The Rise of AI and Data Centres: A New Era for Power Generation
The rapid scale-up of artificial intelligence is quietly reshaping global power infrastructure. Training and deploying AI models now require vast data centres that operate continuously, without disruption. These facilities are among the most power-intensive industrial assets today. As server density rises and workloads become more compute-intensive, the reliance on reliable, uninterrupted electricity has moved to the centre of the AI investment story.
According to the International Energy Agency, electricity usage by data centres has grown at a 12% CAGR over the past five years to about 415 terawatt-hours. This figure is projected to more than double to roughly 945 TWh by 2030, with data centre demand growing over 4X faster than overall electricity consumption across other sectors between 2024 and 2030.
TD Power Systems: A Key Player in the Global Generator Market
TD Power Systems (TDPS) is a leading manufacturer of AC generators and electric motors for power applications. The company operates across power generation, thermal systems, and renewable technologies, and provides customized engineering solutions for data centres, oil fields, and hydroelectric plants. TDPS manufactures generators ranging from 1 to 250 MVA, positioning itself as a global leader in this space.
The global generator market is estimated to reach $73 billion (over Rs 6 lakh crore) by 2029, up from $52 billion (over Rs 4.5 lakh crore) in 2025, per TD Power Systems, supported by data centres, gas-based power generation, and clean energy applications. This is where TDPS comes into the picture, with its share price rising 75% over the last year.
Expansion Plans and Growth Drivers
To support rising demand, TDPS is expanding its manufacturing footprint. A third manufacturing facility in Tumkur is being commissioned in phases and is fully operational from December 2025. The plant is designed to support larger generators, motors, and critical sub-assemblies. The existing plant includes a 25% buffer, enabling short-term capacity growth without the need for new buildings.
The company is also establishing a design and engineering centre in the United Kingdom. The centre aims to bring the company closer to its key global clients, while also promoting innovation, localization, and advanced design compliance. This centre will focus on developing generators in the 50–150 MW range. A prototype machine is expected to be offered to customers for testing and qualification by early January 2026.
Financial Performance and Outlook
TDPS has delivered a strong financial performance, with revenue increasing 42% year-on-year to Rs 824 crore in the first half of FY26. The Ebitda increased 47% to Rs 157 crore, while margin expanded 50 basis points to 18.9%. Net profit rose 46% to Rs 111 crore. The company aims to achieve 20% margins once the third plant reaches full capacity and recovers costs.
At Rs 674 per share, TDPS trades at a price-to-earnings multiple of 50 times, which is a premium to its historical 5Y median multiple (35). However, it trades at a discount to larger competitors such as CG Power (88), Hitachi Energy (111), and GE Vernova T&D (81). Trade-related risks remain a concern, but management has developed a ‘Plan B’ to mitigate the impact of higher import duties if a trade deal is not reached by the end of FY25.
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