Synopsis: TD Power Systems is emerging as a closely watched power equipment stock as the global AI and data centre surge drives rising demand for reliable captive power. Strong export growth, expanding capacity, and increasing generator demand could position it as an indirect but compelling proxy for this structural boom.
A power equipment stock is drawing attention as the global AI and data centre boom starts creating a new kind of demand: not just for chips and servers, but for reliable electricity. As data centres consume massive power, companies that supply critical power-generation equipment are coming into focus.
TD Power Systems Ltd is not a data centre operator. It does not build servers, cooling systems or digital infrastructure. Its role is different but important. The company manufactures large generators and motors used in power systems, industrial plants, hydro projects, railways and other heavy applications. In the data centre chain, its key product is the generator that gets attached to gas engines or gas turbines, helping convert mechanical energy into electricity.
What Does TD Power Actually Make?
TD Power is a specialised manufacturer of electrical rotating machines. In simple terms, it makes large industrial generators and motors. A generator converts mechanical movement into electricity, while a motor uses electricity to create movement. The company’s product portfolio includes generators for steam turbines, gas turbines, hydro turbines, diesel engines and gas engines, along with induction motors, synchronous motors and traction motors.
This means TD Power is not a power producer like a utility company. It is also not a data centre company. It is an equipment supplier to industries that need reliable power systems. Its generators are used in captive power plants, biomass plants, waste heat recovery projects, hydro plants, oil and gas applications, marine and naval systems, railways and now increasingly in global gas engine and gas turbine applications linked to data centres and grid support.
The company’s manufacturing base has also evolved over time. It acquired technology from Toyo Denki of Japan in its early years, developed vertical hydro generators with Voith, signed a long-term supply agreement with INNIO for gas engine generators, entered a licence agreement with Siemens for 2-pole generators up to 250 MVA, expanded into Europe and the US, and later started a motors business. Its Q3FY26 the company has product reach across more than 98 countries.
Why Data Centres Matter For TD Power
The most important part of the story is the sharp rise in demand for gas engine and gas turbine generators. In the Q3FY26 earnings call, management said the gas turbine and gas engine business continues to be the company’s strongest segment, with the highest growth and the highest growth potential in the years to come.
The reason is simple. Large data centres need massive and reliable power. They cannot afford interruptions. TD Power said demand from Europe and the US remains very strong, and there is an increasing trend of data centres using captive power instead of depending only on the grid. Management explained that high power consumption by data centres has pushed up grid power prices, which is one reason data centres are moving towards their own power systems. This directly increases the opportunity size for TD Power.
This is where TD Power fits into the AI story. The company does not supply to data centres in the way a server, chip or cooling company would. Instead, it supplies generators to prime mover customers, such as gas engine and gas turbine manufacturers, who then supply power systems that will be used by data centres, grid stabilisation projects or industrial users.
Management also said the forecast given by its prime mover customers shows a large year-on-year increase until 2030. Importantly, the company added that demand is not only from data centres. It is also coming from grid stabilisation, synchronous condensers and other applications. This matters because it means TD Power is not dependent only on one end-market, even though data centres are clearly one of the strongest triggers.
US And Europe Are The Real Drivers
The current data centre-linked opportunity for TD Power appears to be mainly export-driven. In the Q2FY26 earnings call, management said demand and forecasts in the US and Europe were “extremely high” and that the company was seeing a very large uptick in orders. It also said forecasts from prime mover partners were exceeding expectations. This led TD Power to raise its guidance for the current financial year to Rs. 1,800 crore and indicate over Rs. 2,000 crore for the next financial year at that time.
By Q3FY26, the guidance had moved higher again. Management said the company would cross Rs. 1,800 crore in FY26 and gave an upward guidance of more than Rs. 2,200 crore for FY27. It also said this guidance was conservative, based on the ramp-up in order booking to around Rs. 575 crore to Rs. 600 crore per quarter.
This is where the TD Power story becomes interesting. The company is not just talking about a possible future opportunity. Its order inflow has already moved up sharply. In Q3FY26, order inflow stood at Rs. 6.56 billion, which management called an all-time record. Export order inflow, including deemed exports, was Rs. 5.1 billion during the quarter, forming 84 percent of the quarterly inflow. For the nine-month period, direct and deemed export order inflow stood at Rs. 12.05 billion, compared with Rs. 7.52 billion in the previous year, a growth of 62 percent.
This export mix is important because it shows that TD Power’s growth story is not mainly dependent on domestic demand. In the nine-month period, 79 percent of order inflow came from exports and only 21 percent from domestic orders. Exports and deemed exports, excluding railway orders, also formed 75 percent of the pending order book.
The Bigger Growth Engine Beyond One Product
While gas engine and gas turbine generators are the biggest excitement today, TD Power’s growth is not only about data centres. Steam turbine generators remain a stable base business. Management said the Indian steam turbine market continues to grow at around 10 percent to 12 percent, driven by captive power plants, biomass and waste heat recovery. The export pipeline in steam turbines is also strong, with orders coming from different parts of the world.
Hydro is another area where the company is seeing traction. Management said hydro order inflow has been excellent and that the next year could be the highest in the company’s history for hydro. TD Power is especially active in refurbishment in India and overseas, where older hydro assets are upgraded or modernised. This may not carry the same appeal as AI data centres, but it gives the company another growth leg.
The motors business is still smaller but is becoming more important. TD Power expects around Rs. 150 crore of top line from motors in FY26 and said motors will be a major thrust area from FY28 onwards. The company is also seeing orders in synchronous motors, induction motors and exports. In railways, it has orders from the US, Europe and Russia, along with India, and expects to supply all these markets next year.
The company also highlights one important advanced product angle. TD Power has a licence agreement with Siemens to produce 2-pole generators up to 250 MVA. These generators are more advanced and are relevant for high-speed turbine applications. Management also referred to a US gas turbine customer acquisition that was in the engineering order stage and expected to convert into a machine order.
Capacity, Financials And Execution
The company is already scaling production. In Q3FY26, management said TD Power achieved sales of around Rs. 450 crore per quarter in the previous two quarters, equivalent to around Rs. 1,800 crore on an annualised basis. It declared its third plant operational on December 18, 2025, but said the new capacity had not yet fully reflected in sales. The company expects to ramp up to Rs. 550 crore to Rs. 575 crore of quarterly production and sales in Q4, and around Rs. 600 crore per quarter from Q1 onwards.
Financially, the numbers show strong momentum. On a standalone basis, total income for the nine months ended December 2025 was Rs. 11.94 billion, compared with Rs. 9.02 billion in the same period last year, an increase of 32 percent. EBITDA margin, including other income and excluding exceptional and treasury income, stood at 18.33 percent, compared with 17.45 percent a year earlier. Profit after tax and comprehensive income rose 41 percent to Rs. 1.54 billion from Rs. 1.09 billion.
On a consolidated basis, nine-month total income rose 36 percent to Rs. 12.8 billion from Rs. 9.34 billion. Profit after tax and other comprehensive income rose 37 percent to Rs. 1.66 billion from Rs. 1.21 billion. The company also maintained a strong cash position of Rs. 1.93 billion.
However, fast growth brings pressure. Management said the new plant led to higher factory expenses in Q3 due to manpower additions and support requirements for higher production. It also incurred one-off shifting costs while moving critical machinery such as robots to the new factory. The company expects further cost increase in Q4, but not to the same extent seen in Q3.
Risks Investors Should Not Ignore
The biggest risk is execution. TD Power is ramping fast, entering higher-value products, serving export customers and increasing production. If delivery timelines slip or quality issues emerge, the same export opportunity that is driving growth can become a pressure point.
Raw material cost is another risk. Management said copper prices had gone up sharply. The company is renegotiating prices with customers and expects to pass on cost increases. It also said it has some previously booked copper at lower prices, which should help until new pricing kicks in. Still, commodity volatility remains something to watch.
Bluntly, TD Power is not a pure data centre stock. It is a power equipment manufacturer with rising exposure to the data centre and AI power cycle. That distinction matters.
Final View
TD Power Systems looks like one of the more interesting indirect ways to understand the AI infrastructure boom from a power perspective. The company is not selling chips, servers or software. It is supplying the kind of heavy electrical equipment that becomes important when data centres need reliable captive power.
The bull case is clear. Gas engine and gas turbine generator demand is strong in the US and Europe, export order inflow is rising sharply, the order book has expanded, the third plant is operational, and management has raised guidance while still calling it conservative. The business also has support from steam, hydro, motors and railway exports, which reduces dependence on only one theme.
The caution is equally clear. Data centre-linked revenue is not disclosed separately, India is not yet a major data centre demand driver for the company, working capital can remain stretched during fast growth, and execution will matter more as scale increases.
So the cleanest way to look at TD Power is this: it is not a direct AI company, but it may be a strong power-equipment proxy for the AI and data centre buildout. If global demand for captive power, gas engines and gas turbines stays strong, TD Power could remain a stock to watch closely in this cycle.
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