Welcome to the latest edition of Hidden Gems Weekly. In recent weeks, we covered a digital infrastructure company focused on data centresand a packaged food exporter building global brand buffers. This week, we turn to a company operating in one of the least glamorous but most critical parts of the artificial intelligence economy, manufacturing generators and industrial motors that help produce stable electricity for industries, captive power plants and increasingly, data centres.
There is a strange irony at the heart of the artificial intelligence boom.
Everyone talks about chips.
Nobody talks about electricity.
The headlines are about Nvidia. The money is flowing into data centres. Governments are speaking the language of artificial intelligence sovereignty. Technology giants are announcing one capital expenditure plan after another.
But none of this works without power.
And not just any power. Reliable power. Continuous power. Backup power. Stabilised power.
Which is where TD Power Systems quietly enters the story.
TD Power Systems 1-Year Share Price Chart
TD Power Systems manufactures alternating current generators and electric motors used across industries such as power plants, oil and gas, railways, marine, hydro projects and increasingly, data centres. Its generators work alongside steam turbines, gas turbines and gas engines.
The company exports to more than 110 countries and counts several global original equipment manufacturers among its customers.
For years, the company was seen as a fairly straightforward industrial capital goods business. The kind of stock that benefits when industrial capital expenditure improves and struggles when the cycle turns.
That understanding may now be outdated.
Because TD Power Systems is no longer riding only India’s industrial cycle. It is increasingly becoming part of a much larger global trend.
The scramble for electricity infrastructure.
Exports Have Quietly Become the Main Story
The numbers already reflect this shift.
For the nine months ending December 2025, standalone revenue rose 32% year on year to Rs 1,194 crore. Earnings before interest, taxes, depreciation and amortisation margins improved from 17.45% to 18.33%.
The third quarter itself remained strong.
Order inflow during the quarter jumped 61% year on year to Rs 656 crore. What stands out is where these orders are coming from.
About 84% of the quarter’s order inflow came from exports. For the nine month period, exports accounted for 79% of total order inflows.
That changes the profile of the business completely.
A few years ago, TD Power Systems was largely dependent on domestic industrial demand and captive power projects. Today, exports and deemed exports dominate the order book.
As of December 2025, the company’s total order book stood at Rs 1,845 crore. About 75% of pending manufacturing orders came from exports and deemed exports.
In simple terms, this is increasingly becoming an export led engineering company rather than a domestic cyclical capital goods company.
That distinction matters because export oriented manufacturing businesses tend to get:
- larger opportunity sizes
- longer visibility
- better pricing power
- currency tailwinds
- and often, higher valuations.
Why Data Centres Need Their Own Power
What is driving this export surge?
Interestingly, the answer lies thousands of kilometres away from India.
Management repeatedly highlighted data centres and captive power demand as the key growth drivers.
According to the company, global demand for gas turbine generators and gas engine generators remains extremely strong, particularly in Europe and the United States. Management believes data centres are increasingly moving away from dependence on grid power and towards captive power generation systems.
This is not difficult to understand.
Artificial intelligence data centres consume massive amounts of electricity. In many regions, power grids are already under stress. Electricity prices have risen sharply and reliability has become a concern.
Management believes the sharp increase in electricity consumption from data centres is itself pushing operators towards captive generation infrastructure.
This is where TD Power Systems fits into the global puzzle.
The company manufactures generators that work alongside gas turbines and gas engines used in captive power infrastructure. These systems are increasingly being deployed in data centres, industrial facilities and grid stabilisation projects.
Management believes this trend has years left to run and currently sees demand visibility extending till 2030.
That is an unusually strong statement for a capital goods business.
Capacity Expansion Is Just Beginning to Reflect
The company’s third manufacturing plant became operational only in December 2025.
Which means current numbers still do not fully reflect the benefits of the new capacity.
According to management, the company was already operating at an annualised revenue run rate of nearly Rs 1,800 crore before fully utilising the third plant.
Management now expects quarterly revenue to ramp up from around Rs 450 crore currently to roughly Rs 550 crore to Rs 575 crore in the fourth quarter. From the first quarter of FY2027 onwards, quarterly revenue could move closer to Rs 600 crore.
This naturally flows into stronger guidance.
The company expects to cross Rs 1,800 crore in revenue during FY2026 and has guided for more than Rs 2,200 crore in FY2027.
Management has also indicated that this guidance remains conservative given the current order pipeline.
That is not language companies usually use unless demand visibility is unusually strong.
Margins, Return Ratios And Balance Sheet Strength
The interesting part is that profits are already growing faster than revenue.
That usually happens when operating leverage begins to kick in.
As production rises faster than fixed costs, margins tend to improve. The company is also benefiting from a favourable export mix and currency movements.
Management believes euro and dollar appreciation should support profitability going forward.
The balance sheet remains strong as well.
According to the latest numbers:
- debt to equity stands at just 0.04x
- return on capital employed is 30.4%
- return on equity is 22.3%
- interest coverage stands at 141 times.
The company also had a cash position of Rs 193 crore at the end of the nine month period.
This matters because industrial companies often destroy shareholder wealth when growth is funded through excessive leverage.
That does not appear to be the case here.
The return profile has improved sharply over the last few years as capacity utilisation increased and exports became a larger part of the business.
But The Valuation Already Reflects A Lot Of Optimism
This is also where the risks begin.
The stock is no longer cheap.
At current levels, the stock trades at nearly 89 times earnings. Those are expensive valuations for any industrial company. Especially one operating in a cyclical business.
The market is clearly discounting several years of strong growth ahead.
Which means even a small slowdown in order inflows, data centre investments or global capital expenditure could affect sentiment sharply.
There are also commodity risks.
Copper prices have risen sharply and copper remains a key raw material for the company. Management said it is renegotiating prices with customers and has lower-cost inventory that should cushion margins in the near term.
Still, raw material volatility remains a risk.
Another risk lies in the durability of the current artificial intelligence-driven infrastructure boom itself.
Capital goods cycles can look permanent right before they slow down.
The Bigger Story Here
Even so, something important appears to be changing here.
For years, investors searched for Indian artificial intelligence plays in software companies and digital platforms.
Ironically, one of the more interesting beneficiaries of the artificial intelligence boom may turn out to be a company manufacturing industrial generators in Bengaluru.
Because artificial intelligence may be glamorous.
But electricity is non-negotiable.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary