Powering the Data‑Center Decade: A Deep-Dive into TD Power Systems Business

Ankur Kapur
2 days ago
4 min read

TD Power Systems (TDPS) makes money primarily by designing and manufacturing AC generators and large motors for industrial and power applications, with a smaller EPC/project business, and a growing skew towards exports and higher‑value gas and industrial applications. Rising export volumes drive its economics, an improving product mix (gas generators, motors, aftermarket), and operating leverage on a largely fixed manufacturing base, which together support healthy margins and returns.

TD Power Systems Business model and segments

TDPS operates mainly in one manufacturing segment that covers generators, motors, spares and after‑market services, with a small EPC/projects line for turnkey power packages. Within manufacturing, generators dominate revenue; motors and services are smaller but fast‑growing, lifting blended margins.

By geography, recent disclosures indicate roughly two‑thirds of revenue is domestic (including deemed exports) and about one‑third is direct exports. However, ~70% of new orders are now export- or deemed export, implying the mix will increasingly tilt toward offshore production. TDPS has supplied more than 7,000 generators across 100+ countries, with an installed base concentrated in Europe, the Middle East, and the Americas, generating recurring spares and service demand.

Key revenue drivers are:

Volume growth in generators and motors, especially export‑oriented gas turbine/engine generators and data-centre backup applications.
Product mix shift toward higher‑rating machines, motors and specialised applications (waste‑to‑energy, biomass, CHP, data centres), which carry better pricing and margin.
Aftermarket spares, repairs and upgrades linked to the large installed base, which provide repeat, higher‑margin revenue versus original equipment sales.

Competitive positioning and moats

TDPS’s first moat is engineering depth and niche scale in medium‑to‑large AC generators and motors, where it offers a wide range (roughly 1–200 MW/250 MVA) across steam, gas, hydro, diesel, wind and other prime movers. This breadth, combined with long operating history and certifications, makes the firm a credible partner to global OEMs who need reliable, customised machines without building their own full generator capability.

The second moat is its installed base and OEM relationships: thousands of machines across more than 100 countries, along with long‑standing ties with leading turbine makers, generate repeat orders and a sticky aftermarket, increasing switching costs for OEMs and end‑users. Over time, as data-centre and energy‑transition applications ramp up, these relationships help TDPS participate in new capex cycles while defending margin via specification‑driven, not purely price‑driven, competition.

There is also an emerging scale and cost advantage: high utilisation of its Indian manufacturing base, process automation and experience in export logistics allow TDPS to offer competitive pricing versus global peers while still earning attractive returns, particularly when the product mix skews to higher‑value machines. This combination of cost‑efficient manufacturing and specialised engineering supports both profitability and the ability to command premium pricing in complex applications selectively.

Sector size, growth and drivers

The global industrial generator market is estimated at roughly USD 18–22 billion and is projected to reach about USD 30–31 billion by 2030, implying mid‑single‑ to high‑single‑digit annual growth. Within this, AC generators alone are expected to grow from around USD 5 billion in 2024 to nearly USD 8 billion by 2033, a 5% CAGR, reflecting the continued need for backup and prime power in industrial and infrastructure settings.

Key demand drivers include:

Rising power‑reliability needs from data centres, digital infrastructure and manufacturing, particularly in emerging markets where grids remain unstable.
Energy‑transition investments in renewables, waste‑to‑energy, CHP, and grid-stabilisation projects, which use specialised generators and motors.
Industrial capex and urbanisation support demand for standby and prime‑mover gensets across construction, healthcare, telecom, and process industries.

Competitive dynamics and structure

The industrial/AC generator value chain is fragmented globally with dozens of players. Still, economically, it resembles an oligopoly in medium‑to‑large machines where a handful of engineering‑heavy companies dominate OEM supply. Global names include Caterpillar, Cummins, GE, Kohler, and various Japanese and European firms; in India, Cummins India, Kirloskar, Mahindra Powerol, Greaves and others compete across diesel and gas gensets.

Barriers to entry are significant at TDPS’ end of the spectrum: customers require proven reliability, certifications, long‑life performance data, customisation capability, and global service, all of which take years of engineering investment and an installed base to build. At the same time, basic gensets are still somewhat commoditised, so pricing power is moderate overall but stronger in higher‑rating, engineered‑to‑order and renewable/data-centre applications where specification and long‑term performance matter more than upfront price.

Key sector‑wide risks include:

Commodity and FX volatility affecting copper, steel and imported components, which can squeeze margins where pricing pass‑through is limited.
Cyclicality in industrial and infrastructure capex, as well as interest‑rate cycles that influence large project decisions and data-centre investments.
Regulatory shocks (emission norms, import duties, local‑content rules) and new entrants leveraging cheaper capital or technology partnerships in certain segments.

Key opportunities that could accelerate growth include:

Further penetration of data-centre backup power in the U.S. and Europe, where it already has strong references.
Scaling higher‑margin niches such as motors, traction, geothermal and grid‑stability products, which enhance blended margins and reduce dependence on any single end‑market.

Q2 FY26 call (Oct/Nov 2025)

Key messages and strategy: Management highlighted a 20–22% QoQ and ~45–48% YoY jump in revenue and PAT, driven by strong export orders and mix improvement, with exports contributing about three‑quarters of H1 order inflow. They reiterated their focus on data centres, motors, and grid‑stability applications, and confirmed ongoing capacity debottlenecking rather than an immediate large-scale capex announcement.
Highlights/surprises: The magnitude of order‑inflow growth (around 40%+ YoY in H1) and margin resilience despite commodity and logistics headwinds were key positives; management also disclosed improved visibility for export orders over the next 18–24 months. A mild negative was continued uncertainty around U.S. import tariffs on Indian generators and the need to re‑engineer cost structures for certain contracts.

Three most positive developments:

Sustained acceleration in order inflows with exports forming roughly two‑thirds to three‑quarters of new orders, providing multi‑year revenue visibility.
Strong profitability trends, with EPS and PAT growing faster than revenue and margins holding or improving despite cost and tariff headwinds.
Management’s disciplined stance on leverage and capacity expansion—debottlenecking first, then larger capex only when high growth looks durable—supports capital‑allocation quality and ROCE.

Three most concerning signals:

Growing dependence on data centres and U.S. export demand, combined with unresolved tariff and cost‑sharing issues, could pressure margins if conditions worsen.
Lack of detailed disclosure on market share, competitive intensity and long‑term margin targets, which makes it harder to underwrite the durability of current economics at today’s valuation.
Potential capacity bottlenecks if order growth remains robust but capex decisions are delayed too long, risking missed opportunities or operational strain.