Tech companies are racing to construct AI Data Centers. “The capital intensity of this expansion is substantial. Global capital spending for this AI buildout is projected to reach nearly $6 trillion between 2025 and 2030, according to the BlackRock Q22026 Global Outlook Report.
This investment is huge. In fact, the spending ambitions of just a few top tech “hyperscalers” are so large that they are actively reshaping our entire global economy. But building these data centers is only half the battle.
They also require a lot of Power. To keep machines running without disrupting the power grid, companies are now installing their own power sources. Data centers also require cooling products, generators, and other ancillary products to keep them running.
Against this backdrop, we highlight three select Indian engineering companies that are riding this global AI-data center-led power and cooling infrastructure buildout.
#1 MTAR Technologies: The Bloom Energy Supplier
MTAR Technologies is one of the prime beneficiaries directly linked to the US data center demand. It manufactures Hot Boxes (a key component of Bloom Energy’s fuel cell system). Bloom uses these hot boxes to power AI data centers, which are facing significant power shortages globally.
The Bloom Supply Value Chain
Bloom produces solid-oxide fuel cell systems for on-site power generation globally. It converts unused fuels like hydrogen, biogas, and natural gas into electricity on-site. It is expected that by 2030, one-third of hyperscalers will run solely on on-site power and be completely off-grid. Bloom Energy provides exactly that (on-site power).
Bloom Energy Share Price
Thus, Bloom is a direct beneficiary of the rising data center capex by hyperscalers. The company reported its highest-ever first-quarter profit and revenue (130% growth) in Q1 2026. Bloom has also raised its full-year guidance. Momentum is so strong that its stock price has increased 12.3X in the past year.
Following the move, MTAR, Bloom’s dedicated partner, has seen its share price surge 3.3X over the past year.
Capital Allocation: Inside the 2.5X Capacity Expansion and ₹300-Crore CAPEX Drive
MTAR also manufactures and supplies critical sub-components known as ASP assemblies. These assemblies are directly integrated into the hot boxes. Alongside, MTAR also supplies encoders. These products enable MTAR to increase its wallet share.
To meet the surging demand, MTAR is expanding fuel cell capacity by 2.5X to 20,000 units by March 2027. Moving forward, MTAR plans to incur CAPEX of approximately ₹250-300 crore over the next two years, specifically to build out additional capacity for this customer.
Beyond Bloom, MTAR is partnering with an international customer, SLB, to supply components and assemblies for data center solutions.
MTAR is currently working on prototypes and first articles. It has received its first article export orders worth ₹35 crore. Management hopes to enter into a formal, long-term contract with SLB to ensure the continuous supply. This vertical holds substantial long-term financial potential for the company.
Earnings Quality & Guidance: How a ₹4,861-Crore Order Book Underpins FY27 Growth
Management expects the data center business to generate revenue between ₹400 and ₹ 500 crore over the next few years. Furthermore, MTAR considers it a highly unique and profitable venture, as it offers around 70% value addition on the various assemblies required to build data center infrastructure.
MTAR’s forward outlook is significantly more robust.
FY26 revenue grew by about 30% year-on-year to ₹876 crore in FY26, driven by order book execution, especially in clean energy, which houses the data center business. EBITDA surged by 42% to ₹171 crore, with margins at 19.5%. Net profit surged by 76% to ₹94 crore.
Management has raised its FY27 revenue growth guidance from an initial 50% to 80% (±5%). This ambitious revenue scale-up is underpinned by a formidable order book of ₹4,861 crore as of 18 May 2026. Alongside, MTAR expects to maintain EBITDA margins of around 24%.
Evaluating Execution Hazards: Leverage and Working Capital Pressures
Risks to watch out for include rising debt, stalled progress with a key customer (Fluence), a high reliance on exports, and fixed costs. And of course, the chance that the data center buildout surge dies down.
Coming to debt, MTAR’s debt-to-equity has nearly doubled to 0.45x in FY26 from 0.24x in FY25. The company plans to continue using debt for expansion, which could increase financing costs. Supply Disruptions and the BIS Regulatory Matrix.
More than 70% of revenue is derived from exports, while imports only account for 30% to 35%. Thus, MTAR remains exposed to a slowdown in export demand, especially for AI data center demand. Any slowdown in capex could impact the projected guidance.
Also, almost 28% of its spending goes toward fixed costs. If the expansion faces execution delays, this high fixed-cost structure could severely pressure profitability.
#2 KRN Heat Exchanger: The Cooling System Supplier
KRN Heat is an integrated thermal and HVAC&R (Heating, Ventilation, Air Conditioning, and Refrigeration) solutions provider. The company manufactures heat exchangers, cooling coils, and comprehensive cooling systems for a wide variety of domestic and international industries.
Structural Tailwinds: Capitalizing on India’s Data Center Cooling Pivot
KRN is seeing significant growth in the data center, supplying fin-and-tube and bar-and-plate heat exchangers. Because the Indian market is still largely using air cooling, these products are mainly used for outdoor cooling (such as chillers or dry coolers).
KRN also provides complete sub-assemblies, including sheet metal, if required by the customer.
Mapping the Client Approvals and Backlog
KRN supplies components to India’s top five data center parts manufacturers. Schneider Electric is noted as one of their major domestic clients in this space. Furthermore, KRN has successfully passed the quality audit for Vertiv (a major global thermal management player).
It is currently preparing drawings for prototype approval.
Quantifying the Domestic Data Center TAM: Cooling Infrastructure Hurdles
For FY26, the data center business contributed 16% of KRN’s revenue. The segment is scaling quickly, having jumped to roughly 18.7%-19% of its revenue in Q4FY26 alone. This contribution is expected to increase further as order sizes increase. Management notes that ₹50+ crore orders are becoming routine.
KRN expects more than 80% to 90% of its incremental Fin & Tube business growth to come specifically from data centers. The size of upcoming data center projects provides a strong total addressable market (TAM) for KRN. For instance, HVAC systems typically account for roughly 10% of the total cost of a data center project.
Exports have emerged as a revenue for KRN. It supplies products to a particular customer in North America and has secured two more clients. North America is an undisputed global hub for data centers, hosting almost half of all facilities worldwide. It is further targeting to deepen its export presence.
KRN is targeting exports to account for 30% of revenue (from 17% in FY26) in FY27, with a goal of reaching 30-50% within the next three years. This expansion focuses on converting pilot orders into master supply agreements across the USA, the UAE, and Europe.
Operational Scaling: Analyzing the 6X Factory Footprint Expansion Strategy
To meet the surging demand, it recently increased its manufacturing capacity by 6X. This plant (II) is projected to reach 50% capacity utilization in FY27 and 80% (near-full utilization) by FY28. Once both Plant I/II are fully ramped up, the company anticipates a combined peak revenue potential of ₹2,250-₹2,850 crore, around 5X FY26 revenue of ₹600 crore.
Financially, it reported strong FY26 earnings. Revenue grew 39.5% year-on-year to ₹600 crore. EBITDA scaled by 59.5% to ₹112 crore while margin expanded by 234 bps to 18.7%. Net Profit surged by 45% to ₹76 crore. Alongside strong financial growth, there are concerns.
Execution Pressures and Freight Headwinds
Inventories have nearly tripled from FY25 levels, and receivables have doubled. Management attributed this inventory buildup to several factors, including delayed dispatches to the UAE and stockpiling raw materials to prepare for new Bureau of Indian Standards regulations. KRN also approved a resolution to raise ₹500 crore, probably via Qualified Institutional Placement.
Therefore, this could lead to equity dilution. As KRN expands its export footprint, it is facing disruptions in the global supply chain. Beyond pending shipments to the UAE, the tensions have driven up freight costs. KRN is currently attempting to pass these costs on to customers.
The company’s products rely on metals such as copper and aluminum, which have seen sharp price increases recently. While KRN passes these costs on to customers on a quarter-on-quarter basis, severe market volatility can still impact short-term margins and requires maintaining a 2.5-month inventory buffer. Under-utilisation of expanded plant size is another concern area.
#3 TD Power Systems: The Genset Supplier
TD Power (TDPS) manufactures a comprehensive range of generators and motors for various industrial and power generation applications. This includes generators for steam turbines (up to 250 MVA), gas turbines (250 MVA), hydro turbines (45 MVA), and wind turbines.
The company produces generators for gas engines (up to 25 MVA) and diesel engines (25 MVA).
Grid Expansion: Capturing the 100 GW US AI Data Center Power Shift
A driver of the company’s current demand is the rapid expansion of AI data centers, particularly in the US, which require reliable power-generation solutions. TDPS supplies generators to a major Original Equipment Manufacturer in the USA. This relationship has secured major order volumes.
In FY26, 80% of their order inflows were generated from exports. Its Gas Engine and Turbine Generators are seeing a surge in demand.Management projects that the addressable power requirement for AI data centers is around 100 GW (only in the US).
Just this current installation capacity is expected to take 5-7 years. As other regions add data centers, TDPS anticipates that this market size could easily double.
Capital Intensity: Scaled Generator Blueprints and the FY28 Capacity Horizon
To capitalise on the demand, it is actively planning capex to build larger generators (up to 200 MW). This strategic shift is directly linked to large data centers, which prefer larger generators for their greater efficiency. Currently, a shortage of large generators often forces end users to buy smaller machines.
By expanding into large generators, TDPS is positioning itself to supply these machines to AI data centers. Major production ramp-up targeted for 2028. It expects its manufacturing capacity to support revenue of ₹3,000-₹3,200 crore by FY28. TDPS’s plans to double manufacturing capacity by 2030.
Growth Runway: Parsing a ₹1,973-Crore Order Book and Raised FY27 Targets
As of 31 March, 2026, its order book of ₹1,973 crore provides revenue visibility for a year based on FY26 revenue of ₹1,856 crore. The management expects these orders to be executed in FY27, for which it has raised revenue guidance to ₹2,400+ crore. It also expects this to continue upgrading further, driven by strong inflows.
Management expects the order book to continue growing by another 20% to 25% over the next year. TDPS reported strong FY26 earnings. Revenue grew 45% year-on-year to ₹1,856 crore. EBITDA scaled by 41% to ₹343 crore while margin contracted by 50 bps to 18.3%. Net Profit surged by 37% to ₹239 crore. Alongside strong financial growth, there are also concerns.
Supply Chain Friction: Shipping Realities and Gross Margin Drag
Extreme execution pressure, zero-buffer operations, supply chain vulnerabilities, stringent penalty clauses, rising commodity prices, and heavy pressure on working capital are some of the risks. Its factories are running at extremely high capacity, leading to execution pressure. Any breakdown in production equipment would immediately cause production delays.
Dependence on international shipping poses a significant financial risk. Significant delays in shipping components from India (around 1.5 months) resulted in significant liquidated damage penalties. This penalty resulted in a decline of approximately 3% in TDPS’s gross margin.
TDPS is facing a significant increase in raw material costs, particularly copper. Old raw material hedges are expiring, and it will have to pass these increased costs on to customers. If commodity prices rise by another 20-30%, it will adversely affect margins, as it cannot adjust customer prices quickly enough to offset the increase.
In addition, because TDPS must secure significant raw materials to fulfill short-term orders, growth in trade receivables is outpacing top-line growth. Management confirmed that all of the company’s retained earnings are currently being funneled directly into working capital.
The Capital Efficiency Gap: Decoupling Stretched Multiples From Structural Returns
TDPS boasts a strong return ratio, including return on capital employed (ROCE) and return on equity (ROE). KRN return ratios have declined recently due to capacity additions that have yet to translate into earnings.
Valuation-wise, all three companies are trading at a premium to both industry and historical averages after the recent rally. The market appears to be pricing in strong future growth expectations.
MTAR stands out, with valuations expanding sharply despite relatively moderate return ratios, making its multiples particularly stretched.
| Valuation Comparison (X) | |||||
| Price-to-Earnings Multiple | Return Ratios | ||||
| Company | Company | 5Y Median | Industry | ROCE (%) | ROE (%) |
| MTAR Tech | 223 | 88.9 | 64.3 | 15.2 | 12.6 |
| TD Power | 86.9 | 37.5 | 39.0 | 33.4 | 24.7 |
| KRN Heat | 89.0 | 88.1 (2.7Y) | 24.3 | 16.1 | 14.3 |
The global AI infrastructure buildout is driving strong demand for power, cooling, and other solutions. MTAR, KRN, and TDPS are already benefiting from this data-center buildout, with further spending expected to sustain growth momentum.
Valuations, however, have also become demanding, leaving little room for execution misses despite strong long-term tailwinds. But it’s worth keeping these stocks on your watchlist.
Disclaimer
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data were unavailable have we used an alternative, widely accepted, and widely used source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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