Fundamental analysis of TD power systems

Fundamental analysis of TD power systems: Electricity is a necessity in any country. India is one of the world’s largest emerging economies due to factors such as rising consumption, adoption of new technologies by numerous businesses, and rising income and population.

As energy demand and costs increase, electricity is a major beneficiary of these variables. These factors can be helpful for companies primarily in the power industry.

This article presents a fundamental analysis of TD Power Systems, a company that manufactures generators for electric utilities and has a presence in other countries.

Company Overview

The company was founded in 1999 and is headquartered in Bengaluru. They manufacture and sell AC generators, motors, and other services such as generator repair and replacement. We have manufacturing plants in Bengaluru, India and Türkiye.

These products include steam turbines, gas turbines, water turbines, diesel engines, gas engines, gas and wind turbines, with capacities ranging from 1 MW to 200 MW. They are even involved in the manufacturing of geothermal and solar applications.

segment analysis

The majority of the company’s revenue comes from manufacturing (96.15%), with the remainder coming from project business (3.85%). The company’s network includes 57 service centers spread across 103 countries. The top 10 customers accounted for approximately 78.23% of the company’s consolidated revenue in FY23.

industry analysis

India’s power industry continues to expand and benefit from increased consumption of industrial goods, consumer goods and electric vehicles. This increase is due to the increased importance of electric power. Expansion also led to increased coal extraction. Solar, wind, and nuclear energy are sources of alternative energy. From FY23 to FY28, the Indian power industry is expected to grow at a CAGR of 8.80%.

The industry is experiencing significant demand, and according to a study conducted under the National Power Plan, the projected power capacity by 2026-27 will be 6,09,591 MW, with conventional capacity accounting for 44.79% and renewable capacity accounting for 55.20%. .

TD Power Systems – Finance

Sales and Net Profit

The company reported Rs. 872.29 crore in FY23, up from Rs 797.42 crore in FY22, an increase of 9.38%. The company has recorded revenue growth of 17.40% CAGR over five years. Profits have increased.

The net profit was Rs. 96.81 crore in FY23, up from Rs. It reached $3.19 billion in FY22, a 37.33% increase over the previous year. The CAGR was 138.46%. Increased sales helped improve operating profit margin, which contributed to increased profits.

profit

OPM rose to 15.32% in FY23 from 12.15% in FY22. The average for five years was 10.64%. The increase in operating profit margin was due to an increase in sales exceeding operating expenses, contributing to improved profitability.

NPM rose to 11.10% in FY23 from 8.84% in FY22. The average for 5 years was 6.81%. NPM gradually improved from FY19 to FY23, with interest and depreciation expenses showing a gradual decline.

rate of return

RoE in FY23 increased from 14.11% in FY22 to 17.11%. The average for 5 years was 9.82%. The ratio is increasing, which bodes well for shareholders.

RoCE increased from 17.69% in FY22 to 22.29% in FY23. The average for 5 years was 12.88%. RoCE returns outperform RoE returns, indicating that debt is being used more efficiently. Returns are likely to improve due to debt reduction.

debt analysis

The debt ratio is close to 0, and the five-year debt ratio is as low as 0.11. This is a good indicator for the company as it can invest excess profits in other profitable business segments.

Interest coverage ratio in FY23 increased comfortably to 29.83x from 14.01x in FY22. The average over five years was 11.50. The ratio improved significantly due to improved profitability and reduced interest expenses.

TD Power Systems’ future plans

• We have seen good growth in Hydro segment in FY22 and we expect growth of 60-70% in countries of Europe, Nepal and Vietnam in FY23.
• The company is diversifying its product line into submersible motors and synchronous motors by receiving orders from the Korea Nuclear Power Corporation, which will help strengthen its position and increase its market share.
• The company is in the final stages of testing its products for Indian Railways and is expecting bids or orders and expects to grow its business by around Rs 100 crore over the next two years.
• The Turkish government has offered additional incentives to encourage the purchase of generators, which could help revive a market already in crisis due to power shortages.

TD Power Systems Key Metrics

Let’s take a look at some of TD Power Systems’ key metrics.

conclusion

As we near the end of our fundamental analysis of TD Power Systems, let’s take a quick look at the company.

We are a manufacturer of generators and motors for the power industry, and our sales and profits are growing at a good rate. The power sector is also expected to expand due to increased energy demand and consumption. Their debt reduction appears to be beneficial to the organization. What do you think about the company’s potential? Please share your thoughts in the comment box below.

Written by Santosh

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