Nomura says these 2 companies are best placed to gain from India’s data centre investment cycle

The growth is being driven by rising cloud adoption, increasing artificial intelligence workloads, rapid enterprise digitalisation and surging data consumption. Nomura estimated that the sector could generate nearly $35 billion of cumulative investment by 2030. 

The brokerage said industrial equipment manufacturers supplying power and cooling infrastructure are likely to be among the biggest beneficiaries because these categories account for a large share of overall data centre spending.

Nomura on CG Power and Industrial Solutions: ‘Buy’

Nomura maintained a ‘Buy’ rating on CG Power and Industrial Solutions with a target price of Rs 1,050, implying upside of 19.4%.

The brokerage said India’s upcoming data centre buildout is expected to create substantial demand for electrical infrastructure. According to Nomura, electrical systems account for about 42% of total data centre capital expenditure, making them the largest spending category within a project. 

Switchgear, transformers, power distribution systems and related equipment are expected to remain at the centre of investment activity as fresh capacity comes online over the next several years.

Nomura said the industrial supply chain offers one of the most attractive ways to participate in the theme.

“Within India’s capital markets, the most attractive exposure is in the industrial supply chain, in our view. We estimate five product categories together absorb 60-75% of a datacenter’s capex budget,” Nomura said. Suppliers operating in these categories are benefiting from premium pricing and improving order visibility. 

Nomura also noted that delivery lead times stretching between two and four years have created substantial order backlogs. According to the brokerage, those backlogs are supporting revenue visibility through 2029.

Nomura on GE Vernova T&D India: ‘Buy’

Nomura maintained a ‘Buy’ rating on GE Vernova T&D India with a target price of Rs 5,675, implying upside of 17.1%.

The brokerage said India’s data centre market remains among the fastest-growing globally. Installed data centre IT load increased to roughly 1.5-1.6GW in 2025 from about 350MW in 2019. The capacity is expected to reach around 7GW by 2030 as cloud adoption, artificial intelligence deployment and enterprise digitalisation continue to gather pace.

Discussing the broader industry outlook, Nomura said India’s data centre industry could see sustained growth over the rest of the decade.

“We believe India’s datacenter industry is poised to grow to approximately 7GW at a CAGR of 30% over 2025-30. The sector is aided by India’s cost-efficient construction ecosystem and favorable power economics allowing attractive equity IRRs and long-term infrastructure-like cash flows,” Nomura said.

The brokerage said data centre projects require higher reliability standards and more specialised engineering than conventional commercial developments. According to Nomura, that is helping suppliers secure premium pricing and longer-term demand visibility.

A $35 billion investment opportunity is emerging

Nomura estimated that India could add around 5.1GW of incremental data centre capacity by 2030. The brokerage said achieving that target would require cumulative investments of roughly $35 billion.

Data centres have increasingly become infrastructure-driven assets. A large portion of spending is directed towards electrical systems, cooling architecture and compute-enabling infrastructure. Real estate represents a much smaller share of total project costs.

On the size of the investment opportunity, Nomura said a large share of spending is likely to flow towards infrastructure suppliers.

“We estimate incremental capacity of approximately 5.1GW until 2030 will provide a capex opportunity of $35 billion, a majority of which will be captured by industrial equipment manufacturers supplying electrical, mechanical and cooling solutions to datacenters,” Nomura said.

The brokerage said electrical systems, cooling infrastructure, backup generation systems, uninterruptible power supply solutions and rack infrastructure are likely to account for a substantial share of future spending.

Cloud adoption and artificial intelligence are driving demand

Nomura said the industry’s growth is being supported by several structural demand drivers.

India’s mobile data traffic increased to 27 exabytes per month in 2025 from 10 exabytes per month in 2020. During the same period, the country’s internet user base expanded to about 950 million from 622 million. Average mobile data usage per user rose to 31GB per month in 2025 from 11GB per month in 2019.

The brokerage also expects India’s public cloud market to grow at a compound annual growth rate (CAGR) of around 22% between 2024 and 2029. India’s software-as-a-service market is projected to expand at a  CAGR of about 27% through 2032. The artificial intelligence market is expected to grow at a (CAGR) of 42.2% over the same period.

Explaining the demand drivers behind the sector, Nomura said rising data consumption and artificial intelligence adoption are creating a powerful growth tailwind.

“India’s DC demand is being driven by rising mobile data consumption, increasing the need for low-latency applications, and rapid enterprise digitization. At the same time, we expect India’s cloud, SaaS, and AI markets to record a CAGR of approximately 20-40% over 2025-30,” Nomura said.

The brokerage said artificial intelligence is becoming an increasingly important catalyst. AI workloads require significantly greater computing power and more advanced cooling systems than conventional applications.

Why Nomura prefers equipment makers over data centre operators

Nomura said investors looking to benefit from the theme have limited options among listed data centre operators.

The brokerage noted that companies controlling around 80% of India’s co-location market are either unlisted or in the process of listing. As a result, Nomura prefers listed manufacturers that supply equipment and infrastructure used across data centre projects.

On its stock preferences, Nomura said listed equipment manufacturers offer the most direct exposure to the theme.

“Overall, we believe there are limited opportunities to benefit from the datacenter theme given that the companies controlling approximately 80% of the co-location market share currently are either unlisted or in the process of listing. Our top picks are CG Power and GE Vernova as we believe they are likely to be the biggest beneficiaries of the datacenter opportunities due to their product offerings and strong market positioning,” Nomura said.

Conclusion

Nomura’s latest report identifies data centres as one of the largest infrastructure opportunities emerging from India’s digital economy.

Among listed companies, Nomura prefers equipment manufacturers that are positioned to capture spending on power and cooling infrastructure.

Disclaimer: The stock ratings, target prices, and data centre industry projections discussed in this report are based on institutional research analysis from Nomura and do not constitute direct buy, sell, or hold recommendations for retail investors. Equity investments in the capital goods, power transmission, and industrial engineering sectors are highly sensitive to corporate capital expenditure cycles, long-term project execution timelines, supply chain lead times, and evolving technological requirements for hyperscaler and colocation facilities. Individual risk profiles and portfolio needs vary extensively; therefore, readers are strongly advised to consult a SEBI-registered investment advisor or a qualified financial professional before making specific equity or sector-specific capital allocations based on these infrastructure forecasts.

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