International brokerage firm Nomura believes India’s data centre industry is entering a multi-year growth phase, driven by accelerating digitalisation, rising cloud adoption and growing demand linked to artificial intelligence. The brokerage sees the trend creating a significant opportunity for industrial equipment manufacturers supplying critical infrastructure to the sector.

According to Nomura, India’s data centre IT load has expanded from around 350 MW in 2019 to nearly 1.5-1.6 GW in 2025, implying a CAGR of about 29%, compared with roughly 20% globally, based on data from Cushman & Wakefield and Bloomberg. As a result, India’s share of global data centre capacity has increased from around 1.5% in 2019 to approximately 2-3% in 2025.

To capitalise on this opportunity, Nomura has identified GE Vernova T&D India and CG Power as its key beneficiaries, while also highlighting ABB India, Siemens, Hitachi Energy India and Cummins as companies that could benefit from the expanding ecosystem.

Among its top picks, Nomura has maintained a target price of Rs 5,675 on GE Vernova T&D India, implying an upside of about 17% from current levels. For CG Power, the brokerage has set a target price of Rs 1,050, indicating an upside potential of 19.4%.

Why Nomura backs GE Vernova

Nomura noted that GE Vernova, the parent company of GE Vernova T&D India, is among the world’s largest suppliers of grid infrastructure to hyperscale data centres. The Indian subsidiary, meanwhile, is increasingly emerging as a key manufacturing and export hub for the group.

The brokerage said localisation investments have helped GE Vernova T&D India become a cost-competitive export base for air-insulated switchgear (AIS) and gas-insulated switchgear (GIS) equipment serving Europe, the Middle East and Africa. These regions are witnessing grid modernisation alongside growing power demand from data centres, creating a long-term growth runway for the company’s high-voltage equipment business.
Nomura expects profitability to improve as data centre-linked orders form a larger portion of the company’s order book. It added that higher volumes, supported by a largely fixed manufacturing cost base, along with premium pricing for products where delivery timelines are critical, could further strengthen margins.

CG Power seen benefiting from hyperscale demand

For CG Power, Nomura said the company has emerged as a direct beneficiary of rising data centre investments in both India and the United States.The brokerage pointed to a Rs 900 crore transformer export order secured in January 2026 from US-based Tallgrass Integrated Logistics for a hyperscale data centre project as evidence of the growing opportunity.

Nomura estimates that transformers and switchgear are critical components in every hyperscale data centre project and account for 15-20% of total capital expenditure in both traditional and AI-focused data centres. It expects CG Power to deliver a 31% earnings per share CAGR between FY26 and FY29.

Industrial suppliers seen as the biggest beneficiaries

Beyond its top picks, Nomura believes the most attractive way to participate in India’s data centre growth story is through the industrial supply chain.

The brokerage estimates that five product categories account for 60-75% of a data centre’s capital expenditure budget of USD 10-22 million per MW. These include medium- and low-voltage switchgear and transformers, UPS and battery systems, backup diesel and gas generator sets, precision cooling and liquid-cooling distribution units, and rack, busway and structured cabling infrastructure.

According to Nomura, the competitive landscape across these segments remains highly consolidated, with companies such as ABB India, Siemens, Hitachi Energy India, GE Vernova T&D India, CG Power and Cummins acting as dominant suppliers across multiple categories. The brokerage estimates that these companies collectively command more than 40% market share in each of the relevant segments.

Nomura also highlighted that delivery timelines of two to four years have created a favourable environment for equipment manufacturers. Strong demand and limited supply have resulted in multi-year order backlogs, providing revenue visibility through FY27-FY29 for companies operating in the data centre supply chain.

The brokerage further noted that suppliers are benefiting from premium pricing as data centre projects demand higher reliability, greater customisation, faster delivery schedules, certifications and on-site engineering support compared with traditional commercial and industrial projects.

India’s data centre buildout gathering pace

Based on announced project pipelines, Nomura estimates visibility on more than 15 GW of incremental data centre capacity over the next decade. It expects India’s total data centre capacity to reach nearly 7 GW by 2030, implying a CAGR of around 30% between 2025 and 2030 and outpacing the broader Asia-Pacific region.

The brokerage also highlighted India’s cost advantages in data centre development. According to JLL data cited by Nomura, construction costs in India are estimated at around USD 6-7 million per MW, significantly lower than the USD 10-18 million per MW typically seen across developed Asia-Pacific and Western markets.

In addition, competitive power sourcing through open-access arrangements, renewable power purchase agreements (PPAs) and captive power generation enables electricity costs of roughly 7-8 US cents per kilowatt-hour, strengthening India’s operating cost advantage.

While co-location rental rates in India remain below those in developed markets, Nomura believes lower capital expenditure requirements and favourable power economics support attractive project-level returns. As a result, stabilised data centre assets have the potential to generate infrastructure-like annuity cash flows and deliver mid-teen equity internal rates of return (IRRs), according to the brokerage.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)