Power and cooling stocks to lead India's $25bn data centre boom
An estimated $25 billion in Indian data-centre investments through 2030 will disproportionately benefit power, electricals and cooling equities while structurally threatening traditional IT services.
India is preparing to triple its data-centre capacity to 5 gigawatts by 2030, backed by $25 billion in committed investments from companies including Google, Microsoft, Reliance and TCS. This 26% capacity compound annual growth rate represents a massive physical build-out, but the financial returns will not flow evenly across the market. Approximately 75% of every rupee spent on these facilities goes to power and electricals, which account for 45% of build costs, and cooling, which takes another 30%.
According to Atul Suri, CEO and CIO of Marathon Trends, this capital deployment is already reshaping the Indian equity market. "A data centre actually needs: it needs electrons, not headcount," Suri said, noting that power transmission and distribution stocks are up 41%, while electronics and EMS names have rallied 54%.
Suri argues that equipment manufacturers will sharply outperform engineering, procurement and construction contractors in this cycle. He highlighted that 100% of power T&D names have beaten the benchmark, pointing to Hitachi Energy trading at roughly 3.6 times book-to-sales as evidence of a genuine re-rating on multi-year order visibility.
Conversely, the capital shift is actively punishing traditional IT services, a sector that has fallen 23% as only 14% of its names beat the benchmark. "The people-arbitrage model, that bums-on-seats labour arbitrage, is the very thing AI automates," Suri warned, pointing to TCS and Infosys trading at five- and six-year lows, respectively.
Despite these depressed valuations, Suri views IT services as a potential value trap rather than a buying opportunity. "Value would have walked you straight into IT services, because they look cheap at multi-year lows. But cheap in the face of structural disruption is how you get a value trap," he said.
Beyond data centres, Suri cited parallel tailwinds for defence electronics, driven by a ₹2.2 lakh crore FY27 capex target with a 60% indigenous-content mandate, and EMS, supported by government pushes for a $500 billion electronics ecosystem by FY31. For market participants, the underlying signal is clear: the AI infrastructure trade is rewarding tangible capital goods over asset-light, labour-heavy business models.
