India has emerged as the fastest growing data center market in Asia-Pacific, with a capacity of around 1,600 megawatts of power at the end of 2024, according to analysts.
That’s extra juice to run more servers, networking equipment and cooling systems. And that number could hit 2,000MW by 2026, surpassing Japan’s power capacity and putting India second only to China in the region, says real estate group CBRE.
But serious $$$ will be needed to build that extra capacity — a cool $5.8 billion, according to Puja Jalan, associate director at CareEdge Ratings, in a report on India’s data center capacity.
The flood of investment to build these data centers is expected to benefit the supporting ecosystem such as utilities, land and equipment, Rohit Luthra, a technology investor, and co-founder of data center firm Progression, tells MONIIFY. And that represents a major opportunity for investors.
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How do you MONIIFY this?
While there are no listed companies in India dealing solely with data centers, it’s the supporting industries — such as real estate, power and cooling systems — where the play lies.
“With each megawatt added, several adjoining services companies make money,” says Vinod Saran, an analyst in the digital infrastructure practice at Avendus, an investment bank.
These include Anant Raj, a real estate company that embraced the cloud boom early. Anant Raj has around 28MW of operational capacity currently, which it aims to scale to 300MW in five years, backed by a plan to raise $230 million from the market.
The company, which entered the cloud business in 2024, saw its stock jump nearly threefold last year. Financial services firms Motilal Oswal and Emkay recently initiated coverage with “buy” ratings, and projected over 30% upside for its stock.
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Techno Electric is another company which has diversified into the data center sector. The company, which specializes in building and managing transmission lines and power infrastructure for utility companies, has committed $1 billion to develop 250MW of capacity by 2030.
It’s also positioning itself as a partner for other firms developing data centers by providing solutions and services from start to finish. Its revenue and profit grew 80% and 45% respectively last fiscal year, while its stock doubled over 2024.
Then there’s E2E Networks, which provides cloud infrastructure and artificial intelligence and machine learning tools built on Nvidia’s processors. The company doubled its sales and profits in the most recent quarter. Its stocks? A fivefold surge in 2024.
In a major vote of confidence, construction giant L&T acquired a fifth of the company for $120 million late last year.
Finally, there are the corporate giants like Reliance, Adani, L&T and Airtel. However, given the scale of their core businesses, their push toward data centers may not immediately show up in earnings or the stock price.
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What’s the bigger picture?
India generates a mountain of internet traffic, but its growth isn’t driven by sheer volume alone. Look at these drivers:
- Since 2018, India has mandated that all financial data must stay within the country.
- A new policy’s in the works that will extend this rule to user data from large social media and tech platforms.
- India is spending $1.2 billion to create its sovereign cloud capacity, snapping up thousands of graphics processing units.
According to a 22 January report by India’s IT ministry, the country’s digital economic growth is expected to outpace the overall economy, and make up nearly a fifth of its national income by 2030.
CBRE agrees, noting that India’s data centers show “significant under-penetration” compared to developed economies. For example, the US has 51 data centers for every 1 million users, while China has four data centers per million users.
India? A measly one data center per million users. And playing catch-up is going to take a lot more juice.
Edited by Victor Loh and Tim Hume. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
