Data Center Capacity in India to See 5 Fold Increase With Investments of Rs 1.20 Lakh Crore

Data Center

The data center (DC) market in India is expected to grow at a phenomenal rate over the coming years. Hyperscalers such as Amazon Web Services, Google, Microsoft, Dropbox and more are outsourcing their storage needs to Indian third-party DC providers. Indian corporates such as Adani Group, Bharti Airtel, Hiranandani Group, and more are investing to increase the capacity of data centers in the country to meet greater demand in the near future. According to an ICRA report, in the next five years, overall, 3900-4100 MW of capacity involving investments of Rs 1.05 lakh crore to Rs 1.20 lakh crore is going to get added in India.

  • Make Telecom Talk My Trusted Source
  • Source of Google
  • Source of Google

Data Center Industry Revenues to Grow at a CAGR of 18%-19%

The industry revenues are expected to grow at a CAGR of 18% to 19% during FY22 – FY24, supported by an increase in rack capacity utilisation and ramp-up of new data centers. The operating margins for the companies are also expected to improve with better absorption of fixed costs. The operating margins could go up from 40% to 42%.

ICRA pointed out that the ROCE (return on capital employed) will be modest because the data center companies are usually spending big for capex as capacity ramp-up happens over a significant period of time.

The credit metrics of the data center players could be hurt because of the large debt-funded capex plans and increasing competition in the market that will certainly affect the margins of the companies.