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Beneath this 32nd edition of investor’s edge the real story of the AI revolution is being told - not in algorithms, but in orders for steel pipes and power generators. The AI Gold Rush Is Fueling an Old-School Industrial Boom. Also we discuss the Q2Fy26 result of an interesting company that is proving that you don’t need to be a “Tech Giant” to compete in AI.
Welcome to Investors’ Edge - your daily dose of business insights, trends, and updates that matter. In this space, we go beyond the headlines to explore the evolving world of companies and industries. Here we bring you thoughtfully curated insights, sharp observations, and key developments shaping the business landscape.
While headlines fixate on the digital ether, a closer look at recent financial reports reveals surprising, tangible truths about how this shift is reshaping our physical world. This article distills Q2 results of 3 very interesting companies and impactful takeaways from their concalls, exposing the counter-intuitive trends and second-order effects you won't see elsewhere.
The most profound ripple effect of the AI boom is not in code, but in concrete and steel. The explosive growth of artificial intelligence is creating a voracious demand for decidedly non-digital goods, igniting a boom for industrial manufacturers. The reason is simple: power. The "mushrooming of data centers" required for AI are described as "energy guzzlers" that cannot rely on today's strained power grids.
The mushrooming of energy-intensive data centers is creating substantial new demand for gas pipelines
“At this point in time, as you know, we have a very strong order book in America. I am very pleased to announce and report that yesterday we received two more orders from our two large customers in America, all totally amounting to more than $715 million dollars. This is one of the largest orders we would have received in the last couple of years. This is a very clear indication that the American market stays very strong, buoyant, and being a local there, being one of the largest pipe manufacturing companies, we are getting benefited out of it.
Primarily, if you see, there is a paradigm shift which is now happening in America. Earlier, we were all talking about the Permian gas going to the Gulf Coast for LNG exports. We are now seeing a shift apart from the LNG exports that are happening; we are also now seeing a shift because of the mushrooming of the data centers which is likely to happen in America. These data centers are energy guzzlers. And each data center requires a huge, dedicated power supply. And that power supply requires a huge amount of gas for generating that power.
So this is one major shift which is now capturing the American market and I think this sustained growth of data centers, coupled up with AI and the leadership which America wants to have in this particular field, is giving us a sort of a clear visibility for the next three to five years, if not more. Conservatively, if we look at it, there are more than 2,050 data centers which are being discussed at this point in time. This is a very conservative estimate I am sharing. These numbers are varying anywhere between 200 to 1,200, but realistically, we feel that there is a significant number of data centers which are going to come up and along with that there will be a huge demand for gas which is going to come up.
We have to also understand that the energy grid system in US is not able to meet this type of requirements, which means that if these data centers have to grow and if they have to thrive and they have to deliver and perform, they are putting up their own captive power plants and those captive power plants are completely dependent on gas. For those gas to transport from the Permian Basin, these lines are going to come up. So this is a new value chain which seems to be emerging into America and which is over and above our LNG export. I think these two streams of business—the LNG export and the”
— Vipul Mathur (MD, CEO & Executive Director, Welspun Corp)
And this AI boom is not just narrative but also visible in numbers where these 3 companies have reported upbeat earnings in Q2 reporting strong revenue and profitability growth + strong order booking & order book growth & new significant deal signings. Let’s go company by company and try to breakdown what is moving the needle here for this “Indian proxies to the AI boom”
demonstrated turbocharged growth, leading to a revised upward revenue guidance of ₹18 billion for FY26 and an initial forecast of over ₹20 billion for FY27. The surge is driven by "extremely high" demand for its gas turbine and gas engine business from the US and Europe, directly linked to the power requirements of data centers and for grid stabilization.
Here demand is not the issue for company but the ability to execute in time and with quality is key to win against the competition
“The competition that we face in international markets, in the generator business, we face competition against our competitors who are large multinational companies. All the big names are there. We certainly have our own advantages. We deliver fast. We have a low cost. But, you know, everyone has a lot of business, everyone is full. So, I think that right now the situation is that those who have capacity, those who can deliver faster are getting more business.”
— Nikhil Kumar (MD, TD Power Sys)
Management is confident in its ability to meet this surging demand, stating it will "never be in a situation that we will be short of capacity.
“We will never be in a situation where we will be short of capacity. We will not let that happen. The current capacity, you know, we constantly find ways to push our capacity. So, for example, without the third plant being fully operational, we have already ramped up our production very significantly. The third plant will be fully commissioned in this quarter, and it will be fully in production for us. Then we will see a ramp-up in our production in sales in Q4, further compared to what we are expecting in Q3. There is a lot of scope for us to push this number even beyond 2,400 to 2,500. We have done a lot of capacity management once again with some further debottlenecking. We do not expect to make any major investment up to FY28. Of course, if the demand further pushes the requirement to go beyond 3,000 crores, then we have enough land. We have enough buildings also. We have created 25% extra space in each building so that we can expand capacity. We can put more machines after 25% in the existing building. So, we do not have to create new buildings. We have taken that buffer space in the existing new factory. So, I do not see a problem of capacity, honestly speaking, and that is the last thing on my mind right now.”
— Nikhil Kumar (MD, TD Power Sys)
Guidance upgrade citing strong order book inflow
“Order booking in Q3 will be very strong, and we will end this quarter with extremely strong and good order booking numbers. Currently, what we are seeing is that we are ramping up our order booking to an average of 550 crores per quarter, which we will sustain into next year. This gives us an indication of what the expected business could be on a minimum basis for next financial year.”... “ the revised guidance for the current year is 1,800 crores, and the initial guidance for next year is over 2,000 crores.
— Nikhil Kumar (MD, TD Power Sys)
An apt time for the company to gain considerable market share from the ability to move faster than the competition
“In this current environment where all generator manufacturers worldwide are full, I think it is a great opportunity for us to actually get more market share because we have taken the decision to put up the first-class new capacity where we know that our competitors have not done that."
— Nikhil Kumar (MD, TD Power Sys)
Achieved its highest-ever quarterly EBITDA of ₹626 crore, underpinned by a record-high consolidated order book of ₹23,500 crore, providing clear revenue visibility for the next two or more years. A paradigm shift in the US market is a primary growth catalyst; beyond LNG exports, the mushrooming of energy-intensive data centers is creating substantial new demand for gas pipelines.
The company has already secured a significant order for this new value chain of demand for pipes for gas pipelines
“There are multiple opportunities which are emerging even at this point in time and I am very sure that in times and weeks and months to come, we would have many more opportunities coming up on the table. With this booking in hand, our Little Rock mill is completely booked till FY28, and as I mentioned earlier, we are still seeing a continued demand. So the US continues to be a very strong focus market and we being one of the largest players, one of the most established and most credible players, I am sure that we will be able to leverage our proposition.”
— Vipul Mathur (MD, CEO & Executive Director, Welspun Corp)
Despite aggressive CAPEX, Welspun maintains a healthy net cash position, reflecting strong operational efficiency.
“Our guidance is a factor of our order book and its execution timelines. Right, I may
have orders expanding over a couple of years, but all those orders have to be delivered into a particular time. So, when we factor all those things—which order from which mill, from what location, to which customer, in what timeline—I think all these components become the factor of our guidance and accordingly we have given the guidance.
So, you are right, H2, the second half of the year, is definitely historically has been better than the H1 part of it and that is what gives us a reasonable amount of confidence that since we have already received, we have almost achieved our mid-year guidance, I am sure there is no reason why we should not be able to accomplish or exceed the guidance given for the full year.
But are we going to change it drastically? The answer is no, because there are certain orders which have already been factored for and they need to be executed in time. This question will become more relevant for the next financial year when we will sit down and finalize the business plan for the next financial year, keeping all the pending businesses in mind and how we are going to execute that. Second, next year also we would have additional capacities which will come on screen, and to that extent, as I said earlier, we will see a growth in volume, growth in revenue, and also growth in margins, as well as growth in guidance as well. So that is how we would like to play around with this.”
— Vipul Mathur (MD, CEO & Executive Director, Welspun Corp)
India Market Outlook: The Indian market is expected to see a strong rebound.
Water Sector: Demand has been depressed due to a fund crunch, but this is expected to resolve in early 2026. Mega river-interlinking projects in states like Madhya Pradesh, Maharashtra, and Rajasthan could create demand for 4-5 million tons of pipe.
“There are huge projects which are being discussed at this point in time for water. Primarily, they are more around interlinking of rivers and distribution. We are seeing states like Madhya Pradesh, states like Maharashtra, and states like Rajasthan which are taking the lead in terms of capturing interlinking of rivers. All put together, the demand between all these three states put together could be in excess of almost 4 to 5 million tons of pipe over the next couple of years time. With our presence in Gujarat, our presence in Madhya Pradesh, and our ability to service Rajasthan from either of these states, I think Welspun is very well positioned to capture this upcoming demand of interlinking of rivers. Apart from interlinking of rivers, there is also a huge push which is going to come up for distribution across all these three states, and that is where we see that the subdued demand which our DI pipe sales has seen in the last one or two quarters is going to rebound.”
— Vipul Mathur (MD, CEO & Executive Director, Welspun Corp)
Oil & Gas: A strong push for natural gas pipeline networks continues, with robust demand for both domestic distribution and export-oriented projects from India.
“As regards oil and gas in India, we are seeing a huge push coming up for the development of natural gas pipelines. We understand that the global price of natural gas is likely to go down over a period of time, which will be extremely beneficial for an energy-hungry nation like India. We are very confident that once those prices come into a very attractive range, which could just be a matter of time, there will be a huge demand for LNG for the gas pipelines network which will be developed here in India. We are seeing a strong demand already in place for our small diameter pipes, which are the ERW pipes used for city gas distribution. We are seeing a lot of work happening in many geographical areas.”
Reported exceptional financial results, with revenue growing 34% and net profit nearly doubling year-on-year. This performance is fueled by its strategic platforms, eMACH.ai and Purple Fabric, which are securing large, multi-million dollar "Destiny deals" and expanding the company's deal funnel to over ₹12,000 crore
A calibrated investment in the US market is yielding significant growth, and the company is doubling down on its AI capabilities with a ₹130 crore investment in its Purple Fabric platform, which management positions as a competitor to Palantir.
“I think you should attend a master class first—the Purple Fabric master class—to understand what AI is. It is a completely different line of business. What does cannibalization mean to me? So, sorry to be slightly harsh on this call. I think we are communicating the master class on Purple Fabric. It is such a differentiated product against Palantir. It is the biggest opportunity an investor can have, and if you do not understand that and assume something else, I think we have a very serious issue as an investor to understand what product your company has made which is compared to Palantir. So, you should study Palantir, and you should study my master class, which is available on YouTube, to understand what Purple Fabric is.”
(https://youtu.be/QK27658JXIU?si=ZqLCv20V-UkBPG10)
— Management Intellect Design Arena
The synergistic platforms eMACH.ai and Purple Fabric are the primary drivers of growth, enabling enterprise-wide digital transformation for financial institutions. The company is targeting ₹200 crore in revenue from Purple Fabric in the current fiscal year.
“Let me now speak about the accelerating growth we are witnessing with our two synergistic platforms, eMAc.ai and Purple Fabric. Together, they are powering enterprise-wide transformation at scale, enabling financial institutions to embrace intelligent, composable, and open architectures that deliver measurable business outcomes. In Q2 of the current financial year, Intellect recorded 18 new deal wins, including 11 multi-million dollar Destiny deals. These are large strategic engagements that span multiple modules and represent deep, long-term partnerships with some of the world's leading banks and financial institutions. In parallel, we enabled 22 successful digital transformations this quarter, validating not only the breadth of our offerings but also our delivery excellence. Looking at the demand side, our global deal funnel has now crossed 12,000 crore. This represents both the depth of opportunity and the strategic nature of our engagements.
— Management Intellect Design Arena
Strategic leadership hires and a major new R&D facility in Siruseri underscore a clear focus on scaling its high-value, IP-led offerings globally.
Management draws direct comparisons to high-value competitors
“If Manish speaks for a few minutes, it is about each industry segment to understand that customer desirability. Then we moved to first principle thinking. First principle thinking is why the bank exists, because the event exists in the company. So, we do a fundamental shift in the way we design our product than my competitors do. I do not want to compare with Tesla, but the way Tesla has challenged the initial starting first principle thinking they applied in Tesla, we applied it in banking technology. The six first principles any bank will require are: event, microservices, API, cloud, headless, and AI. And we invested all the money around making that perfect, composable, and contextual. For the last five years, you have been hearing the same story. Initially, you were not understanding what is composable and contextual; it was labeled when we put composable and contextual in 2020. It took five years for them to come to reality, and that investment is there. So, the differentiation is design thinking and first principle thinking are the way we design the product, and that is why we are able to take on competition one by one. We are not jumping all of it together. We are saying first take one space, then take the next space, then you take the next space, and then take a leadership there”
— Management Intellect Design Arena
Designed for 20% growth year on year and with this a faster Ebitda growth as investment paves off
“We are designed for 20%. We design for 20%. We achieve higher or we achieve lower. You do not beat us when we are growing 10%. So, it always happens in this industry when we grow a few quarters less and a few quarters higher. We stay at 20% design growth. There is no need of depicting any numbers there. If 20% growth is happening, the margin should grow better.”
— Management Intellect Design Arena
We are undermining the power of AI as an agentic power.
“I think people are not understanding AI. A lot of us understand the AI world as agentic. AI is not just agentic; AI has changed the world. It is a new way of working in this world where every manager has to work with AI augmentation in your job. As an analyst or as an investor, how many places are you using AI in seriousness, rather than just ChatGPT as a conversational agent? It is a new way of working in this era, and people are not realizing it. When we have 9,000 agents in Intellect, it is not that they are creating operational excellence or they are doing a part and parcel of their day-to-day work. They are thinking like that. So, in the next three years, AI will change the entire way a lot of businesses which you are evaluating today will change dramatically differently in the next three years. We are undermining the power of AI as an agentic power.”
— Management Intellect Design Arena
R&D and consistency is the core of everything
“I think our strength is R&D.; 1,200 research engineers working—how many companies have 1,200 research engineers given the freedom of working together? And if you look at the average tenure in the company, it is so phenomenal that everybody just works like a team of research engineers. We have made a lot of mistakes. It is not that we do not make mistakes. I acknowledge that in the AI space from 2016, we did not succeed in the first three cycles. From 2016 to 2018, we did not succeed. From 2018 to 2020, we did not succeed. It takes that amount of resilience for a research team to work. Research is a completely new paradigm for the Indian IT industry”
— Management Intellect Design Arena
The digital gold rush, it turns out, is forged in steel and powered by gas. As the Q2 scorecards for Welspun Corp, TD Power Systems, and Intellect Design Arena reveal, the AI revolution isn't an abstract concept floating in "the cloud." The cloud itself has a massive, physical, and power-hungry footprint, and building it is fueling an old-school industrial boom.
While the headlines chase the chipmakers and software wizards, these Indian proxies are capturing the powerful, second-order effects that are just as transformative—and perhaps more tangible. They are the ones selling the "picks and shovels" in this new economy.
The key takeaway for investors is clear: the most profound opportunities of the AI era may not be where everyone is looking. They're hidden in plain sight—in the industrial order books and the R&D labs of companies building the essential, unglamorous, and indispensable backbone of our digital future.
Disclaimer - This is only for educational purposes and not a recommendation to buy or sell
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