Generator Segment Revives, But Outlook Remains Challenging TD Power Systems (TDPS) reported consolidated revenues of Rs1.3bn for 2QFY18, up 20% YoY. Manufacturing (generator) segment's revenues rose 33% YoY to Rs1.3bn while TG Island segment's revenues declined 40% YoY to Rs161mn. On a low base of 2QFY17, gross margin rose 320bps YoY to 31.4% while EBITDA margin expanded 550bps YoY to 7.3%. Aided by improved operating leverage, EBITDA stood at Rs92mn versus Rs19mn YoY. Generator segment posted EBIT margin expansion of 110bps YoY to 9.6% while TG Island segment's EBIT margin rose 230bps YoY to 5.5%. Consequently, TDPS reported net profit of...

TD Power Systems (TDPS) reported consolidated revenues of Rs552mn for 1QFY18, down 32% YoY. Manufacturing (generator) segment's revenues declined 43% YoY to Rs446mn owing to deferment of deliveries on account of GST (inventory build-up of Rs250mn which will be shipped out in 2QFY18). The delivery despatch schedule of 2QFY18 is healthy at Rs1.2bn, leading to normalisation of performance in 1HFY18. Following lower sales and lack of fixed-cost absorption as well as lower foreign exchange realisation, EBITDA was negative at Rs188mn compared to Rs16mn profit on YoY basis. Generator segment posted EBIT loss of Rs117mn while TG Island segment registered EBIT loss of Rs13mn. Consequently, TDPS...

TD Power Systems (TDPS) reported consolidated revenues of Rs1.3bn in 4QFY17, up 8% YoY, partly aided by booking of deferred revenue from the 3QFY17 quarter. Manufacturing (generator) segment revenue grew 20% YoY in 4QFY17 to Rs1.2bn, while TG Island segment revenue fell 8% YoY to Rs198mn. With better revenue mix (generator revenue forming 86.4% of sales in 4QFY17 versus 82.8% YoY), gross margin rose 280bps YoY to 32.6% in 4QFY17. Lower staff costs (down 6% YoY to Rs170mn) and other expenses (down 15.5% YoY to Rs147mn) led to a positive EBITDA of Rs102mn compared with Rs2mn loss on YoY basis. EBITDA margin stood at 7.9%, the highest level in the past three years. Generator segment...

Muted Performance Owing To Soft Despatch Schedule TD Power Systems (TDPS) reported consolidated revenues of only Rs641mn for 3QFY17, down 43% YoY and below our estimate of Rs1.2bn as the manufacturing (generator) segment's revenues were muted at Rs538mn, down 40% YoY (past six quarters' average is Rs910mn). The management attributed the weak top-line to soft delivery despatch schedule as most of the deliveries are scheduled in 4QFY17 with likely revenue booking of Rs1.4bn. Absence of operating leverage owing to muted revenues as well as forex translation loss of Rs25mn (from euro and Japanese yen) led to Rs60mn EBITDA loss and Rs116mn net loss....

Exports Scale Up But Domestic Slowdown Continues; Retain Buy TD Power Systems (TDPS) reported consolidated revenues of Rs1.06bn for 2QFY17, broadly in line with our estimate of Rs1.15bn. On YoY basis, the top-line was down 40% because of the closure of EPC segment (2QFY16 revenues of Rs48mn) and significantly unfavourable base effect of TG Island segment (2QFY16 revenues of Rs719mn, 58% of annual revenues of FY16). Manufacturing (generator) segment posted revenues of Rs891mn, in line with our estimate of Rs950mn, with EBIT of Rs93mn translating to EBIT margin of 10.5%. TG Island segment posted revenues of Rs267mn with EBIT of Rs8mn, translating to 3.2% margin....

Subdued Performance, But Fundamentals Intact; Retain Buy TD Power Systems (TDPS) reported consolidated revenues of Rs814mn in 1QFY17, down 18% YoY and below our estimate of Rs1.1bn. Manufacturing (generator) segment posted revenues of Rs775mn, 2% lower YoY, with EBIT of Rs71mn translating to EBIT margin of 9.2% (on lack of operating leverage). However, losses in other two segments dragged down overall profitability. TG Island segment posted EBIT loss of Rs26mn owing to lack of turnover (Rs83mn revenues in 1QFY17 compared to likely sales of Rs1bn in FY17E), as deliveries are scheduled for 2HFY17. Hence, the management has retained its FY17 margin...

Attains EPC Closure, Generator Scale-Up Imminent; Retain Buy TD Power Systems (TDPS) reported consolidated revenues of Rs1.2bn for 4QFY16, down 37% YoY and marginally below our estimate of Rs1.3bn owing to a 99% YoY decline in revenues of EPC segment to Rs3mn (versus Rs420mn in 4QFY15) as EPC division has been wound up. Manufacturing (generator) segment posted revenues of Rs1.1bn, 4% down YoY, with EBIT of Rs107mn translating to EBIT margin of 10.2%, in line with our estimate (margins are not comparable on YoY basis as 4QFY15 was a high-margin quarter due to revenue mix). For FY16, generator segment posted revenues of Rs3.8bn with EBIT margin of...

EPC Closure And Generator Business Scale-Up Imminent; Retain Buy TD Power Systems (TDPS) reported consolidated revenue of Rs1.1bn for 3QFY16, down 25% YoY, owing to an 83% YoY decline in revenue of EPC segment to Rs90mn, which is about to be wound up. Manufacturing (generator) segment posted revenue of Rs896mn, 6% down YoY, with EBIT of Rs85mn, translating to EBIT margin of 9.5%, in line with our estimate. Over 9MFY16, generator segment posted a 50bps YoY rise in EBIT margin to 10.2%. TG Island segment posted revenue of Rs149mn, up 41% YoY on a low base and EBIT of Rs11mn, resulting in a 7.5% margin. EPC segment posted EBIT loss of Rs53mn...

Export Led Scale-Up In Generator Business Imminent; Retain Buy TD Power Systems (TDPS) reported consolidated revenue of Rs1.7bn for 2QFY16, flat on YoY basis but 31% above our estimate of Rs1.3bn driven by higher-than-expected revenue booking in TG Island business. Manufacturing (generator) segment posted revenue of Rs1.1bn, in line with our estimate, with an EBIT margin of 9.8%. Consolidated EBITDA stood at Rs74mn (4.2% operating margin) as EPC business posted EBIT loss of Rs57mn towards business closure costs. PBT stood at Rs40mn, broadly in line with our estimate of Rs49mn. However, a higher tax rate of 72% led to lower PAT of Rs11mn compared to our estimate of...

On The Cusp Of A Turnaround; Reiterate Buy We believe TD Power Systems (TDPS) is on the cusp of a turnaround with strong scale-up opportunities in the core generator segment and impending winding up of the loss-making EPC segment (25% of total revenue in each of the past three years). Rising penetration among existing OEMs, fresh tie-ups with new OEMs and diversification in untapped verticals are expected to result in a 26% revenue CAGR for the generator segment over FY15-FY17E. While the generator segment posted EBITDA margin of 12.8% in FY15, consolidated margin stood at only 2.4% because of losses in the EPC segment. Post...

Strong Scale-Up Opportunities In Generator Business; Retain Buy TD Power Systems (TDPS) reported consolidated revenue of Rs994mn for 1QFY16, up 15% YoY and 8% above our estimate. Top-line was driven by robust execution in manufacturing (generator) segment, up 39% YoY at Rs792mn (75% of total revenue) with an EBIT margin of 11.5%. EPC segment booked revenue of Rs90mn with an EBIT loss of Rs59mn on account of exit costs of final two projects. Pending order backlog in EPC stood at Rs65mn (to be completed in 2QFY16) after which EPC business will be wound up. Affected by the loss in EPC segment, TDPS was at break-even stage at operating level, compared to a loss of Rs80mn on YoY basis. Further,...

Generator Business On Strong Footing; Retain Buy TD Power Systems (TDPS) reported consolidated revenue of Rs1.9bn for 4QFY15, in line with our estimate. Manufacturing (generator) segment posted revenue of Rs1.1bn (57% of total revenue) with a strong EBIT margin of 20.6%. EPC segment booked revenue of Rs420mn with an EBIT loss of Rs102mn on account of exit costs of final two projects, after which EPC business will be wound up (only Rs124mn of order backlog pending). As a part of EPC exit costs, TDPS has booked Rs115mn towards one-time settlement and Rs153mn towards provision for doubtful debts (included in other expenses), leading to suppressed EBITDA and PAT of Rs17mn/Rs7mn,...

Healthy Scale-up In Generator Exports Likely; Retain Buy TD Power Systems (TDPS) reported a 23% YoY growth in consolidated revenue to Rs1.5bn, in line with our estimate. Manufacturing (generator) segment's revenue grew 27% YoY to Rs951mn (60% of total revenue), while EPC segment's revenue rose 24% YoY to Rs521mn (33% of total revenue). TG island segment posted a 48% YoY growth in top-line to Rs105mn, on a low base. With improved operating leverage and a 80bps YoY decline in raw material costs as a percentage of sales, EBITDA grew 108% YoY to Rs86mn, in line with our estimate. Operating margin stood at 5.7%, up 230bps YoY, partly affected by Rs16mn forex...

TD Power Systems (TDPS) is a leading manufacturer of AC generators for diverse prime movers such as steam, gas, hydro and wind turbines as well as diesel and gas engines and a key supplier to renowned global OEMs (original equipment manufacturers) like Siemens, GE and Voith Hydro with huge export potential. With a strong product portfolio and added benefit of high-technology customised products with low-cost Indian manufacturing, TDPS is witnessing a surge in its export order book (up 115% YoY to Rs2.2bn as of 1HFY15-end). We expect a 45% CAGR in export order inflow of generators over FY14-FY17E driven by rising penetration among existing OEMs, fresh tie-ups with new...