1 week ago
TD Power and Sterlite Target AI Data Centre Boom
Artificial intelligence needs many powerful computers to work.
Those computers need reliable electricity and fast connections.
TD Power Systems makes generators that can provide electricity directly to data centres.
Sterlite Technologies makes fibre cables and equipment that connect computers and data centres.
Both companies reported strong growth in the first quarter of FY27.
Sterlite had a larger order backlog, while TD Power had more direct exposure to the power shortage around data centres.
The companies are expanding their factories and product offerings.
Their share prices already reflect high expectations.
Investors therefore need to watch whether the companies can deliver their promised growth.
AI-driven data-centre expansion is increasing demand for reliable power and high-speed optical connectivity.
TD Power Systems supplies generators for behind-the-meter power plants serving United States data centres.
Sterlite Technologies provides fibre and connectivity products for hyperscalers, cloud providers and data-centre operators.
In Q1FY27, STL reported Rs 19.1 billion revenue while TD Power reported Rs 6.4 billion.
Both companies have large backlogs but trade at premium valuations that require sustained execution.
- Who
- TD Power Systems and Sterlite Technologies, which supply power-generation and optical-connectivity equipment respectively.
- What
- The companies are being compared as potential beneficiaries of the AI-driven data-centre infrastructure buildout.
- Where
- The opportunity is global, with particular emphasis on United States data centres, the Americas, and facilities in India.
- When
- The comparison focuses on Q1FY27, FY26 and expected growth through FY27-FY30; global hyperscaler capex is projected for CY26.
- Why
- Larger AI computing clusters require dependable electricity, on-site generation and high-speed optical connectivity.
Power-generation exposure
Connectivity exposure
Position in the data-centre chain
Power-generation exposure
TD Power Systems supplies heavy-duty AC generators used by engine and turbine manufacturers in behind-the-meter power plants.
Connectivity exposure
Sterlite Technologies supplies dense fibre cables, connectors and related systems linking server racks and data centres.
Growth advantage
Power-generation exposure
TD Power offers greater exposure to the shortage of reliable data-centre power and has orders from a major United States gas-turbine original equipment manufacturer.
Connectivity exposure
STL has stronger near-term earnings momentum, a larger backlog and growing data-centre and cloud revenue contribution.
Capacity and execution considerations
Power-generation exposure
TD Power is debottlenecking capacity, developing larger generators and targeting revenue capacity above Rs 40 billion by FY29-FY30.
Connectivity exposure
STL plans Rs 5 billion of annual investment for three years and aims to raise factory utilisation above 70%, while increasing higher-margin connectivity products.
Valuation risk
Power-generation exposure
TD Power trades at the higher reported EV/EBITDA multiple of 59.1 times, leaving limited room for execution disappointments.
Connectivity exposure
STL trades at 38.2 times EV/EBITDA, also above its three-year median, so its premium depends on converting its backlog and sustaining margins.
Key facts
- Projected data-centre capacity
- Global capacity is projected to increase from 103 GW to 200 GW by 2030.
- Projected hyperscaler capex
- US hyperscalers are expected to spend around US$700 billion in CY26.
- TD Power Q1FY27 revenue
- Rs 6.4 billion, up 71% year-on-year.
- STL Q1FY27 revenue
- Rs 19.1 billion, up 87% year-on-year.
- TD Power order backlog
- Approximately Rs 22.1 billion at the end of Q1FY27.
- STL order backlog
- Rs 186.2 billion at the end of Q1FY27, including a US$1.11 billion hyperscaler order through FY29.
- Reported EV/EBITDA valuations
- STL traded at 38.2 times and TD Power at 59.1 times, according to the article.
Sources
Related news
CLSA Sees 46% Upside for Sterlite Technologies on AI Demand
US may ban China data centre fibre; Indian makers gain
Indian Pipe Stocks Ride America’s AI Infrastructure Buildout
Beyond Nvidia, power and cooling firms benefit from data-centre boom
India's data centre capacity surges four-fold to 1,575 MW
Anant Raj, Lodha Tap Data Centre Boom as Growth Engine
Indian shares slip as earnings, supply issues drive moves
Top stocks in news: LIC, Britannia, TVS Motor Q1 results
Top 10 Stocks Rated Buy
MOFSL Recommends Siemens Energy for 60% Upside
