Three Indian firms eye growth as data-centre spending rises

India's data-centre capacity is expanding rapidly, driving investors to examine the order books of companies involved in construction, power and optical connectivity. Live data-centre capacity in the country has crossed roughly 1.8 gigawatts, following a record addition of 258 megawatts in the first half of the financial year. This capacity is projected to reach about 10.5 gigawatts by 2031 as artificial intelligence infrastructure spending grows.

Three Key Companies

Larsen and Toubro, Power Mech Projects and Sterlite Technologies stand out for their exposure to different parts of this infrastructure chain. Larsen and Toubro reported record second quarter results, with revenue rising 16 percent to 78,700 crore rupees and profit after tax increasing 33 percent to 5,200 crore rupees. Its consolidated order book reached 8,53,500 crore rupees as of September 30, up 28 percent. Power Mech Projects saw its revenue grow at an annual rate of more than 17 percent to 6,060 crore rupees in the previous financial year, with an order backlog of 56,650 crore rupees by September 30. Sterlite Technologies held an order book of 35,274 crore rupees on the same date, supported by multi-year agreements with cloud and data-centre operators.

Context

Order books give a helpful view of the business companies have secured and offer clues about their future revenue. However, a large order book does not guarantee smooth project execution or profits, meaning investors still need to check factors like profit margins and debt levels.