TD Power Systems (TDPOWERSYS)

FairStock Score: 50/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Outstanding profitability with ROE of 25.87% and ROCE of 30.35%
• Nearly zero debt with Debt/Equity of 0.04, providing strong balance sheet cushion
• Consistent growth: sales up 26.36%, profit up 25.35%, and 5-year revenue CAGR of 16.58%
• Healthy Piotroski F-Score of 7/9 indicates solid fundamentals

Concerns

• Extremely rich valuation: P/E of 64.26 and P/B of 21.77 leave no margin of safety
• Poor cash conversion: FCF of only ₹6 Cr versus net profit of ₹56 Cr in latest quarter
• Low promoter holding of 26.87% raises minority shareholder alignment questions
• Negligible dividend yield of 0.14% offers no income cushion to investors

AI Analysis

When I look at TD Power Systems, I see a business with impressive economics but a price that makes me pause. The company earns a return on equity of 25.87% and a return on capital employed of 30.35%, with virtually no debt—debt-to-equity is just 0.04. That is the kind of capital discipline I admire. Sales grew 26.36% and profits 25.35%, and the five-year revenue CAGR of 16.58% shows sustained momentum, not a one-quarter wonder. The latest quarter adds ₹443 Cr in sales and ₹56 Cr in net profit. The Piotroski F-Score of 7/9 suggests a healthy financial position. But I cannot ignore the gap between reported profits and cash. Free cash flow is only ₹6 Cr against a net profit of ₹56 Cr—that is a red flag for a value investor. Earnings must eventually convert to cash, and here that conversion looks weak. The valuation is even more concerning. At ₹1,070.45, the market cap is ₹14,111 Cr, which is 64.26 times earnings and 21.77 times book value. The PEG ratio of 2.49 tells me the growth is already more than priced in. With promoter holding at just 26.87%, I worry about minority-interest alignment. The stock has fallen from ₹1,530 to ₹1,070, and even after that fall, the dividend yield is only 0.14%. This is a fast-growing, high-quality franchise, but I am a buyer only at a price that offers margin of safety. At this price, I would rather wait and watch.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer