Riding the Data Wave: India's Data Center Boom and the Stocks Powering the Revolution

The Digital Surge: India’s Data Center Revolution

India’s journey toward a robust digital economy has catalyzed rapid growth in the data center sector. The expanding adoption of cloud services and artificial intelligence technologies, coupled with favorable government policies, has positioned India as a significant player in the global data center market.

In 2024 alone, India is expected to add around 230 MW of data center capacity, bringing the total to approximately 1.21 GW, as per a Cushman & Wakefield report. Projections by CBRE indicate an even brighter future, with data center capacity poised to reach 2,070 MW by the end of 2025. These advancements reflect India’s burgeoning role as a global data hub, supported by investments exceeding $60 billion over the last six years and anticipated to surpass $100 billion by 2027.

This robust growth has fueled the emergence of Indian companies as global leaders in the sector, with their financial performance and share prices reflecting the immense potential of this industry. Let’s explore five stocks that stand out as key beneficiaries of this transformative trend.

1. Aurionpro Solutions: Driving Tech Innovations

Aurionpro Solutions is a leading provider of solutions in banking, mobility, payments, insurance, and government services, with a strong foothold in data center services.

• Financial Growth: In Q2FY25, Aurionpro achieved revenue growth of 32% YoY, reaching Rs 2.8 billion, with net profit rising 34% to Rs 460 million.

• Market Performance: Its share price has surged over 54% year-to-date, reflecting strong investor confidence.

• Future Outlook: With a robust order book of Rs 11.5 billion and plans for global expansion, Aurionpro is set to achieve over 30% growth in FY25, driven by AI-driven enterprise solutions.

2. Anant Raj: Building India’s Data Infrastructure

Primarily known for real estate development, Anant Raj has made a strategic pivot into the data center sector, planning to transform 5.66 million square feet of commercial property into a 300 MW data center.

• Strategic Partnerships: Collaborations with key government agencies and an MoU with Google for data center infrastructure showcase its strong positioning.

• Financial Highlights: Q2FY25 saw revenue growth of 55% YoY to Rs 5.1 billion, with net profit soaring 75% YoY to Rs 1 billion.

• Market Buzz: Its share price skyrocketed 177% YTD, with analysts predicting a further upside of 31%.

3. Cummins India: Powering the Digital Backbone

Cummins India provides backup power systems crucial for data centers, including generators and alternative fuel solutions.

• Revenue Growth: Q2FY25 revenue grew 31% YoY to Rs 24.9 billion, with net profit increasing 37.5% YoY to Rs 4.5 billion.

• Stock Performance: A share price rise of 69% YTD underscores its market relevance.

• Future Prospects: Double-digit revenue growth and ongoing cost-efficiency measures position the company for continued success.

4. ABB India: Innovating for a Sustainable Future

ABB India delivers essential services like grid connections, power distribution, and cooling systems for data centers.

• Consistent Growth: Q2FY25 revenue increased 5.2% YoY to Rs 29.1 billion, with net profit rising 21% YoY to Rs 4.4 billion.

• Sustainability Focus: The company’s commitment to green solutions and robust demand is driving optimism for long-term growth.

• Analyst Projections: Motilal Oswal forecasts impressive PAT growth of 51% in CY24, emphasizing ABB India’s market potential.

5. Voltas: Cooling Solutions for the Data Era

Voltas, a leader in commercial air conditioning, offers specialized cooling solutions tailored to data centers, a critical component of their operations.

• Growth Trajectory: With investments in India’s data center market expected to cross $100 billion by 2027, Voltas is poised for exponential growth.

• Market Impact: The company’s stock has surged 74% YTD, driven by its strategic focus on high-demand segments.

The Investment Opportunity of a Lifetime

India’s data center market is not just growing, it’s transforming. The sector’s expansion, supported by technological innovation, government initiatives, and robust investment, represents a unique opportunity for investors and businesses alike. The five companies highlighted here exemplify the diverse ways in which businesses are tapping into this lucrative market, making them compelling candidates for long-term investment.

As India continues its digital journey, the data center sector will remain at the heart of this transformation, offering unparalleled opportunities for growth and innovation.