TDPS Power Idea Q4FY26: Structural Demand, 25% Upside Potential
India’s power and industrial capex cycle is creating a structural opportunity in alternators. TDPS stands out with global OEM linkages, export dominance, and strong execution visibility.
| Particulars | Details |
|---|---|
| Order Book | Rs 15.8 bn |
| Earnings CAGR (FY25–28E) | 26–28% |
| Valuation Basis | 40x Sep’27E EPS |
| Target Price | Rs 840 |
| Implied Upside | 25% |
What we like in the company
- Structural demand visibility: Alternators are critical in gas turbines, power plants, and captive generation—segments seeing sustained capex from data centers, grid stability, and industrial expansion. OEM data and commentary confirm demand exceeds supply.
- Diversification cushions cyclicality: TDPS gets ~70% of orders from exports across 110 countries, supported by OEM partnerships. Diversified exposure across renewables, industrial, and data center segments lowers volatility and improves long-term growth visibility.
- Strong balance-sheet: Low leverage and disciplined capex reduce downside risk while enabling growth (3rd plant commissioned on 18th Dec, 2025) and strong return ratios (+20% ROE/ROCE).
Near-term triggers
- New customer addition and ramp up in the newly commissioned plant in Tumkur.
Earnings Outlook
We expect TDPS to deliver a 26–28% revenue/EBITDA/PAT CAGR over FY25–28E, driven by its strong competitive positioning in the AC generator space and healthy revenue visibility backed by an order book of Rs15.8 bn.
Gas Turbine orders in a multi-year upcycle
Valuation and view
- 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, implied upside of 25%
- Key Risks: Further worsening of cash conversion, and slowdown in global industrial capex in the energy sector
Strong Order backlog (Rs mn) providing near term visibility
Key financials (Rs mn)
| Particulars | FY24 | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|---|
| Revenue (Rs mn) | 10,005 | 12,788 | 17,928 | 21,926 | 25,719 |
| EBITDA | 1,674 | 2,308 | 3,226 | 4,055 | 4,757 |
| Net Income | 1,183 | 1,746 | 2,384 | 3,002 | 3,646 |
| EBITDA Margin (%) | 16.7% | 18.0% | 18.0% | 18.5% | 18.5% |
| Net income (%) | 11.8% | 13.7% | 13.3% | 13.7% | 14.2% |
| ROAE (%) | 18.1% | 22.3% | 24.6% | 24.6% | 23.8% |
| ROCE (%) | 22.1% | 26.6% | 30.0% | 30.0% | 28.1% |
| P/E (x) | 39.1 | 36.7 | 46.1 | 36.6 | 30.2 |
| EV-to-EBITDA (x) | 26.7 | 27.3 | 33.6 | 25.8 | 21.8 |
| P/B (x) | 6.6 | 7.5 | 10.2 | 8.1 | 6.4 |
FAQs on TDPS Power Idea
What drives TDPS growth?
Structural demand for alternators from power, data centers, and industrial capex.
Why are exports important?
Exports (~70%) diversify revenue and reduce domestic cyclicality.
What is the key trigger?
Ramp-up of the newly commissioned Tumkur plant.
Main risk?
Slower global industrial and energy capex.
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