TD Power Systems · risk themes across the available quarters.
Bear-case history
Despite 75% total revenue growth, domestic market continues at 10-12% growth rate with no explosive demand for power generation equipment. Hyperscaler data centers in India face constraints around gas and water availability for large-scale facilities.
Company is not taking any fresh orders in the railway segment and will review sustainability at end of FY27. Once Indian Railway contract completes, production spacing capacity will need to be redeployed to generator and motor products.
While all customers are taking delivery of products as ordered, there are execution delays on ground with projects getting delayed. This could impact timing of replacement orders and service revenue.
Trade receivables stand at approximately ₹785 crore with customer advances and tax provisions increasing current liabilities. Customer payment terms cannot be altered significantly without risking business relationships.
Copper prices have risen drastically and management acknowledged renegotiating prices with customers. While existing copper inventory provides insulation, new orders will need to absorb higher commodity costs.
Indian railway contract (1.87 billion of 2.85 billion railway order book) expires by FY28 with no replacement domestic orders in pipeline. Management flagged steady state rather than growth post-FY28.
Management explicitly stated motor business is not a priority given focus on generator segment. The 150 crore motor revenue target may slip as capacity and attention are diverted to higher-growth generator business.
Management stopped hedging 6 months ago to capture rupee depreciation benefits. While currently advantageous, this leaves the company exposed to adverse currency movements if rupee strengthens.
Factory is running at "very full" capacity with customers monitoring deliveries twice weekly; any equipment breakdown could cause production delays given lack of buffer.
Equipment lead times extended to 15-16 months due to machine tool manufacturers being fully booked globally; management deflected detailed capex and revenue questions, deferring to next quarter.
INO (one large gas turbine customer) planning to triple capacity by 2030 with a signed capacity commitment agreement; management declined to share specific numbers despite analyst persistence.
Copper at $14,000/tonne with hedges expiring; price increases to customers are "approaching double digit levels" but management expects neutral impact due to FX tailwinds—risk if prices rise another 20-30%.