Triveni Turbines Ltd - High Quality Engineering Play?

Stock Opportunities Not-so-Hidden Gems
43

Q1 FY27 Earnings Conference Call:

Key Takeaways & Executive Summary of the Call

The Q1 FY27 call was dominated by analyst concerns over the sharp drop in EBITDA margins to 18.0% (vs. 25.8% YoY) and the 35.4% slowdown in domestic order bookings.

Management, led by Vice Chairman & MD Nikhil Sawhney and CEO S.N. Prasad, presented a confident counter-narrative:

  1. The margin compression was a deliberate, temporary “deck clearing” of lower-margin strategic/bought-out scope orders (e.g., NTPC [Upload failed] storage) combined with client-driven export dispatch deferments due to 3x–4x spikes in ocean freight.

  2. High-margin Export Order Inflows (+53.4% YoY) and Aftermarket Backlog (+115.1% YoY) are accelerating aggressively, guaranteeing strong margin recovery in H2 FY27.

  3. The US AI/Data Center boom is generating a massive ~3 GW enquiry book for combined-cycle steam turbines, though conversion cycles remain extended.

Q&A Themes & Reading Between the Lines:

1. The NTPC Project & Q1 Margin Compression

  • Analyst Questions: What was the exact margin impact [Upload failed]rom the NTPC [Upload failed] order and commodity inflation in Q1? Why did margins drop to 18.0% when domestic execution mix was similar to past Q1s?

  • Managment Response

    • The NTPC CO2 project is a technology validation project taken at “negligible and near-zero margins”. Execution peaked in Q1/Q2, carrying a high proportion of “bought-out scope” (30%–70% of contract value) which diluted margins.

    • High ocean freight rates (jumping 3x to 4x) caused international clients to push back FOB dispatches from Q1 to Q2/Q3.

    • Roughly ₹175 crores of the NTPC order remained at the end of Q4; ~40% was executed in Q1/Q2, and the project will hit full commissioning by late Q2 / early Q3 FY27.

  • Reading Between the Lines:

    • Sacrificing Short-Term Margin for Technology IP: TTL deliberately absorbed a zero-margin, bought-out heavy quarter to validate its CO2 mechanical storage technology in India.

    • Freight Risk Shift: Because TTL exports on FOB terms, clients bear the freight cost. When shipping rates spiked, foreign buyers deliberately delayed taking delivery. This temporarily trapped finished inventory and forced TTL to recognize a lower-margin domestic revenue mix in Q1. As freight rates stabilize and deliveries resume in Q2/Q3, these high-margin export revenues will recognize, unlocking strong H2 operating leverage.

2. US Market: Data Center Boom vs. Water Permitting Reality

  • Analyst Questions: Where are the US enquiries coming from? How real is the data center opportunity for steam turbines?

  • Management Response:

    • The US enquiry book has expanded nearly 1,000% from a low base, representing ~3 GW of the global 18 GW pipeline.

    • Over 50% of US enquiries are tied to AI data centers. Because gas turbine manufacturers have 4-to-5 year lead times, developers are adding steam turbines to create Combined Cycle Gas Turbines (CCGT) or using gas-fired boilers to generate immediate steam power.

    • US conversion gestation exceeds 12 months due to stringent water permitting regulations.

  • Reading Between the Lines:

    • The AI Data Center Mega-Trend is Real, but FY28-Bound: Data centers are desperate for power. Simple-cycle gas turbines only yield ~30–35% efficiency, whereas combined-cycle steam additions boost efficiency to ~50%.

    • Permitting is the Bottleneck: Air permits for gas turbines are fast, but water permits for steam cooling towers take over a year in the US. Management is warning analysts not to model sudden US product revenue in FY27.

    • Aftermarket as the US Trojan Horse: The Houston facility incurred a Q1 loss but is expected to break even for full-year FY27, supported purely by high-margin refurbishment and quick-turnaround aftermarket repairs while waiting for massive CCGT product orders to clear U.S. water permits.

3. Domestic Slowdown vs. International Enquiry Explosion

  • Analyst Questions: Why did domestic order inflows drop 35.4%? Is domestic industrial CapEx collapsing?

  • Management Response:

    • Domestic enquiries softened temporarily, and customer decision-making gestation stretched from 6 months to 12 months (a “wait and watch” stance).

    • However, the domestic enquiry pipeline remains solid at ~7 GW, driven by WHR in steel/cement, thermal power plant additions, and ethanol/distilleries.

    • Meanwhile, export enquiries in Southeast Asia, Europe, and North America are booming (+53.4% export order intake in Q1).

  • Reading Between the Lines:

    • Domestic industrial CapEx in small process industries (sugar, textiles, small co-gen) hit a cyclical lull in Q1 FY27.

    • However, TTL’s geographic diversification strategy is working as intended. The surge in international demand (Southeast Asia biomass, European waste-to-energy, US geothermal) easily offsets the domestic lull, shifting the overall order book toward higher-margin export offerings.

4. Multi-Product Pivot: Solutions Over Pure Equipment

  • Analyst Questions: What is the commercial traction for new products like Geothermal, MVR, CO₂ heat pumps, and Organic Rankine Cycle (ORC) turbines?

  • Management Response (S.N. Prasad & Nikhil Sawhney):

    • TTL is not selling heat pumps or Mechanical Vapor Recompression (MVR) as standalone, low-margin products.

    • Instead, they are bundling Heat Pumps + MVRs to replace small packaged fossil-fuel boilers in industrial plants.

    • They are expanding into Organic Rankine Cycle (ORC) turbines to capture low-grade industrial waste heat without using water.

  • Reading Between the Lines:

    • TTL is deliberately executing a margin-accretive strategy: moving up the value chain from a “single-product steam turbine vendor” to an “integrated industrial thermal solutions provider”.

    • Crucially, management emphasized that they will provide these integrated technical solutions “without taking on EPC responsibilities or civil liabilities”. They capture the high-margin engineering/equipment envelope while letting third-party contractors handle risky civil construction.

5. Executive Realignment: Re-Allocating Top Leadership to AI

  • Key Disclosure by Nikhil Sawhney: In Q1 FY27, COO Sachin Parab’s operational role was formally transitioned to focus on “Business Transformation and AI-specific initiatives.”

  • Reading Between the Lines:

    • Pulling a Chief Operating Officer away from day-to-day manufacturing to head AI transformation is a significant corporate move.

    • TTL is actively deploying AI-driven predictive maintenance across its 6,000+ global installed turbine fleet, digitalizing casing hydro-tests, and adopting automated laser hardening.

    • This strategy aims to scale global aftermarket servicing and remote monitoring without linearly expanding engineering headcount, laying the groundwork for software-like operating leverage in the Aftermarket segment over the next 3 to 5 years.

    • ————————-

    • Note: I don’t know why this was flagged. If the reason was that the help of an AI agent is taken, then what is bad in it, are we living in medieval times? I am not promoting anything. I would prefer if someone assigns a reason before flagging it again.

2 Likes
44

There are so many contradicting forecasts/estimates of Sub 100MW. Can anyone please clarify or provide an authoritative figure on how big the market is in India and globally and projected growth rates?

and why did the management start providing ex china and Japan figures and few years ago? Is it to hide unflattering numbers?

And at most the market is projected to grow at sub 5% CAGR in India right? How is the Management planning to deliver double digit growth over the next 5-10 years? Can anyone who has been studying this company help me out, I am new to this company

55PE seems quite steep right? for an industry that’s in a decline. I know the company also has ORC and developing Sco2 storage system. But for the near term to mid term, how will they generate >10% return? Is it through exports especially US?

Doesn’t TTL face high comp from cheap Chinese EPCs, in india they may be protected but globally, how competitve is TTL?

Sorry for so many questions, I am doing a deep dive on this sector. I couldn’t find much substance in Siemens’ prospectus either

Please anyone with deep knowledge answer. Thanks in advance

2 Likes
46

I have been studying this company for a month now so, I will answer based on my understanding, may be @kdjolly can elaborate/correct -

  1. What’s Sub-100 MW market? - I have never seen TTL’s management give a definitive answer backed by independent market research - I found Mccoy 2023 data in DossanSkoda’s prospectus - in 2023 TTL had 14.4% market share in terms of units and 1.1% in terms of capcity (because Chinese state sponsored players dominate >100MW where units are less but capacity is high). TTL is 2nd globally in <30MW (25% share) behind Siemens AG and in 30-100MW Seimens is again no.1 and Mitsubushi is No.2, TTL’s position unclear. Globally the sub -100MW market shrank 28% from 2014 to 2024 to 5.5GW. I don’t have the latest market size in 2026. Domestically it has been shrinking (but non fossil is rising within the shrinking pie except bagasse). In India some reports say TTL is no.1 and some say no.2. Some even say Shin Nippon is no.2 and not Siemens. So TTL is definitely top 2.
  2. As per my observation the management has the tendency to just drop disclosing a particular item when it doesn’t flatter them . But I don’t think this is the case here, TTL’s market is ex - China and Japan so it represents their actual playground.
  3. I don’t think Sub 100MW will grow domestically, infact the domestic product segment has been shrinking year on year. Siemens Ennergy India is putting Zero Capex towards steam turbine segment and they have explicitly said, sub 50MW is a cost competitive segment and they are not interested in small and medium turbine market.
  4. How will they deliver >10% return, well the trend over the last 5 quarters don’t look good - basically all the growth in FY26 came from that one turnkey project or else it would have been flat, in Q1Fy27, while revenue grew, because of low margin project mix, profits fell. Over the short term, as @kdjolly mentioned above the management have received backlog orders that were delayed because of west asian conflict and if american unit stops bleedig then that will contribute positively. Over the medium term 2-5 years - American API orders, data centre orders, American Aftermarket growth, most likely exports carrying almost all of the growth, domestically I don’t see what will change. Maybe Sco2 becoming a viable option. Then over long term >5years, these alternatives might become the growth engine or atleast protect the business - SCo2, Sco2 based heatpumps, heatpump+MVR packager replacing fossil fuel based boilers, ORC for <350C steam, geothermal etc along with export market (american especially)
    5.Yes Chinese EPCs compete and usually win globally and as management has said it TTL doesn’t have that brand recog like Siemens or the price comptetiveness like chinese but Chinese firms usually dominate >100MW market (TTL is #2 in <30MW and #2 globally in terms of units sold). But I don’t think Chinese firms are a threat for the sub 100 domestic market, especially after 2020 and they can’t respond as quicky and broadly as TTL as far as domestic aftermarket service is concerned. New entrants are not a threat, the threat is from existing rivals like Siemens (domestically and globally), DossanSkoda, Japnese and Chinese firms (globally), BHEL (may be for tender offers), there 1 or 2 domestic firms that inhabitat sub 30MW.
1 Like
47

And what is the policy like here? It’s been a minute since I last wrote here on value pickr. Can you share your own substack article? Because I have written in depth on Triveni Turbine and it will answer a lot of questions asked here. @Satishwe

48

REG SELF PROMOTION

Kindly share your entire message directly in the forum—please leave out any links to personal blogs or other sites.

Remove blog links from all current and future posts.

Feel free to list your YouTube, blog, or website in your profile, but don’t include those links within posts themselves.

Post the complete, original text (not an AI‑generated summary) here in the VP forum.

Interested readers can visit your profile to explore your other content.

Refer the guidelines below.

“Spam/Self-Promotional posts pointing to ones own blogs/twits/websites (everyone is encouraged though to share preferred details in their profile sections). If a member has something to say on a business/topic it is to be put down here at VP forums (NOT take the discussion elsewhere)”

2 Likes