3 Small-Cap Stocks Poised to Benefit from India's Data Center Boom
India's data center market is expected to reach $5 billion by 2024, driven by rapid digitalization and increasing demand for data storage. This growth presents lucrative opportunities for small-cap stocks to capitalize on the expanding market.
Data CenterSmallcap StocksAnant Raj LtdSchneider ElectricTechno ElectricReal EstateOct 27, 2024
Here are three small-cap stocks that can benefit from the data center boom in India
Anant Raj Ltd
Anant Raj Ltd, with a market capitalization of Rs. 23,604 crore, saw its share price close at Rs. 670.00 on Friday, down 3 percent from the previous close. The real estate company is capitalizing on the growing demand for data centers, leveraging its early-mover advantage with lower capital expenditure (capex) due to land ownership and existing infrastructure. Anant Raj is converting 5.66 million square feet of commercial property into a 157 MW data center, expecting Rs. 3,300 crore in rentals once fully operational. The company is also investing Rs. 10,000 crore to build a 300 MW facility.
In Q1FY25, Anant Raj reported a 50 percent year-on-year increase in revenue to Rs. 472 crore and an 82 percent rise in net profit to Rs. 91 crore.
Schneider Electric Infrastructure Ltd
Schneider Electric Infrastructure Ltd, with a market capitalization of Rs. 18,145 crore, saw its share price close at Rs. 731.00 on Friday, down 3 percent from the previous close. Schneider Electric has opened a new manufacturing facility in Bangalore, India, with a Rs. 100 crore investment. Spanning 6.5 acres, the plant will produce cooling solutions for data centers, telecom, and industrial applications, with 85 percent of the products intended for export. To meet growing global and domestic demand, Schneider plans to invest Rs. 3,200 crore by 2026, enhancing its manufacturing capabilities and supporting the global data center market from India.
In Q1FY25, Schneider Electric reported a 20 percent year-on-year increase in revenue to Rs. 593 crore and a 37 percent rise in net profit to Rs. 48 crore.
Techno Electric & Engineering Company Ltd
Techno Electric & Engineering Company Ltd, with a market capitalization of Rs. 17,954 crore, saw its share price close at Rs. 1,470.00 on Friday, down 4.5 percent from the previous close. The engineering company is venturing into the data center development sector as an operator, planning to invest $1 billion to establish data centers with a total capacity of 250 MW across India by 2030. Currently, it is constructing a 24 MW facility in Chennai. Techno Electric can leverage its expertise in engineering, procurement, and construction to act as an EPC partner for other firms developing data centers in India.
In Q1FY25, Techno Electric reported a 37 percent year-on-year increase in revenue to Rs. 375 crore and a staggering 292 percent rise in net profit to Rs. 98 crore.
Kirloskar Oil Engines Ltd
Kirloskar Oil Engines Ltd, with a market capitalization of Rs. 15,586 crore, saw its share price close at Rs. 1,020.00 on Friday, down 5 percent from the previous close. Data centers require an uninterrupted power supply to operate effectively. Kirloskar Oil Engines produces diesel generators that serve as backup power sources during grid outages or fluctuations. Additionally, it has strategically developed its product line, with the OptiPrime series of generators specifically designed for data centers.
In Q1FY25, Kirloskar Oil Engines reported a 6 percent year-on-year increase in revenue to Rs. 1,636 crore and a 23 percent rise in net profit to Rs. 156 crore.
Conclusion
The data center boom in India presents a significant opportunity for small-cap stocks to capitalize on the growing market. Companies like Anant Raj Ltd, Schneider Electric Infrastructure Ltd, Techno Electric & Engineering Company Ltd, and Kirloskar Oil Engines Ltd are well-positioned to benefit from this expansion, thanks to their strategic investments and expertise in the sector.
Frequently Asked Questions
What is driving the growth of India's data center market?
Rapid digitalization and increasing demand for data storage are the primary drivers of India's data center market growth. The market is expected to reach $5 billion by 2024.
Which small-cap stock is converting commercial property into a data center?
Anant Raj Ltd is converting 5.66 million square feet of commercial property into a 157 MW data center, expecting Rs. 3,300 crore in rentals once fully operational.
What is Schneider Electric's new manufacturing facility in Bangalore for?
Schneider Electric's new manufacturing facility in Bangalore, spanning 6.5 acres, will produce cooling solutions for data centers, telecom, and industrial applications, with 85 percent of products intended for export.
What is Techno Electric & Engineering Company Ltd's plan for data centers?
Techno Electric & Engineering Company Ltd plans to invest $1 billion to establish data centers with a total capacity of 250 MW across India by 2030. They are currently constructing a 24 MW facility in Chennai.
Why are diesel generators important for data centers?
Data centers require an uninterrupted power supply to operate effectively. Diesel generators serve as backup power sources during grid outages or fluctuations, ensuring continuous operation.
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