TD Power Systems Q2 FY26 Earnings Call — Analysis (NSE: TDPOWERSYS)

TD Power Systems raises FY26 revenue guidance to ₹1,800 Cr on surging gas generator demand and strong order inflow, order book at ₹1,587 Cr.

28 Jun 2026 · Analysis by Alpha Inflection

The take

H1FY26 Consolidated Total Income (H1) ₹833 Cr ( +42% YoY ) . New guidance — FY26 fy26 revenue ₹1,800 Cr . New story: Data center-driven gas generator super-cycle .

Financial highlights

What management committed to

• TD Power Systems revised its FY26 revenue guidance to ₹1,800 Cr. — ₹1,800 Cr, FY26
• TD Power Systems initial guidance for next year (FY27) is over ₹2,000 Cr. — over ₹2,000 Cr, FY27
• We will sustain an average quarterly order inflow of ₹550 Cr into next year (FY27). — ₹550 Cr per quarter, FY27
• We do not expect to make any major [capacity expansion] investments up to FY28. — FY28
• We are very confident that we will get back to our earlier numbers of GP by the end of Q4 [FY26]. — earlier numbers of GP, Q4FY26
• The third plant will be fully commissioned by end of December 2025 and will be in full operational capability by middle of January 2026. — Q3FY26
• Both trial units for [railway projects in US and Europe] will be handed over to the customer by the end of Q3 FY26. — Q3FY26
• Qualification [of railway trial units] will take place early in Q4 FY26, and we'll start volume production in Q1 next year (FY27). — Q1FY27
• The [40-50 MW new large generator] will be offered to the customer by end of December/early January; after qualification, we expect to start getting larger orders by second half of [calendar year 20]26. — H2FY27
• Next year (FY27) will be one of the highest in the history of [TD Power Systems] for hydro. — FY27
• If [India-US trade deal] does not materialize by end of December 2025, then [production for US direct exports] will shift to the Turkey facility. — Q4FY26
• The plan is to get [EBITDA margin] to 20% plus after [the third plant is running at full capacity and ramp-up has taken place]. — 20% plus

How the narrative shifted

• Data center-driven gas generator super-cycle: Gas turbine/gas engine demand is 'turbocharged', with AI-driven data center orders creating unprecedented visibility, OEMs already talking about 2027-28 capacity needs.
• Capacity advantage and market share grab: TDPS pre-built the third plant while competitors are capacity-constrained; this positions them to capture market share as the only player with ready capacity.
• US tariff risk and Turkey hedge: A US-India trade deal is hoped for, but a fallback Turkey production plan is fully prepared and accepted by customers; waiting for resolution by year-end.
• Margin recovery path: Gross margin dip explained by one-time product mix; confident of recovery by Q4; EBITDA margin expansion to 20%+ is the goal after full ramp-up, though not committed yet.
• New product catalysts (large gen, railway): 40-50 MW generator test by year-end and railway traction motors qualification in Q4 open up multi-hundred-crore opportunities, diversifying beyond current core.
• Hydro export record in FY27: Hydro segment seeing excellent order inflow from exports (Nepal, Vietnam) and set for a record year in FY27, complementing core gas generator growth.

Operational commentary

• Third plant: 33% operational (one shed fully running 3 shifts); second shed commissioning by end-Nov, full commissioning by end-Dec 2025, full operational capability mid-Jan 2026.
• Large generator (40-50 MW) to be offered to customer by end Dec 2025 / early Jan 2026; qualification to follow, larger orders expected from second half of CY2026.
• Railway: trial units for US and Europe to be handed over by end Q3 FY26; qualification early Q4 FY26; volume production from Q1 FY27. Russian traction motors qualification units offered, ramp-up expected after testing in Q4 FY27.
• Hydro: excellent order inflow; FY27 will be one of the highest years in company history, driven by exports (Nepal, Vietnam).
• Turkey facility prepared as fallback for US exports if no India-US trade deal by year-end; customers accepted the plan.
• ADNOC oil & gas generator: first machine tested and cleared; more orders in pipeline; real ramp-up expected 6-8 months after first units commissioned.
• Motors: separate team and facility; targeting ₹500 Cr business over time, currently in early ramp-up stage.

Analyst Q&A

• Q. What was the constant currency revenue for this quarter?

  I don't think we've done that calculation, Ganesh.

• Q. What is the total addressable market size and market share for TD Power Systems?

  These are not the kind of questions for an earnings call. Please contact Investor Relations for a separate presentation.

• Q. Are you seeing any realizations improvement given strong demand, and will FY27 revenue guidance of ₹2,000 Cr be conservative?

  We are focused on execution. We will only guide what we can do for sure; there is upside potential on top of the ₹2,000 Cr minimum. We will announce as it materializes.

• Q. Why did gross margin decline ~250 bps and what is the outlook?

  Product mix effect from services and spares jobs in Q1; very confident of returning to earlier GP numbers by end Q4.

• Q. When will capacity expansion be required beyond the third plant, given quarterly run-rate of ₹550 Cr?

  We will not let capacity become a constraint. With debottlenecking, current capacity can reach ₹2,500-2,600 Cr, and no major investments are expected up to FY28.

Research and educational content only. Not investment advice.