Ambit Capital has initiated coverage on Schneider Electric Infrastructure with a ‘Buy’ rating and a target price of Rs 1,400, implying an upside of 19%. The brokerage believes the company is well placed to benefit from India’s accelerating electrification cycle, rapid growth in data centre investments and increasing export opportunities arising from Schneider Electric’s global manufacturing strategy.
Ambit expects Schneider Electric Infrastructure Ltd. to deliver revenue growth of 24% CAGR between FY26 and FY29, driven by strong momentum in data centres, industrial electrification, grid modernisation and exports. The brokerage also forecasts EBIT growth of 40% CAGR during the same period and expects margins to improve steadily as the company’s revenue mix shifts toward higher-value segments and operating leverage strengthens.
Data centres emerge as the biggest growth driver
Ambit identified data centres as the single largest growth driver for Schneider Electric Infrastructure over the coming years.
The brokerage said data centres currently account for around 10-12% of the company’s revenue, compared with just 3-4% in FY20. It expects the contribution to rise further to 18-20% by FY29 as capacity additions across the sector gather pace.
India currently has about 1.6-1.7 GW of installed data centre capacity. Depending on the industry estimate used, Ambit expects this to increase to between 7 GW and 18 GW by FY32.
The report noted that investments announced by companies including Amazon Web Services, Microsoft, Google, Meta, Reliance Industries, NTT Global Data Centres, CtrlS and Yotta indicate more than 6 GW of planned capacity additions in the medium term.
“SEIL offers strong proxy to the multi-year data centre theme, with over 10% of revenues derived from data centres. We estimate around 50% CAGR for data centres in FY26-29 will drive 24% group sales CAGR. With improved mix and operating leverage, EBIT margin can expand from 11.7% in FY26 to 16.8% by FY29,” Ambit said.
Schneider Global’s India strategy could accelerate exports
A second pillar of Ambit’s investment case is Schneider Electric’s growing focus on India as a manufacturing and export hub.
The brokerage noted that Schneider Global now considers India one of its four global manufacturing hubs alongside the US, China and France. India is also Schneider Electric’s third-largest market globally.
Exports currently contribute around 12% of Schneider Electric Infrastructure’s revenue. Ambit expects that figure to increase to 14-15% by FY29 as the company becomes more deeply integrated into Schneider Electric’s global supply chain.
“Schneider Global is establishing India as one of its four global manufacturing hubs, along with the US, China and France. In the medium term, Schneider Global plans to expand its capacity in India by 2.5-3x. India is currently Schneider’s third-largest market globally and is becoming an increasingly important node in the company’s global supply chain,” the brokerage said.
Capacity expansion underway across manufacturing facilities
Ambit said Schneider Electric Infrastructure is investing more than Rs 200 crore across its manufacturing facilities to support future growth.
At the Vadodara switchgear facility, capacity is being expanded from approximately 8,000 panels to 14,000 panels. Transformer capacity at the same location is being increased from 5,500 MVA to 7,000 MVA.
At its Kolkata facility, breaker manufacturing capacity is being expanded from around 5,000 units to 45,000 units.
The company is also increasing ring main unit capacity by about 25%, taking overall capacity to roughly 32,000 functions.
The brokerage believes these investments will support rising domestic demand as well as growing export opportunities over the coming years.
Margin expansion expected as business mix improves
While Ambit acknowledged that commodity inflation could weigh on profitability in the near term, it expects the impact to be temporary.
The brokerage said Schneider Electric Infrastructure operates largely as a short-cycle business where price increases can eventually offset rising input costs, albeit with a lag.
Over the medium term, a greater contribution from data centres, services and higher-value products is expected to support profitability.
Ambit forecasts EBIT margins to improve from 11.7% in FY26 to 12.7% in FY27, 15.2% in FY28 and 16.8% in FY29.
“Price increases can offset cost inflation with a lag, and SEIL’s focus on increasing services, data centres and transactional products mix would benefit in the coming years,” the brokerage said.
Earnings growth outlook remains strong through FY29
Ambit projects revenue to increase from Rs 2,891 crore in FY26 to Rs 5,497 crore by FY29.
Net profit is expected to rise from Rs 213 crore in FY26 to Rs 676 crore by FY29, while earnings per share are projected to grow from Rs 8.9 to Rs 28 over the same period.
The brokerage expects order inflows, revenue and EBIT to grow at CAGR of 19%, 24% and 40%, respectively, between FY26 and FY29.
According to the report, order growth is likely to be driven by data centres as well as the metals, mining and minerals segment, where industry capital expenditure is expected to remain strong.
Why Ambit prefers Schneider Electric Infrastructure
Among electrical equipment companies under its coverage, Ambit places Schneider Electric Infrastructure at the top of its preference list.
The brokerage’s pecking order is Schneider Electric Infrastructure, followed by GE Vernova T&D, Hitachi Energy, ABB, Siemens Energy and Siemens. It carries a Sell rating on CG Power.
Ambit believes Schneider Electric Infrastructure offers a combination of high-growth data centre exposure, rising export opportunities, capacity expansion and margin improvement that differentiates it from peers.
The brokerage also sees the company as one of the most direct listed beneficiaries of increasing investments in power infrastructure, digitalisation and electrification across India.
Conclusion
The growth potential predicted by Ambit is built around three key themes: rapid growth in data centre investments, increasing exports through Schneider Electric’s global manufacturing strategy and sustained margin expansion driven by an improving business mix.
The brokerage expects data centres to become a significantly larger contributor to revenue over the next three years, while export intensity continues to increase as India assumes a larger role within Schneider Electric’s global supply chain.
Disclaimer: The specific stock ratings, target prices, and earnings growth projections discussed in this report are based on institutional equity research from Ambit Capital and do not constitute direct buy, sell, or hold recommendations, or an offer or solicitation for investors. Equity investments carry inherent market risks, including corporate execution challenges, input cost inflation, and cyclical demand fluctuations within the infrastructure sector. Because individual financial goals and risk thresholds vary significantly, readers are strongly advised to consult a SEBI-registered investment advisor or a qualified financial consultant before making personal capital allocations based on these projections.
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