Investment theme: turnaround
Industry type: Cyclical – Capital Goods
TD Power Systems(TDPS) is one of the leading manufacturers of AC Generators with output capacity in the range of 1 MW to 200 MW for prime movers, such as steam turbines, hydro turbines, diesel engines, wind turbines, gas engines and gas turbines. Co has tie ups with global OEMs to manufacturer and supply generators. TDPS is market leader in domestic market for sub 52MV generators. Company has 3 manufacturing base in Bangalore of which one is dedicated capacity for large generators with capacity 52MV-200MV. EBITDA margin – 15+%
TDPS is also into EPC and Projects business. Management ventured into these businesses to demonstrate capability of its generators when company did not have any products references during initial years. Management has ramped down projects business and will fully exit EPC business by Q1FY16.
EPC – currently loss making, will exit fully once they commission its last 2 projects by q1FY16. During FY15, EPC division posted EBITDA loss of 24Cr on rev of 157cr.
Projects (TG Island) – Except Japan subsidiary, all other business was ramped down during past 2 years as this was resulting in competition with existing customers. May close entire business once existing order book is over - management is yet to take a call.
EBITDA margin: ~5%
Manufacturing generator is core strength for TDPS and management expects to earn 15%+ margin on current order book. As company fully exit loss making EPC business and execute profitable generator manufacturing orders, TDPS could potentially turn profitable with health return ratios.
Market Cap: 1023Cr.
Cash: 272 Cr (~60-65cr is with EPC subsidiary which would be used to pay payables)
Pending order book: 464.4Cr (manufacturing: 339.4cr, projects: 112.7 Cr, EPC: 12Cr)
Attaching VP business quality template.
Disc: TDPS_VP-Business-Quality-Ver3 (2).xlsx (39.2 KB) Invested.