transition phase as Indian Railway contracts (expiring FY28) are being replaced by export orders for the U.S., Europe, and Russia. Growth is expected to remain steady rather than exceptional as many locomotive OEMs produce motors in-house.
• Motors: Achieved a ₹150 crore top-line run rate; however, priority has shifted toward the high-demand generator business. Growth is projected at a moderate 10-15% per annum.

Company-Specific & Strategic Commentary

• Capacity Expansion: The third plant became operational on December 18, 2025. Production is expected to ramp up from ₹450 crores/quarter to ₹550–₹575 crores in Q4, reaching ₹600 crores/quarter from Q1 FY27.
• New Product Breakthroughs: Delivering first unit of larger 20-100 MW generators this month, with a commercial ramp-up scheduled for calendar year 2027. A major new gas turbine customer acquisition in the U.S. is currently in the engineering phase.
• Operational Efficiency: Management will “flog” existing assets until FY28, with peak revenue potential estimated at ₹2,600–₹2,800 crores before requiring further bulk capex.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Data Center Demand

• Question: Is the AI investment slowdown in the U.S. impacting power infrastructure orders? (Kiran)
• Answer: Absolutely not. Tech companies like Microsoft are increasing AI spend, and the demand for captive power for data centers remains firm through 2030. (Nikhil Kumar)

Forex Strategy

• Question: How far out is the company hedged given the rupee depreciation? (Ganeshram)
• Answer: Minimal hedging is in place (only ~10%). Management consciously stopped hedging six months ago to benefit from spot rate depreciation (USD/INR at 91-92), which will flow into the bottom line starting Q4. (Nikhil Kumar/M. Varalakshmi)

Domestic Competition

• Question: Will relaxations on Chinese equipment impact the domestic market? (Ganeshram)
• Answer: No impact is seen in the captive power plant business (up to 100 MW). Import of such equipment was never strictly restricted for this segment. (Nikhil Kumar)

Pricing Power

• Question: Does the FY27 guidance include volume or price growth? (Mohit Surana)
• Answer: Both. Management is implementing price increases across products to manage commodity costs and capture market demand. (Nikhil Kumar)

Key Takeaway

TD Power Systems delivered a record-breaking performance in Q3 FY26, highlighted by an all-time high quarterly order inflow of ₹656 crores, driven primarily by an 84% export mix. The company successfully operationalized its third plant, positioning it to scale quarterly revenues from ₹450 crores to ₹600 crores by early FY27. Strategic focus remains on the gas engine and turbine segments, which are capitalizing on the global surge in data center infrastructure and grid stabilization requirements. While railway and motor segments show steady growth, the core generator business is the primary driver, leading to a revised FY27 revenue guidance of ₹2,200+ crores. Despite sharp increases in copper prices, the company expects to maintain 35% gross margins through contract renegotiations and a deliberate unhedged forex strategy that benefits from rupee depreciation. TDPS appears well-positioned to reach a ₹2,800 crore revenue ceiling by FY28 before requiring significant new capital expenditure.