Stocks to watch amid India's AI-driven data-centre boom

The country generates nearly 20% of the world's data but hosts only 3% of global data centre capacity. This creates a structural supply gap that global technology companies are now rushing to address.

According to Colliers India, India's installed data-center capacity has expanded from 0.3 gigawatt (GW) in 2018 to 1.26 GW by April 2025. This was driven by a nearly 30-fold rise in data traffic since FY17, driven by smartphones, OTT platforms, digital payments, and e-commerce.

So, it’s still early days. Jefferies estimates capacity could quintuple to 8 GW over the next five years, implying US$ 30 billion (bn) i.e., ₹2.7 trillion (tn) of investment.

With hyperscalers such as Google ($15 billion), AWS ($ 8.3 billion), OpenAI, Reliance ($11 bn), and TCS ($6.5 bn) committing large sums to AI-focused infrastructure, India's data centre expansion has moved firmly into the execution phase.

The buildout is now shaping up as a multi-year capex cycle. This is expected to open a large market for real estate ($6 bn), electrical and power systems ($10 bn), racks ($7 bn), cooling systems ($4 bn), and network infrastructure ($1 bn).

Here are five stocks that can ride the data centre boom:

#1 E2E Networks

E2E Networks is a leading Indian hyperscaler and Infrastructure-as-a-Service (IaaS) provider, specialising in advanced Cloud GPU infrastructure.

A key differentiator for E2E is its commitment to Sovereign AI.

The company's compute instances are distributed across four data centres located in Noida, Chennai, and Mumbai, ensuring data locality for India-centric workloads.

Within these data centres, E2E uses InfiniBand NDR with speeds up to 3.2 tbps.

This low-latency technology allows them to scale GPU clusters across multiple physical machines to handle massive AI training workloads.

E2E currently has access to about 10 megawatts (MW) of power capacity. This includes 1 MW of older capacity and 9 MW of newer capacity added in the last two years.

This 10 MW infrastructure can accommodate 8,000 to 10,000 cloud GPUs. As of late 2025, the company has deployed nearly 3,900 cloud GPUs, leaving a big gap to fill.

Total utilisation during Q2 FY26 was 35-40%. The goal is to achieve 80-90% utilisation by March 2026, driven by large contracts such as the IndiaAI mission.

A core component of E2E's strategy is its partnership with Larsen & Toubro (L&T).

E2E recently expanded its capacity by setting up specialised GPU clusters at L&T's state-of-the-art data centre facility in Chennai, which went live in August 2025.

The company is currently in advanced stages of procuring nearly 2,048 NVIDIA Blackwell B200 GPUs to stay ahead of the rapid technology cycles in the AI market.

From a financial perspective, E2E revenue rose by 21.3% year-on-year (YoY) in Q2 FY26. However, the operating profit margin decreased by 25 basis points (bps) to 41%.

As a result, the company reported a loss of ₹13 crore, against a net profit of ₹12 crore. High depreciation costs of ₹42.8 crore related to new GPU infrastructure also contributed to the loss.

The financials are expected to improve due to two contracts worth ₹2700 crore awarded to the company under the IndiaAI Mission. These orders can contribute ₹20 crore to the monthly run rate once fully implemented. The management aims to reach ₹35 crore per month by March 2026.

#2 Netweb Technologies

Netweb Technologies operates as a leading OEM in the high-end computing solutions space, providing the essential infrastructure required for modern data centres.

Netweb designs and manufactures the servers, storage, and software stacks that power data centres.

Data center servers feature cyber-secure architecture, consume less rack space, and offer increased built-in storage. They are designed to reduce the complexity of managing heavy, critical workloads.

It also provides a unified data storage platform for object, block, and file architectures, which are essential for the large data repositories found in data centres.

Its Tyrone Skylus brand offers hyper-converged infrastructure that combines compute, storage, and networking, enabling organisations to quickly set up on-prem cloud infrastructure.

The management has identified the explosion of on-premises cloud infrastructure across large enterprises and the rising demand for inbound data centres in India as key growth catalysts.

They view global hyperscalers (such as Google) setting up data centres in India as a big opportunity to offer high-end computing solutions.

From a financial perspective, operating income rose by 21% YoY to ₹300 crore. Profit after tax surged by 20% to ₹31.4 crore. The AI segment is the primary growth engine, expanding by 160% to contribute 25.4% of revenue in the first half of FY26.

Netweb aims to grow at 35-40% CAGR organically over the next three years. This strong growth is expected to be driven by the order book of ₹2,680 crore, providing revenue visibility of over two years.

The management aims to secure orders from a robust pipeline of about ₹4,000 crore. They expect to complete about one-third of large orders in FY26, with the remainder in FY27.

Netweb is also expanding into Europe and the Middle East with plans to establish service networks in four countries to meet international demand.

#3 Cummins India

Cummins is a major manufacturer of engines and power generation solutions. It serves a diverse range of industries, including data centres, construction, railways, and marine.

Power generation is its largest revenue driver, with a focus on providing backup and mission-critical power. Cummins manufactures engines and gensets across low, medium, and high-horsepower ranges.

Data centres utilise extremely heavy engines and gensets. Cummins manufactures these engines close to the customer because of their high weight, which makes them logistically difficult and expensive to ship.

Revenue rose 28% YoY to ₹3170 crore in Q2FY26, driven by a 49% growth in the power generation sales of ₹1340 crore. PAT grew by 38.5% to ₹620 crore.

Notably, data centres accounted for 40% of power generation sales during the quarter. Excluding data centers, the power generation business grew by 20% only.

This trend aligns with the parent company's order intake, driven primarily by data centre demand in the US and Europe.

The company believes this presents a significant future opportunity, as this country has the potential to bridge the gap with rapidly growing markets such as the US, China, and Europe.

Cummins India categorises its data centre clients into two main types, each with distinct demand patterns. These include co-location players and hyperscalers.

Within co-location, Cummins builds infrastructure to sell to other global operators. Their demand is generally stable and well-spread throughout the year.

The hyperscaler group includes global technology giants such as Microsoft, Amazon, and Google. But business from hyperscalers is lumpy and project-based, as execution depends on complex site clearances and specific commissioning windows.

The recent growth was due to several large hyperscaler projects fructifying simultaneously. Cummins is also focusing on reducing lead times and expanding capacity to strengthen competitive positioning.

Cummins is also increasingly looking toward battery energy storage solutions.

#4 KRN Heat Exchanger

KRN specialises in manufacturing fin-and-tube heat exchangers for the heating, ventilation, and air conditioning (HVAC) and refrigeration industries.

The company uses non-ferrous metals, like copper and aluminium, to produce various products.

These products are used in critical applications, including air conditioning, refrigeration, and process cooling. KRN manufactures large heat exchangers that meet the cooling needs of data centres.

The cooling requirements for data centres represent a primary high-growth segment for KRN, fueled by the rapid expansion of digital infrastructure and the rise of AI.

As a result, KRN expects commercial HVAC growth to increase at least 20% over the next decade.

The management aims to capitalise on major opportunities, such as Google's announced ₹50,000 crore investment in data centres in Visakhapatnam. The estimate is that this project alone could generate demand for ₹1,500 crore in heat exchangers.

To meet these demands, its new plant for manufacturing large cooling coils started operations in May 2025. The total annual capacity has increased sixfold, from 1 milion units to 6 million units.

The existing facility is operating at almost full utilisation. The new capacity is expected to achieve 20% utilisation in FY26 and 50% the next financial year.

KRN also aims to achieve a 50% export revenue share in the next three years for the finned and tube-type heat exchanger segment.

From a financial perspective, revenue rose 67% YoY to ₹1500 crore in Q2 FY26, with operating margins at 20%. However, net profit surged 50% to ₹18 crore.

#5 Orient Technologies

Orient is a diversified IT solutions provider company. Its core offerings are divided into two categories.

IT infrastructure solutions include data centres, end-user computing, and cybersecurity. IT infrastructure and application services include cloud and DevOps, digital transformation, managed infrastructure services, and Device-as-a-Service (DaaS).

Orient aims to transition from DaaS to a Total Outsourcing Service (ToS), in which they manage a client's entire IT ecosystem, covering both infrastructure and application modernisation.

The company doesn't build the physical structures of data centres. Rather, it provides the complete IT infrastructure they need to function. This includes providing and setting up the network, backup, and storage devices for the data centre.

In addition, it provides 24/7 monitoring and comprehensive IT management to ensure high availability of the data centre ecosystem.

The company also implements high-availability technology infrastructure, such as Dell's Azure Stack, for complex client requirements.

New India Assurance recently awarded Orient a multi-year order worth ₹30.8 crore to provide network, backup, and storage services for the insurer's data centres.

From a financial perspective, revenue increased by 22.3% YoY to ₹270 crore. BFSI accounted for 14.90% of revenue, followed by government/PSU (19.65%), telecommunications (13.11%), and ITES (4.9%). Both segments contribute almost equally to the revenue mix, at about 50% each.

PAT declined 6.7%, with EBITDA margin at 8%. Margins are expected to gradually improve in Q4 as initial setup costs for new initiatives taper off and higher-margin services scale up.

Conclusion

India's AI data-centre buildout is no longer a distant theme—it’s unfolding through committed capital, rising capacity, and visible order flows.

As hyperscalers scale infrastructure, the opportunity extends well beyond operators to enablers across compute, power, cooling, and IT systems.

The five firms discussed sit at different points of this value chain, each exposed to the same multi-year capex cycle. Execution, utilisation ramp-up, and balance-sheet discipline will determine which ones convert this structural tailwind into sustained earnings growth.

Instead of relying on hype, investors need to carefully analyse the company's fundamentals, including financial performance, corporate governance practices, and growth strategies.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com