India's data centre industry has experienced explosive growth, with IT load capacity expanding from 350 MW in 2019 to 1.5-1.6 GW in 2025, representing a 29% compound annual growth rate that significantly outpaces the global average of 20%. This accelerated expansion has enabled India to increase its share of global data centre capacity from 1.5% to 2-3%, positioning the country as one of the fastest-growing markets worldwide. The structural drivers behind this growth include cost advantages—construction costs at $6-7 million per MW versus $10-18 million in developed markets—government policy support through Digital India initiatives, and surging demand from cloud adoption and AI workloads.
HFCL has executed a remarkable business model transformation, with product revenue share surging from 27% in FY21 to 66% in FY26, targeting 80%+ by FY29. This strategic shift from low-margin turnkey projects to margin-accretive products has driven a significant EBITDA turnaround, with Q4 FY26 EBITDA reaching ₹336.19 crore. The telecom products category delivered 26% PBT margin in FY26 and an impressive 40% PBT margin in Q4 FY26, while turnkey losses are reducing as the NFS contract exits its warranty period. Management expects 3-4% overall margin expansion based on current run rates, with data center interconnect solutions expected to generate ₹400-500 crores in the current year. Transcripts +5
Sterlite Technologies has emerged as a major beneficiary of the AI data centre boom, securing a landmark $1.11 billion order from a US hyperscaler for optical connectivity products running through March 2029. This order win has catalyzed a 706.67% one-year stock return, far exceeding the 488% surge mentioned in market commentary. CLSA projects a 49% EBITDA CAGR between FY26 and FY29 based on this order, which strategically expands Sterlite's presence in AI data centers and improves future growth visibility. The company's Neuralis portfolio, featuring ultra-high-density fibre connectivity solutions, positions it as an early mover in AI-driven infrastructure, though valuations remain elevated with a trailing P/E of 514x.
Netweb Technologies has established itself as India's only full-stack domestic provider for high-end computing systems, capitalizing on the government's commitment to building indigenous AI compute capacity. The company reported a current order book of ₹2,400 crores with a substantial pipeline of ₹4,400 crores, bringing total opportunity to approximately ₹6,500 crores. The AI Systems segment delivered exceptional performance, growing 459.6% year-on-year and contributing 43.4% of total operating revenue in FY26. Management has provided revenue growth guidance of 35-40% for FY27 and EBITDA margin guidance of 13-14%, supported by the government's ₹103,000 million outlay for the IndiaAI Mission. Transcripts +10
GE Vernova T&D India has leveraged deep localization investments to become a cost-competitive export base for air-insulated and gas-insulated switchgear serving Europe, Middle East, and Africa markets. The company's "India for the World" strategy focuses on deepening localization, enhancing competitiveness, and increasing the share of high-value export orders manufactured from India. Similarly, CG Power secured its largest-ever single order worth ₹900 crore from US-based Tallgrass Integrated Logistics for power transformers specifically engineered for hyperscale data center applications, marking its formal entry into the global data centre vertical. Apar Industries is investing ₹1,300 crore in capacity expansion, including ₹800 crore for a greenfield cable division facility, to manufacture sophisticated cable products tailored to US data centre requirements and achieve its target of ₹10,000 crore in segment revenue. Transcripts +5
Transformers and switchgear account for 15-20% of total capital expenditure in both traditional and AI-focused data centres, creating substantial opportunities for power equipment manufacturers. Nomura estimates that CG Power will deliver a 31% earnings-per-share CAGR between FY26 and FY29 driven by this structural demand. Siemens India expects India's installed data centre capacity to expand from 1.5-2 GW currently to 10 GW over time, with the company currently catering to 10-20% of total project spending while ranking among the top one or two suppliers in several product categories. Siemens' competitive advantages include strong positioning in electrification, capability to conduct simulations and design complete data centre facilities, and comprehensive integrated building management systems. Transcripts +1
Despite strong growth prospects, Cummins India faces margin pressures from rising commodity prices, particularly pig iron and copper, even as data centres contribute 30-35% of its power generation segment revenue with expected 20% CAGR growth between FY25 and FY29. Management noted that copper prices have reached around ₹1,320 per kg, with the alternator business being hugely impacted by copper price fluctuations. While ferrous and pig iron have remained quite benign, contributing partially to gross margins, the company faces implementation lags in passing through commodity increases to customers. Nomura has maintained a Neutral rating with a target price of ₹6,000, citing these margin pressures expected to persist through the first half of FY27 despite the company's 8-10% price increases. Transcripts +4
Brokerage firms have taken markedly different approaches to risk assessment and valuation. Nomura assigns an Outperform rating to GE Vernova T&D India with a target price of ₹5,675 (17% upside) based on its export competitiveness and dual growth drivers from domestic data centre demand and EMEA grid modernization. However, Nomura maintains a Neutral rating on Siemens India despite acknowledging strong long-term demand outlook, likely due to valuation concerns with P/E of 48.21x and more cyclical exposure to industrial capex cycles. For ABB India, Nomura has assigned a Reduce rating despite the company securing large order inflows worth ₹7.6 billion including Rs 3.6 billion for data centre equipment, citing extremely rich valuations with P/E of 50.87x and global parent dependency limiting autonomous growth strategy.
CLSA's aggressive bullishness on Sterlite Technologies, with target price raised from ₹405 to ₹655 (62% hike), contrasts with Nomura's conservative 14% upside target for Apar Industries, revealing different risk appetites toward hyperscaler dependency. CLSA is willing to pay premium valuations using 50x PE on one-year forward earnings, citing improved order visibility and stronger order book from the $1 billion hyperscaler order. Nomura takes a more conservative view, emphasizing execution risk, competitive intensity, and customer concentration concerns that justify valuation discipline despite strong growth prospects. This divergence highlights the fundamental investment decision: whether to pay premium valuations for companies with strong hyperscaler relationships and order visibility, or maintain valuation discipline emphasizing execution and concentration risks.
The multi-year growth phase in India's data centre industry, fueled by digitalization, cloud adoption, and AI demand, creates sustainable revenue visibility for companies across the infrastructure value chain. Nomura estimates visibility on more than 15 GW of incremental data centre capacity over the next decade, expecting India's total capacity to reach nearly 7 GW by 2030, implying a CAGR of around 30% between 2025 and 2030. Delivery timelines of 2-4 years have created a favorable environment for equipment manufacturers, with strong demand and limited supply resulting in multi-year order backlogs providing revenue visibility through FY27-FY29. The competitive landscape remains highly consolidated, with domestic suppliers commanding more than 40% market share in key segments, supporting premium pricing and healthy margins.
