Which Companies Make Data Center Equipment in India?

The data centre boom in India is well under way.

These are facilities that house the technological infrastructure that store, process, and manage colossal amounts of data. They are also known as data factories of the world.

Companies store massive amounts of information in data centers. These centers provide reliable power, cooling, security, and connectivity. They are also designed to withstand natural disasters such as hurricanes or earthquakes.

These unassuming structures work tirelessly behind the scenes to ensure the seamless functioning of the technologies we heavily rely on. Without them, you wouldn't be able to chat on WhatsApp or initiate a UPI transaction or binge-watch your favourite show on Netflix.

Data centres are becoming increasingly important to businesses. Businesses today are data driven and this means that data centres are needed to house servers.

A report published in June 2023 by Colliers, a commercial real estate company, states that India's data centre inventory will double to 20 m sq. ft by 2025, from the current 10.3 m sq. ft. This will be led by increased adoption of smart devices, e-commerce, and cloud services.

A joint report by the Confederation of Indian Industry (CII) predicts that by 2026 data centres are expected to fetch investments up to US$ 10 billion (bn).

At present, Mumbai accounts for the largest chunk of the data centres at 49%, benefiting from the presence of a landing station and submarine cable connectivity. Delhi-NCR has about 17%, followed by Bengaluru with 12% of the total data centre capacity.

Currently, India has about 151 data centres, ranking 14th in the world. With 880 million users, India has witnessed a surge in data centre investments. This surge in interest has been spurred on by conducive government policies and a well-developed ecosystem as well.

The government has proposed the Draft Data Centre Policy in 2020 to streamline regulatory processes and incentivise investments.

Thanks to robust government support and strong global interest, the sector is racing towards rapid growth. This offers investors a great opportunity to profit from this trend.

In this editorial, we will discuss the top Indian companies that are providing the equipment to make date centers in India a reality.

#1 RailTel

RailTel Corporation of India (RailTel) is not a manufacturing company. It provides telecom and signalling services to the Indian Railways. It's a railway infrastructure company.

While not the sole player in the market, RVNL holds a significant position due to its strong government backing, expertise in project management, and track record of successful project completion.

The company's core asset is its extensive pan-India optic fiber network. The network spans over 61,000 km along railway tracks. It covers key towns, cities, and even rural areas.

In the key cities, RailTel has a network of over 21,000 km, with 1,050 telecom towers. It also has a government empanelled RailCloud, a specialised security operation centre, and a highly qualified team of domain experts.

The company already offers leased internet lines and retail broadband to sectors like coal, banking, health, defence, etc.

RailTel has already set up two data centres (at Gurgaon and Hyderabad) from which it provides host of managed services including cloud and security operations for various government organisations.

The company is now planning to create a 30 MW data centre at its Noida plot of 17,000 sq. metres, under a partnership model. This is expected to be an investment opportunity of approximately Rs 15 bn for the data centre partner.

So, the Miniratna is on a reasonably sound footing due to its monopoly over the telecom and IT infrastructure requirements of Indian Railways.

However, RailTel's potential to deliver higher growth on the back of its data centre business and its subsequent ranking as a Navratna could be the triggers for rerating.

Investors should have this stock on their watchlist and track this company closely.

#2 Kirloskar Oil Engines

Kirloskar Oil Engines, is the flagship company of the Kirloskar group, which manufactures and services diesel engines and diesel generator sets.

It's a renowned designer, manufacturer and distributor of engines and power solutions. The company's management has highlighted data centers as the company's new leg of growth.

The company is expanding its portfolio by creating 1,500 KVA+ category nodes to meet the burgeoning energy demand from data centers.

Higher data consumption along with faster cloud adoption is likely to push demand for power generation sets going forward. As the demand shifts to higher HP gensets, Kirloskar is at the forefront with new product offerings to capture the opportunity.

Kirloskar is a strong proxy play to ride the infra development and capex theme. Infrastructure spending and capital expenditure, both private and public, have shot up in the past two years.

This signals growth for capital goods companies like Kirloskar Oil Engines. Data centers are a part of this big growth opportunity.

#3 Apar Industries

Apar Industries is a trusted manufacturer and supplier of conductors, cables, speciality oils, polymers, and lubricants. The company specialises in making a variety of cables, especially fiber optic cables.

It supplies a comprehensive range of fibre optic cables, manufactured in accordance with a number of international standards and covering a wide range of applications for both indoor and outdoor installations. The company exports cables to over 50 countries.

Apar offers customised cable solutions for high-bandwidth applications like data centres, internet service providers (ISP), multiple service providers (MSO), telcos, and cable TV networks.

It has extensive experience in the exact specifications of fibre optic cables demanded by customers. It develops new cable constructions for optimal performance and special applications.

This holds the company in good stead when catering to the data center market.

#4 Schneider Electric

Schneider Electric Infra is the Indian arm of the multinational corporation Schneider Electric.

It specialises in digital automation and energy management. The company's core business is designing, and manufacturing technologically advanced products and systems for electricity distribution.

The company has ventured into the data center business. It's a leading provider of hardware and software infrastructure solutions for all kind of data centres.

Schneider Electric offers to either build new data centers or upgrade existing ones. It has developed a comprehensive solution for data centers called EcoStruxure with Internet of Things (IoT) architecture.

The company offers a wide variety of IT equipment, storage systems, firewalls, routers, cooling systems, generators, batteries, and cables that are used to operationalise data center.

Schneider Electric also provides data center services including installation, technical support, and configuration services. The company is competent implementation of advanced digital solutions, in the energy management industry.

Conclusion

Technology's transformative impact is reshaping our lives, work, and interactions from rural communities to bustling urban centres.

Amid this digital revolution, data centres play a pivotal role by providing critical infrastructure to store, process, and manage vast amounts of data. The Indian data centre industry is poised for a bright future, powered by innovation.

However, investors should not get carried awa by the excitement of investing in themes like data centres. Always conduct due diligence on any data center stocks before considering an investment.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...