TD Power Systems – Strong Q2 Performance; Growth Momentum to Sustain | MNCL Research Company Update

We revise our rating on TDPS to Accumulate with an increased target price of Rs 840. Operational performance in Q2FY26 was robust, driven by a strong pick-up in demand from AI/data center projects in the USA and Europe, and further supported by a sustained ramp up in thermal renewables and small hydropower projects. Revenue visibility and demand momentum looks strong through FY26e-FY27e, with order inflows and backlog at record levels amid positive industry cues. TDPS is well positioned to navigate the tariff-related challenges for its minimal direct exports to the USA, though a resolution on this front would be a positive surprise. We have revised our estimates up by 10-12% and now expect a revenue/EBITDA/PAT CAGR of 26-28% over FY25-28E.

Operationally robust quarter:

TDPS delivered a solid performance in Q2/H1FY26, reporting strong growth across revenue, profitability and order inflows. Sales rose 48% YoY (22% QoQ) to Rs4.5bn / H1 sales at Rs8.2bn (+42% YoY). EBITDA grew 49% YoY (20% QoQ) to Rs 826mn, with margins stable at 18.3%, a slight decline due to product mix changes. PAT rose 46% YoY (20% QoQ) to Rs602mn; H1 PAT increased 44% YoY to Rs1.1bn. Operationally, TDPS benefited from a sharp pickup in export demand—particularly from the USA and Europe—for gas turbine and gas engine generators and continued traction in hydro and steam turbine orders. With a record order book of Rs15.9bn and upcoming capacity expansion, TDPS boasts of sustaining this growth momentum over FY26-28e.

Revenue guidance revised upward on strong export momentum:

Data center-driven demand for generators remains extremely strong, particularly in the USA and Europe, driving the overall growth for the company. The company’s upcoming production facility was partly commissioned (1/3rd) at the end of Oct’25 and is expected to reach optimum utilization by Jan’26, supporting its ambitious growth plans. The company expects this momentum to continue – revising its revenue guidance up by 20% for FY26e to Rs18bn of revenue (vs. Rs15bn earlier) and Rs 20bn+ for FY27e (vs. Rs18bn earlier).

TDPS remains a proxy to data center and decarbonization play:

TDPS reported strong order inflows of ~Rs 5.3bn, (+45% YoY / 34% QoQ), driven by healthy demand traction across end-users in data center, thermal renewables, and grid stabilization. The order book now at Rs 15.9bn provide solid revenue visibility. With strong industry tailwinds, TDPS is poised for accelerated growth. With ample headroom and strong execution capabilities, we remain confident of the company gaining incremental market share, especially as larger players are operating near full capacity.

Valuation & View:

Revised our estimates upwards by 10-12% on revenue / PAT front over FY26-28e. We value the stock at 40.0x September 2027E EPS and 28.0x September 2027E EBITDA to arrive at an average TP of Rs 840 (vs 755 earlier). ACCUMULATE. Key risks: Further worsening of cash conversion, and slowdown in global industrial capex in the energy sector.

Company website: https://www.tdps.co.in/

Click to download the full TD Power Systems 2QFY26 Company Update

Analyst: 

• Mohit Surana - Senior Research Analyst, Institutional Equities (NISM-202300189881)
• Mohd Haris - Research Associate, Institutional Equities (NISM-202400161268)

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