Despite generating 20% of global data, India’s share of data center capacity is only 3%.
Jefferies analysts project that India’s data center capacity will rise twelvefold, reaching 17 GW by FY24-30E, up from the current 1-1.5 GW.
ABB recently introduced ABB Ability Data Center Automation, a robust industrial solution designed to manage on-premise and hybrid cloud data center environments.
Siemens has partnered with NxtGen, one of India’s largest colocation data center providers, to help them scale up their data center operations securely and efficiently.
Industry analysts note that Siemens has the largest exposure to data centers in their coverage universe, accounting for 40-45% of project costs.
Data centers are specialized facilities that house mission-critical computing and networking equipment, such as servers, storage systems, and telecommunications infrastructure. They are the backbone of the digital world, enabling the storage, processing, and distribution of vast amounts of data.
India’s data center industry is experiencing rapid growth, with its capacity expected to double to approximately 2,000 MW by 2026, according to CareEdge Ratings. This expansion is anticipated to attract substantial investments, with an estimated capital expenditure of Rs 50,000 crore over the next three years.
Despite generating 20% of global data, India’s share of data center capacity is only 3%. The adoption of technologies like 5G, IoT, and AI is expected to significantly increase data demand, potentially tripling data consumption in the country.
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Jefferies analysts project that India’s data center capacity will rise twelvefold, reaching 17 GW by FY24-30E, up from the current 1-1.5 GW. Siemens and ABB are expected to be among the major beneficiaries of the increased power consumption driven by data center capacity additions in India and globally, according to Jefferies.
India’s data center capacity is growing over 50% annually and is expected to meet 6% of demand by 2030, up from less than 1%. Meanwhile, the US and Europe are upgrading their grids to handle increased power demand and the green energy shift, benefiting transmission equipment vendors due to strong demand.analyst mentioned.
Jefferies analysts highlight that this rise in power consumption will boost Indian companies through capex spends and export opportunities. Siemens has the largest exposure to data centers, covering 40-45% of project costs, followed by ABB at 20-25%. L&T, Voltas, and Bluestar each have a 15% exposure.
Here are three stocks that might benefit from the growth of data centers in India
ABB India Limited, a leading power equipment manufacturer, offers a comprehensive range of engineering products, solutions, and services in automation and power technology.
ABB recently introduced ABB Ability Data Center Automation, a robust industrial solution designed to manage on-premise and hybrid cloud data center environments. This solution provides advanced control, monitoring, and optimization capabilities for mission-critical data center infrastructure.
In 2023, ABB launched the MegaFlex DPA (Decentralized Parallel Architecture) UPS solution for the Indian data center market.
Over the past six months, ABB India Ltd. shares have surged by 80%, and over the last year, they have gained 97%. The company boasts a market capitalization of ₹1,80,098 crore. On Friday,ABB shares closed at ₹8,501 apiece.
ABB India generates 38% of its revenue from its electrification business, another 38% from the industrial motion segment, 21% from the industrial automation segment, and 3% from the robotics and discrete automation segment.
The company’s operational revenue increased by 27% year-on-year, rising from ₹2,411 crores in Q4FY23 to ₹3,080 crores in Q4FY24, while net profit soared by 87%, from ₹245 crores to ₹459 crores.
Schneider Electric Infrastructure Limited specializes in the manufacturing, design, construction, and servicing of technologically advanced products and systems for the electricity network.
Recently, Schneider Electric inaugurated a new manufacturing facility in Bangalore, India, with an investment of ₹100 crore. The factory, which covers approximately 6.5 acres, focuses on producing innovative cooling products and solutions for data centers, telecom, and commercial/industrial applications.
The new facility is set to strengthen Schneider Electric’s global supply chain, with 85% of the manufactured products intended for export. Company aims to meet the increasing demand for cooling solutions in the rapidly growing data center ecosystem, both domestically and globally.
The company plans to invest ₹3,200 crore by 2026 to expand its presence in India. Schneider Electric’s latest venture is a strategic move to enhance its manufacturing capabilities and support the global data center market from India.
Schneider Electric Infrastructure Ltd. shares have delivered a return of 113% in the last six months and 245% in the past year. The company has a market capitalization of ₹21,136 crore. On Friday, Schneider Electric Infrastructure shares closed at ₹873 apiece.
Operational revenue increased by 15% year-on-year, from ₹410 crores in Q4FY23 to ₹471 crores in Q4FY24. However, net profit decreased by 93%, from ₹44 crores to ₹3.24 crores.
Siemens Limited provides a range of products and integrated solutions for various industrial applications. These include manufacturing industries, process industry drives, intelligent infrastructure and buildings, efficient and clean power generation from fossil fuels, oil & gas applications, and electrical energy transmission and distribution for passenger and freight transportation.
Siemens has partnered with NxtGen, one of India’s largest colocation data center providers, to help them scale up their data center operations securely and efficiently. Industry analysts note that Siemens has the largest exposure to data centers in their coverage universe, accounting for 40-45% of project costs.
Schneider Electric Infrastructure Ltd. shares have increased by 95% over the past six months and 109% over the past year. The company has a market capitalization of ₹2,76,615 crore. On Friday, Siemens shares closed at ₹7,710 apiece.
The company’s operational revenue has risen by 19% year-on-year, from ₹4,465 crore in Q4 FY23 to ₹5,314 crore in Q4 FY24, while net profit has increased by 74%, from ₹516 crore to ₹896 crore.
Cummins India Ltd, a part of the Cummins Inc. Group USA, designs, manufactures, distributes, and services diesel and alternative fuel engines ranging from 2.8 to 100 liters. The company also offers diesel and alternative-fueled power generator sets of up to 3000 kW (3750 kVA), along with related components and technology.
Data centers require substantial backup power, a demand Cummins meets with its extensive expertise in the field. As a leading global provider of backup power solutions for the data center industry, Cummins India recently completed a significant order for data center generator sets during Q3 FY24.
The company estimates potential orders from data centers in India to be around ₹500 crore annually. Cummins reported that data centers contribute to 10% of their FY24 power generator segment revenues (4% of total revenue).
Cummins India Ltd shares have delivered a return of 105% in the last six months and 116% over the past year, with a market capitalization of ₹1,12,543 crore. On Friday, Cummins shares closed at ₹3,962 apiece.
The company’s operational revenue has increased by 20% year-over-year, from ₹1,926 crore in Q4FY23 to ₹2,316 crore in Q4FY24. Meanwhile, net profit rose by 77%, from ₹318 crore to ₹562 crore.
Written by Omkar Chitnis
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