India’s digital economy is accelerating at an unprecedented pace, with artificial intelligence (AI), cloud computing, and enterprise digitisation driving exponential data consumption. In 2025, this digital surge is reshaping infrastructure priorities, putting data centres at the forefront of technology investment.
Backed by stable cash flows, long-term lease agreements, and strategic partnerships with global hyperscalers, Indian data centre companies are evolving from niche infrastructure providers to core portfolio plays. For investors, this represents an emerging sector where structural demand meets scalable growth.
This article explores how the AI and cloud boom is influencing stock valuations, identifies leading data centre-focused companies, and presents Streetgains’ research-led insights on navigating this trend.
India’s Data Centre Growth in 2025
India’s digital infrastructure is entering a transformative phase. Data localisation norms, 5G adoption, AI workloads, and cloud expansion are accelerating demand for secure, scalable computing environments. According to industry projections, India’s data centre capacity is expected to more than double by 2026, with over ₹40,000 crore in new investments planned across key hubs like Mumbai, Hyderabad, and Chennai.
Unlike traditional tech cycles, this boom is driven by infrastructure necessity. Enterprises are migrating from legacy servers to cloud-native solutions, while global technology firms expand their footprint in India to serve the domestic and Asia-Pacific markets. Data centres, therefore, are no longer auxiliary; they are the backbone of digital services.
This demand is reshaping investor attention. Listed companies with exposure to digital infrastructure, energy-efficient power solutions, or hyperscaler partnerships are beginning to command premium valuations, especially as India seeks to become a global data hub.
Top Sectors and Stocks Riding the Boom
The data centre opportunity in India spans multiple sectors. Investors aren’t limited to pure-play infrastructure developers. Instead, value is emerging across diversified verticals:
1. Power and Energy Solutions: Data centres require uninterrupted, scalable power. Companies in energy management, renewable integration, and high-efficiency cooling systems are poised to benefit. Stocks involved in green energy supply to urban tech clusters are gaining investor interest.
2. Telecom and Network Providers: With increasing bandwidth needs, telecom firms expanding fibre optic infrastructure are crucial to data flow. Firms with strong enterprise connectivity portfolios may see growth tailwinds.
3. Real Estate and Logistics: REITs and developers catering to hyperscaler needs, especially in metros with digital clusters, are emerging as indirect beneficiaries. Specialised business parks and IT zones focused on data and cloud infrastructure offer long-term rental yields and capital appreciation.
4. Listed Conglomerates with Data-Centric Plans: Select large-cap stocks in the IT and industrial space are allocating capital to cloud services, AI compute capacity, and edge data centre projects, offering a blended growth profile.
Streetgains’ research identifies companies within these segments with favourable P/E ratios, low leverage, and rising capex guidance toward digital infrastructure.
For a detailed breakdown, read: Top Data Center Stocks in India
What Makes a Data Centre Stock Promising in 2025
Not every company in the digital infrastructure ecosystem offers sustainable value. Investors should focus on specific fundamentals and signals:
1. Capex Visibility and Execution Track Record: Firms with clear capital expenditure roadmaps, especially those tied to hyperscaler contracts or AI compute expansion, stand out. Execution capability matters, especially in sectors where scalability and timelines are critical.
2. Margin Stability Amid Rising Demand: As demand surges, companies that demonstrate operating leverage without significant margin erosion, especially in power management and fibre backbone, signal long-term efficiency and resilience.
3. Balance Sheet Strength: Data centre projects are capital intensive. Low debt levels, healthy cash flows, and stable ROE are indicators of a company’s ability to fund growth without excessive risk.
4. Valuation Relative to Growth Potential: Stocks trading at attractive P/E or EV/EBITDA multiples compared to sector peers, while maintaining growth visibility, indicate room for re-rating.
Structuring Exposure to India’s Digital Infrastructure Play
India’s AI and cloud momentum is not just a technology story; it’s an infrastructure revolution. As demand for compute capacity, edge networks, and data storage grows, data centres are becoming central to long-term portfolio strategies.
Investors looking to tap into this theme should consider a multi-layered approach: anchor positions in leading infrastructure providers, satellite exposure to power and connectivity enablers, and tactical bets on emerging SaaS or AI integration plays. The key lies in balancing growth potential with business resilience.
Streetgains provides research-driven insights into this evolving sector, identifying high-conviction ideas using valuation, execution, and demand signals. With disciplined allocation and timely rebalancing, investors can position portfolios for India’s digital decade.
Disclaimer: This document is intended for educational and informational purposes and does not constitute investment advice. Investment in the securities market is subject to market risks. Read all related documents carefully.
