TD Power Systems’ export-led order book boosts FY27 earnings visibility

Investment View and Valuation

In its August 12, 2026 result update, Anand Rathi Research upgraded TD Power Systems to BUY after a strong Q1 FY27 performance improved confidence that the global power-equipment upcycle is translating into near-term execution and earnings.

The broker raised its DCF-based target price to Rs1,751 from Rs1,324, citing stronger expected operating cash flow, improved earnings visibility and a one-year DCF roll-forward, with FY28E becoming the first discounted year. At the report CMP of Rs1,478, the target implied 18.5 per cent upside. Anand Rathi noted, however, that valuation remains demanding at 62.3 times FY27E EPS and 50.2 times FY28E EPS.

Strong Q1 FY27 Financial Performance

TD Power Systems reported consolidated Q1 FY27 revenue of Rs6,400.5 million, up 72.1 per cent year-on-year and 8.6 per cent quarter-on-quarter, versus Anand Rathi's Rs4,780 million estimate. The performance was led by execution of 320 generators and was also helped by price increases implemented during the quarter.

Gross margin was broadly stable year-on-year at 34.7 per cent, down 26 basis points. EBITDA increased 76.7 per cent year-on-year to Rs1,216.5 million, while EBITDA margin expanded 50 basis points year-on-year to 19.0 per cent. Reported PAT rose 72.3 per cent year-on-year to Rs862.9 million, ahead of the broker's Rs650 million estimate.

Export-Led Order Growth and Execution Visibility

Order inflows grew 87 per cent year-on-year to Rs7,340 million in Q1 FY27, supported by 165 per cent growth in exports. Closing order backlog rose 50 per cent year-on-year to Rs22,070 million.

Exports, including deemed exports, represented 70 per cent of the Q1 FY27 order book, compared with 43.4 per cent in Q1 FY26. Anand Rathi views the export-led, repeat and high-volume orders from global OEMs as evidence of a durable demand environment and as support for FY27E execution visibility.

Management Outlook and Capacity Expansion

Management said demand remains robust across gas engines and turbines, steam turbines, hydro, geothermal, waste-to-energy, grid balancing and AI-data-centre-linked power generation. The company attributed demand strength to a global shortage of power-generation equipment and firm OEM schedules supported by customer advances.

Management raised FY27 revenue guidance to Rs26,000 million from Rs24,000 million and indicated FY27 order inflows above Rs28,000 million, led by exports. It maintained EBITDA margin guidance of 18-19 per cent despite the strong Q1 margin.

Around Rs500 million of FY27 capital expenditure is planned to create annual revenue capacity of about Rs32,000 million for FY28. This is a capacity indication rather than FY28 guidance. TD Power Systems is evaluating further expansion to exceed Rs40,000 million of revenue by FY29 or FY30.

Earnings Estimates and Return Outlook

Anand Rathi raised its FY27E revenue estimate by 9.7 per cent to Rs25,799 million, EBITDA by 10.9 per cent to Rs5,142 million and PAT by 11.4 per cent to Rs3,702 million. FY28E revenue and PAT remain broadly unchanged at Rs30,773 million and Rs4,595 million respectively.

The broker reduced its FY27E order-inflow forecast from Rs32,000 million to Rs28,000 million to align with management guidance, while retaining its FY28E inflow assumption of Rs35,000 million. It forecasts revenue and PAT compound annual growth rates of 28.8 per cent and 38.7 per cent respectively over FY26-FY28E, with FY28E RoE of 28.3 per cent and RoCE of 37.4 per cent.

Business Optionality and Execution Considerations

The broker's base case does not include revenue from TD Power Systems' proposed above-100MW generator programme because of its 18-20 month manufacturing cycle. Hydro refurbishment is identified as near-term order optionality, while railway capacity is expected to be redeployed to generators and motors after the existing railway backlog is executed.

Key execution issues are the ability to add fungible capacity, protect gross contribution, manage receivables and redeploy railway capacity without disrupting deliveries.

Key Risks

• Commodity-price volatility
• Execution delays
• Working-capital stretch
• Delays in large-generator capital expenditure