TD Power Systems: Powering Ahead with Strong Q2 & H1 FY26 Performance

TD Power Systems Limited, a prominent player in the power generation equipment sector, has delivered a robust financial performance for the second quarter and first half of fiscal year 2026. The company reported a significant surge in its consolidated total income, which grew by an impressive 42% year-on-year to INR 824.36 crore for H1 FY26. This strong top-line growth was complemented by a healthy expansion in profitability, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increasing by 46% and Profit After Tax (PAT) climbing by 45% during the same period. These figures underscore the company's effective strategy and its ability to capitalize on prevailing market opportunities.

The exceptional performance was primarily driven by a substantial increase in order inflows, particularly from international markets. The company's order inflow for Q2 FY26 witnessed a remarkable 45% year-on-year growth, reaching INR 524.1 crore. For the first half of the fiscal year, order inflows grew by 39% year-on-year, totaling INR 915.9 crore. A significant portion of these orders, 84% in Q2 and 76% in H1, originated from exports, highlighting TD Power Systems' strong global presence and diversified revenue streams. Management emphasized the dramatic increase in demand from the gas turbine and gas engine segments, especially for data centers and grid stabilization units in the US and Europe. The hydro segment is also poised for a strong year in FY27, with significant order inflows and large refurbishment projects on the horizon.

Strategic Capacity Expansion and Market Diversification

To support this accelerating demand, TD Power Systems has proactively invested in capacity expansion. The company's third manufacturing plant is on track for full commissioning in Q3 FY26, with complete operational capability expected by mid-January. This expansion, coupled with ongoing debottlenecking efforts and optimized space utilization in existing facilities, ensures that TD Power Systems can meet the surging demand without requiring major new capital expenditures until FY28. This strategic foresight allows the company to push its production capacity beyond INR 2,400-2,500 crore, positioning it favorably in a market where many competitors face capacity constraints.

Beyond generators for turbines and engines, TD Power Systems is also making strategic inroads into new business verticals. The railway business, for instance, is progressing well, with trial units for the US and European markets expected to be delivered by the end of Q3 FY26. Qualification for these units is anticipated in early Q4 FY26, paving the way for volume production to commence in Q1 FY27. Furthermore, the company is developing large generators in the 50-150 megawatt range, a multi-hundred crore opportunity that is expected to yield larger orders from the second half of FY26. These initiatives demonstrate TD Power Systems' commitment to diversifying its product portfolio and expanding its addressable market.

Financial Health and Outlook

Despite the strong growth, the company's cash conversion from CFO to EBITDA was less than 10% for H1 FY26, primarily due to increased working capital requirements for inventory to support the rapid production ramp-up. The Gross Profit Margin also experienced a temporary dip due to a change in product mix, though management expects it to normalize in the upcoming quarters. However, the overall financial health remains robust, with a strong cash balance of INR 193 crore. The management has provided a revised top-line guidance of INR 1,800 crore for FY26 and an initial guidance of over INR 2,000 crore for FY27, reflecting confidence in sustained growth.

TD Power Systems' strategic focus on exports, proactive capacity management, and diversification into high-growth segments like data centers and railways positions it strongly for continued success. The company's ability to secure prestigious orders and maintain a competitive edge in the global market, despite challenges like trade deal uncertainties, underscores its resilient business model and operational excellence. As the third plant becomes fully operational and new product lines gain traction, TD Power Systems is well-equipped to power ahead, delivering value to its shareholders and solidifying its position as a leader in the power generation industry.