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Data centers to be a major growth driver

We recently interacted with the management of Powerica Ltd (PWRL). The management remains highly optimistic on the company’s long-term growth trajectory, driven by a multi-pronged strategy spanning DG sets, data centers and renewable energy. In the power solutions business (expected to grow at early teens), the company believes it is well-positioned to capitalize on the accelerating data-center buildout in India, leveraging its long-standing partnership with Cummins, execution capabilities, and approvals for large-scale data center projects. The management indicated that data center related revenue, contributing to 17–18% of the business, has the potential to scale up exponentially with demand. Simultaneously, the wind power business vertical is expected to witness significant expansion, with the company targeting ~500MW of owned wind assets by FY28 while also executing large EPC projects and developing wind parks through strategic partnerships with GE Vernova. With investments in engineering talent, execution infrastructure and manufacturing already in place, the management expects operating leverage to improve as volume ramps up, while maintaining a disciplined focus on profitability and return on capital, rather than chasing long-term growth. Not rated.

PRWL is a diversified power infrastructure company with over 40 years of experience in providing backup and continuous power solutions. Established in 1984, the company started as a DG set manufacturer to address India's growing power reliability needs and has since emerged as one of the leading Cummins OEM partners in the country. Its core business comprises manufacturing and integrating DG sets ranging from 7.5kVA to 3,750kVA for industrial, commercial, infrastructure and data center applications. Over the years, PWRL has expanded into medium-speed large generators (MSLG) through its partnership with Hyundai, serving critical industries such as nuclear power, fertilizers, chemicals and oil & gas that require uninterrupted power supply. The company has also diversified into the wind energy sector through both IPP and EPC businesses, with a target of reaching ~500MW of owned capacity by FY28. In addition, it operates in highgrowth segments, including data center power infrastructure, Schneider control panel manufacturing, defense solutions and retrofit emission control devices (RECDs). Leveraging strong engineering capabilities, long-standing OEM relationships and turnkey execution expertise, PWRL is positioning itself as a comprehensive power solutions provider with increasing focus on data centers and renewable energy while maintaining disciplined capital allocation and profitability.

Powerica business is largely divided into 2 parts of business

* Generator Set business: Powerica derives ~83% of its revenue from the DG set business, with Cumminspowered generator sets contributing ~70–73% of consolidated revenue. As a leading Cummins OEM partner, the company offers DG sets across 7.5 kVA–3,750 kVA for industrial, commercial, infrastructure and data centre applications, while undertaking in-house system integration and manufacturing of key components. The balance ~10–13% of revenue comes from MSLG (5% of total revenue) and allied businesses, including Hyundai-based medium-speed generators for continuous-duty industrial applications, Schneider control panel manufacturing, defence projects, data centre execution and RECD emission-control solutions, providing diversification beyond the core DG business.

* Powerica's Wind business contributes ~17% of consolidated revenue and operates through two verticals: Independent Power Producer (IPP) and EPC/Balance of Plant (BoP) services. The company owns and develops wind assets while also executing turnkey projects covering land acquisition, approvals and infrastructure development for third parties. Management is targeting ~500 MW of owned wind capacity by FY28 and expects the segment's revenue contribution to increase to ~25% over the medium term, supported by ongoing capacity additions, EPC opportunities and growing renewable energy demand.

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