Is TD Power the Next Millionaire-Making Stock?

About TD Power Systems

TD Power Systems (TDPS) manufactures AC generators and electric motors.

The company designs and manufactures fully customised power equipment that serves the full spectrum of power generation.

TDPS manufactures AC generators, including Steam Turbine Generators (up to 250 MVA), Gas Turbine Generators (up to 250 MVA), Hydro Turbine Generators (up to 75 MVA), and Gas and Diesel Engine Generators (up to 25 MVA).

TDPS Product Portfolio

TDPS also manufactures motors for industrial and mobility applications. This includes Synchronous Motors (up to 50 MW), Induction Motors (up to 20 MW), and Traction Motors (up to 1,250 kW).

It also provides custom solutions for geothermal plants, solar thermal setups, wind generation, marine/naval power systems, and specialized installations for the oil and gas industries.

TDPS has built a global footprint, supplying over 7,000 generators and motors across 110 countries spanning Asia, the Middle East, Europe, and the Americas.

The majority (64%) of its revenue comes from exports and deemed exports, while domestic revenues accounted for the remaining 36%.

The 100 GW Surge: Powering the AI Infrastructure Supercycle

Every data center requires robust backup generation to avert power outages. As AI workloads scale, power intensity per facility is rising sharply.

The massive proliferation of data centers and AI server farms, especially in the US and Europe, is driving a significant increase in orders for gas-powered solutions.

Furthermore, higher power consumption has pushed up grid electricity prices.

In response, data centers are moving away from grid dependence and toward captive power. This is further supported by the relatively clean and energy-efficient nature of gas turbines.

Gas engines are efficient, flexible, and produce fewer emissions than traditional coal or oil-based systems, making them a preferred option in the global energy transition.

Demand is also accelerating due to investments in fracking operations, distributed power solutions, and reconstruction efforts in Ukraine.

These drivers expand the addressable opportunity for TDPS in gas-based generation. TDPS's equipment is increasingly deployed in this space.

The 40 MW Pivot: Moving Up the Value Chain

Previously known for smaller units (up to 25 MW), TDPS has embarked on a medium to long-term strategy to expand into higher-capacity machines, especially in the 40 MW and 100 MW ranges.

A major part of this initiative is the targeted development of larger generators in the 40-45 MW range. The management views this as a natural progression of its technological capabilities.

This segment is currently transitioning from development to early-stage execution. TDPS is expected to deliver its first unit of this larger size in January, followed by necessary testing. Initial deliveries of these 40-45 MW machines are scheduled to begin in FY26, with scale-up expected from FY27 onwards.

This scale-up aligns with rising global demand for high-capacity captive power, particularly from AI-driven data centers and grid-stabilisation projects. To this end, it secured an engineering order from a major US OEM for a 25 MW, 2-pole generator.

This OEM is converting a popular aircraft engine into an aeroderivative gas turbine designed specifically to provide efficient energy solutions to data centres, AI, grid support, and modular power applications. The management states that the demand profile provides strong visibility through 2030.

No AI Slowdown

TDPS dismissed concerns about an AI slowdown, stating that big tech companies are actually increasing their AI spending and that the company doesn't see any slowdown in the pipeline.

Diesel Generators

While gas engines are seeing strong traction, TDPS's diesel engine generators operate under different market dynamics.

TDPS specialises in highly engineered, customised machines, and its diesel generators are typically used in mission-critical niche applications. Its revenue contribution to TDPS's overall revenue remains small. Despite this, the global market for diesel generators presents steady future opportunities.

Key demand drivers include grid reliability, emergency backup requirements, and oil & gas expansion. Rising power outages and natural disasters are reinforcing the need for dependable backup power.

Additionally, new hydrocarbon discoveries and offshore exploration are generating demand for diesel gensets to support production activities.

Hydro Refurbishment: The "Agnostic" Cash Engine

In hydro, the company focuses on the small hydro segment, generally encompassing installations up to 45 MW.

Crucially, TDPS operates this business on an 'agnostic' basis, meaning it repairs, rebuilds, and refurbishes machines originally manufactured by its competitors. It has a co-development partnership with VOITH, Germany, since 2009.

The order inflows here are strong. The management expects the upcoming year to be the highest in the company's history for hydro. The Indian hydro segment is now actively opening up and generating strong order inputs. TDPS has visibility for the next 2-3 years in this market.

Globally, the hydro generator sector is projected to surpass US$ 301.6 bn by 2034, driven by a global push toward renewable energy.

This growth is concentrated in the Asia-Pacific region (including India, China, and Southeast Asia), where small and micro-hydropower installations are gaining popularity to meet localized energy needs. Europe is also experiencing a resurgence in hydro investments, further expanding its addressable market.

A big tailwind for TDPS's growth in this segment is the refurbishment business. The business momentum is reflected in several major order wins reported in its 9M FY26. These orders include three 17.8 MW, 11kV vertical hydro generators from an Italian OEM for the Upper Magdi Project.

A breakthrough order from a new Spanish OEM (a global supplier of Kaplan, Francis, and Pelton water turbines) for two 7.7 MW, 6.3kV horizontal hydro turbine generators for the Dak Lo project.

It also finalised a massive package order with a major Indian OEM encompassing 8 projects and 14 individual units for installations across India and Nepal.

The Steam Turbine Generator Segment

While the gas and hydro segments are seeing strong demand, the steam turbine generator segment remains a stable cornerstone of the portfolio. This business is expected to deliver consistent 10-12% year-on-year growth.

This steady growth trajectory is supported by robust demand in both the domestic Indian market and a strong export pipeline. Combined-cycle power plants, waste heat recovery, biomass, and the steel industry are expected to fuel this demand.

TDPS is seeing a strong number of orders for large machines (beyond 20-25 MW) from steel plants. The European and Indian market is seeing steady growth in captive power plants tied to waste heat recovery.

The Alstom Legacy: Pivoting Rail Motors to Global Markets

TDPS manufactures traction motors for railway locomotives, a capability strengthened by a long-term agreement signed with Alstom in 2014. This segment is currently undergoing a strategic transition.

The domestic Indian Railway contracts are expected to taper off by FY28. To replace this, TDPS is aggressively pivoting to exports. The company is currently delivering prototypes and securing orders for the US, European, and Russian (CIS) markets.

Given that railway OEMs often manufacture their own motors, management expects this segment to remain steady rather than grow rapidly.

In the short term, the motor business is expected to grow steadily at about 10-15% per year. It aims to generate around Rs 1.5 bn in top-line revenue in FY26. However, with capacities largely tied up due to the surge in the generator business, the motors segment is not an immediate priority.

Inside TDPS's Financial Performance

Strong financial performance also supports the sectoral tailwind.

Revenue increased 27.8% YoY to Rs 12.8 bn in FY25. EBITDA grew 38.6% to Rs 2.5 bn, with margins at 19.5%. Net profit surged 47.5% to Rs 1.7 bn, driven by improved operating leverage, cost discipline, and a favorable sales mix.

Historical Financial Performance

The company's growth momentum continued into FY26. Revenue increased 36% YoY to Rs 12.7 bn in 9M FY26. EBITDA grew 41% to Rs 2.4 bn, with margins at 18.8%. Net profit surged 37% to Rs 1.7 bn, effectively touching FY25 revenue in just nine months.

Return ratios reflect healthy operating efficiency. In FY25, return on capital employed stood at 21%, while return on equity was 20%.

Looking further, TDPS is laying the groundwork for a massive scale-up. The company has since upgraded its top-line guidance to Rs 18 bn in FY26 and Rs 22 bn in FY27. The management said there is a high probability this target will be increased.

To handle the rising inflow of orders, TDPS made its third manufacturing plant operational in December 2025. TDPS expects production to scale up from Q4 FY26, targeting quarterly revenue of Rs 5.5-5.7 bn.

Following this, TDPS anticipates a quarterly revenue run-rate of around Rs 6 bn from Q1 FY27 onwards.

Strategically, the company plans to leverage its existing assets and does not intend to undertake any major capacity expansion until FY28. The management believes the current capacity can support a peak revenue between Rs 26-28 bn.

The order book of Rs 18.4 bn provides revenue visibility of about a year.

Diversified Order Book

TDPS expects higher overall profit, driven by expanding top line and operating leverage. Exports will be the primary driver in FY27 and FY28. The company expects the motor business to become a strategic thrust area starting FY28.

Why TDPS Trades at a Discount to Global Giants

Valuation-wise, TD Power is trading at a price-to-earnings multiple of 64 times, above its 3-year median of 36.4 times.

However, the valuation is at a discount to ABB (77), Siemens (74), CG Power (102), and Hitachi (129).

Could This be a Millionaire Stock?

TD Power stands at the confluence of a global AI-driven data center expansion and rising demand for captive and backup power.

Its push into higher-capacity gas generators, strong hydro momentum, export-led growth, and improving financial metrics provide clear earnings visibility over the next two years.

Capacity additions support near-term scale-up without major capex until FY28.

However, valuations remain elevated and execution in larger machines alongside sustained AI capex will be critical.

If order inflows continue to grow steadily and margins hold, TD Power could evolve into a structural growth play rather than a cyclical industrial stock.

Risk to Watch

TD Power faces risks from its continued exposure to steam turbine generators. Its growing international presence and competition from large global OEMs add further pressure.

Operationally, the company remains sensitive to copper price volatility and supply chain disruptions that can affect margins and execution.

Any slowdown in AI-linked data center capex could also temper visibility into demand.

Instead of relying solely on hype, investors need to carefully analyse the company's fundamentals, including financial performance, corporate governance practices, and growth strategies.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...