TD Power Systems - Guided For Revenue CAGR Of 17-18%: ICICI Securities

ICICI Securities Report

We recently interacted with TD Power Systems Ltd.’s senior management in Mumbai. Key takeaways:

1. guided for revenue compound annual growth rate of 17-18% over the next two-three years and margins to sustain at the current level of 17%;

2. order pipeline in hydro is strong and the company targets to double the order inflow in the current year; indicated heathy growth ahead;

3. the recent railways’ motor order worth Rs 7.5 billion is likely to see execution over the next four-five years;

4. current capacity utilisation is 70%; management has announced capex of Rs 1.2 billion in a phased manner; capex likely to lead to incremental revenue of Rs 4 billion-5 billion.

The stock is currently trading at 39 times trailing twelve months. We believe TD Power System is a potential beneficiary of pick-up in industrial capex, rising demand for captive power, and increased focus on renewable power globally.

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