India’s diesel generator (DG) market is quietly entering a new growth phase.
According to the Frost & Sullivan report, the DG market was valued at ₹10,521 crore in FY23 and is projected to more than double to ₹23,803 crore by FY30.
India DG Market Size
The need for reliable backup power remains non-negotiable for industries where even a few minutes of downtime can result in big losses. One of the biggest drivers of demand is the rapid growth of data centers.
The expansion of data center capacity in India is driving a massive demand for high-capacity DG sets that ensure nearly 100% uptime. Simultaneously, the need for reliable standby power is rising due to the expansion of electric vehicle charging networks, infrastructure development, manufacturing activities, and commercial real estate projects.
As power reliability becomes more critical across sectors, diesel generators continue to play a vital role in supporting India’s digital and industrial growth. In this article, we examine two DG set companies positioned to benefit from rising demand from data centers.
Let’s take a look at their summary first:-
| Particulars | Powerica | Kirloskar Oil Engines |
| Core Business | DG Sets, Wind Power | Engines, DG Sets, Pumps |
| DG Capacity Range | 7.5-10,000 kVA | Up to 8,000 kVA |
| Key Data Center offering | Cummins-powered high-horsepower DG sets | Optiprime & high-capacity gensets |
| Data Center Presence | Established supplier to hyperscalers and colocation players | Expanding from edge and colocation to hyperscalers |
| Revenue | ₹3,011.5 crore | ₹5,647 crore |
| Net Cash Position | Net Cash Positive | ₹552 crore |
| Key Strength | Strong data center execution and Cummins partnership | Scale, product diversification, and capacity expansion |
| Risks | High dependence on Cummins | Rich valuation after sharp rally |
| Source: Management commentary, Investor Presentations | ||
#1 Powerica: The Cummins Partner Supplying Up to 90 Generators Per Data Center
Powerica offers a wide range of power solutions, including generator sets, wind power systems, associated equipment, and emission control devices. As a single integrated manufacturer in India, the company offers the largest range of generators, spanning from 7.5 kVA to 10,000 kVA.
In partnership with Cummins India since 1984, Powerica manufactures and supplies diesel generator (DG) sets ranging from 7.5 Kilovolt-Ampere (kVA) to 3,750 kVA. The DG set business is the company’s primary revenue stream, accounting for approximately 83% of its total earnings.
Segment Dynamics: Wind Margin vs. Generator Volume
The Wind Power business contributes the remaining 17% of revenue. The generator business operates on a low margin of 9.1% (FY26), compared with 31.1% for the wind power segment. This is why, despite contributing only 17% to revenue, the wind power business accounts for 41.2% of Powerica EBITDA (earnings before interest, taxes, depreciation, and amortization).
Powerica Financials
This single-engine platform enables Powerica to meet 90-95% of market demand. It provides end-to-end solutions, including marketing, manufacturing, installation, and commissioning. Powerica manufactures all components in-house except engines and alternators.
Heavy-Duty Industrial Footprint: The Hyundai Association
Since 2014, the company has also been associated with Hyundai for single-unit generators with capacities ranging from 3,000 kVA to 10,000 kVA. These heavy-duty generators cater to the needs of high-capacity, continuous-operation industries such as cement, steel, nuclear power, and fertilizer plants.
Data Center Demands: Driving High-Horsepower Backups
Powerica shares have gained traction of late, as data centers have become a major growth driver. The company first entered this sector in 2021 and has established a strong identity among major hyperscalers and colocation data center operators in India. Generally, diesel and gas generator sets are essential for the round-the-clock operations of data centers.
Powerica supplies its Data Center Application-approved engines and high-horsepower generator sets to these facilities. Powerica can supply anywhere from 10 to 60, and sometimes up to 90, generator sets per facility.
The Corporate Overlap: Assessing Concentration Risks
In FY26, data centers accounted for 12% of the company’s Cummins-powered business. Cummins also contributes approximately 66% of Powerica’s total revenue. This implies that, despite the long-standing partnership with Cummins, client concentration is significantly higher. If the contract were to end, its operations could be adversely affected.
Capturing Extra Order Value Through EPC Execution
Not just simple supply, the Engineering, Procurement, and Construction (EPC) and installation work for data centers can account for anywhere between 25% and 75% of the total order value. As a result, Powerica projects to outpace the industry’s average growth of 10.5%, driven by the execution of high-value, high-horsepower orders.
The inquiry pipeline for data centers remains consistently robust. Currently, Powerica has a visible order book for the next 9-12 months, driven primarily by demand from data centers. Beyond diesel generators, data centers and Artificial Intelligence facilities are also contributing to Powerica’s renewable energy portfolio.
Renewable Pipelines: Long-Term Visibility in Wind Energy
Powerica owns and operates 12 wind power projects in Gujarat, with an installed operational capacity of 330.85 megawatt (MW). These projects are backed by 25-year-long-term Power Purchase Agreements (PPAs), ensuring strong revenue visibility.
Growing demand for clean energy is driving power-hungry industries to sign Commercial & Industrial (C&I) private Power Purchase Agreements (PPAs). In addition, Powerica also serves the defence industry. It designs and manufactures Electromagnetic Interference shelters and military DG sets.
Financial Health: Record Revenue and Capital Efficiency
Now, coming to its financials. The company revenue grew by 13.5% year-on-year to ₹3,011.5 crore. This was the highest annual revenue in Powerica’s history. EBITDA grew by 11.8% to ₹386 crore, while margins stood at 12.8%. Net profit grew by 61% to ₹277 crore, driven by lower tax expenses.
The company’s balance sheet is also robust. It is net cash-positive and consistently generates profits from its operations. Net cash from operating activities rose from ₹252 crore in FY23, ₹283 crore in FY24, and ₹249 crore in FY25 to ₹453 crore in FY26. Working capital days stand at 33, down from 47 in the previous year.
#2 Kirloskar Oil Engines: How it Plans to Scale Data Center Share to Double Digits
Kirloskar Oil Engines (KOEL) manufactures engines, generating sets, and pump sets. Today, KOEL ranks among the top 10 manufacturers globally by volume in the industrial and Powergen space. In the power generation business, KOEL designs, manufactures, and sells a wide range of engines and diesel generators (gensets).
Portfolio Breakdown: Segment Revenue Drivers
PowerGen remains the largest source of revenue, accounting for 46% of the total revenue on its own. It is followed by the Industrial Business (26%), Distribution and Aftermarket (17%), and the International B2B Business (11%). Domestic business accounts for 90% of revenue.
Scaling Capacities for Hyperscaler and Edge Facilities
Currently, KOEL manufactures single-engine units for data centers with capacities reaching up to 1,650 kVA. It believes it offers a unique proposition to data center customers. KOEL is actively supplying power solutions across tiers of the data center industry. It already has an established presence in Edge and Colocation facilities.
Now they are steadily expanding in Hyperscaler operations. However, management is increasing this capacity to meet growing and future demands. The company aims to raise the data center business’s share of Powergen’s revenue mix to double-digit levels overall.
High-Capacity Execution: The HyperNext System Order
It also offers specialized compact products such as the “Optiprime” series. Optiprime is the world’s smallest 1000 kVA genset, optimized for space savings. KOEL recently won an order from HyperNext (a digital infrastructure company offering data center solutions) to supply 96 units of KOEL’s 2500 kVA Optiprime Dual Core power system.
Significantly, this is among the largest deployments of high-capacity power systems for data centers in India. In addition, the company is currently receiving inquiries from data centers being developed in Vizag.
Alternative Fuels and Alternative Energy Adaptations
In addition, the company manufactures specialized 8,000 kVA gensets, such as those currently being delivered to the Nuclear Power Corporation. To future-proof its technology, KOEL has developed internal combustion engines capable of running on alternative fuels like gas, ethanol, methanol, and hydrogen blends.
Corporate Earnings: Outlining Strong Operational Margins
From a financial perspective, the company’s revenue rose 25% year-on-year to ₹5,646.8 crore. EBITDA increased by 33% to ₹737 crore, while the margin expanded by 90 bps to 13.1%. Net profit grew by 35% to ₹464 crore. It also held a net cash position of ₹552 crore. The 29 working capital days indicate an efficient business.
Capital Expenditure: The ₹2,100 Crore Roadmap to FY30
Looking ahead, management has outlined an ambitious target to become a $2 billion company by FY30. To meet its revenue targets, KOEL is undertaking significant capital expenditure. The company is investing ₹700 crore to increase its current capacity (1,35,000 engines) by 50,000. This expansion is expected to become operational by April of next year.
KOEL recently announced an additional ₹1,400 crore capex over the next 2 years. This will fund a completely new building at the existing Kagal site, adding capacity for 20,000 engines. This new capacity will support overall company demand, particularly addressing the needs of the Higher HorsePower and international markets.
Valuation Framework: Balancing Cash Generation Against Multiples
Kirloskar Oil has a higher Return on Capital Employed (ROCE) than Powerica, indicating more efficient use of capital, while Powerica reports a stronger Return on Equity (ROE), reflecting better returns for shareholders.
From a valuation perspective, following a sharp 107% gain so far in 2026, Kirloskar is currently trading at a significant premium to the industry median and approximately 3x its own 5-year median. Powerica is a new listing but currently trades at a discount to the industry multiple.
| Peer Comparison (X) | |||||
Company | Price-to-Earnings Multiple | Return Ratios | |||
| Company | 5Y Median | Industry | ROCE (%) | ROE (%) | |
| Kirloskar Oil | 80.0 | 25.2 | 45.1 | 19.1 | 14.6 |
| Powerica | 30.8 | NA | 36.8 | 15.7 | 17.4 |
| Source: Screener.in (Data as of 24 June 2026) | |||||
India’s DG market is expected to more than double to ₹23,803 crore by FY30, supported by data centers, manufacturing, EV infrastructure, and rising power reliability needs. Both Powerica and Kirloskar Oil are well-positioned to benefit from this trend.
However, while Powerica offers growth at a relatively lower valuation, Kirloskar’s premium pricing leaves little room for execution hiccups.
Nonetheless, these names could be kept in your watchlist to track their execution.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data was unavailable have we used an alternative, 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 educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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