The global and Indian data center markets are experiencing massive expansion, creating a significant growth engine for companies across the ecosystem.
The ₹63 Lakh Crore Global Data Center Boom
The global data center market is projected to reach US$425.0 billion by 2026 and is expected to scale to US$ 684.0 billion (about ₹63 lakh crore) by 2031. India presents a highly attractive growth opportunity due to a fundamental mismatch between usage and infrastructure.
Data Center Market Size
While India ranks first globally in data consumption per user, its data center capacity share remains heavily underpenetrated at just around 2.8% of the global total. This dynamic makes India one of the fastest-growing data center markets worldwide.
The ₹2.3 Lakh Crore India Data Center Market
As such, India’s data center market is expected to more than double to US$25.1 billion (₹2.3 lakh crore), up from US$11.8 billion during the period. As such, this article examines three “hidden gems” expected to benefit from this opportunity.
#1 Dynacons Systems: The IT Architect of AI Data Centers
For Dynacons Systems, Data Centre and Cloud Infrastructure are core business and the primary growth engine. It is an IT services provider that sits between traditional data center providers and end customers. Dynacons is benefiting from massive tailwinds in the data center market.
It supplies a range of data center infrastructure setups. Dynacons provides end-to-end design, build, optimisation, and modernisation services for data centers. Its specific solutions include private and hybrid cloud solutions, hyper-converged infrastructure, enterprise backup, Artificial intelligence, and infrastructure.
The Transition: From IT Services to High-Margin Data Center Architect
The data center segment has been growing faster for Dynacons. Revenue from this segment grew 2.4 times from ₹195 crore (FY23) to ₹471 crore in FY25. Notably, the data center and cloud segment’s contribution to Dynacons’ overall revenue mix has steadily grown from 14% in FY21 to 37% in FY25.
8X Jump in Revenue from Data Center and Cloud
Margin Expansion: Why 37% Revenue Mix is a Sustainability Milestone
Data center projects have higher profit margins than other segments, such as workplace solutions. This changing revenue mix has been a key driver of the company’s EBITDA margin improvement, which increased from 4.2% in FY21 to 8.3% in FY25. This margin is completely sustainable and may increase further, per management.
Agentic AI & Cybersecurity: Future-Proofing the ₹2,389 Crore Order Book
As of Q3FY25, its order book stood at ₹2,389 crore, providing robust near- to medium-term revenue visibility. The average execution timeline for this order book is approximately two years. Dynacons is actively pursuing an additional pipeline of orders totaling approximately ₹3,083 crore across its business segments.
The company expects its growth to be driven by rising enterprise investment in data center modernisation, cloud adoption, and cybersecurity. It also foresees a very strong pipeline from the public sector, as government digital transformation initiatives are still in their early stages.
This is because rising AI workloads and automation requirements are accelerating enterprise investments. Dynacons is actively building capabilities around AI-ready infrastructure and “Agentic AI.” As AI both heightens cybersecurity needs and creates new threats, Dynacons has partnered with firms such as Cygeniq to roll out AI-ready cybersecurity services.
The Amazon & Uber Connection: Leveraging Hyperscalers
It aims to continue leveraging its large pool of enterprise clients, including ICICI Bank, Uber, and Amazon, by cross-selling and up-selling new digital workplace and managed service solutions. Beyond India, Dynacons has outlined a multi-phase geographic expansion strategy to Southeast Asia, Europe, and the Middle East.
Numbers are also showing this shift. Revenue increased 10% year-on-year to ₹341 crore in Q3FY26, driven by disciplined execution, operating leverage, and an improving solutions mix. EBITDA was up 49% to ₹41 crore, while margins increased by 260 bps to 11.9%. Net profit surged 27% to ₹23 crore.
#2KRN Heat Exchanger: Cooling the Giants with B2B Precision
KRN Heat Exchanger manufactures customised heat exchangers and related products for the Heating, Ventilation, Air Conditioning, and Refrigeration sector. KRN has a B2B business model, supplying mainly to original equipment manufacturers (OEMs) like Schneider Electric and Blue Star.
KRN’s products include fin-and-tube heat exchangers, including condensers, evaporators, and fluid and steam coils. It is used in various applications, including data centre cooling. As data centers increasingly adopt liquid cooling technologies, KRN provides targeted components for this shift.
Moreover, heat exchangers required for data centers are significantly larger than standard units. Previously, KRN lacked the necessary infrastructure to manufacture these effectively. But with its newly built manufacturing facility, KRN is now fully capable of fulfilling data center orders.
The 15% Revenue-Mix from the Data Center Cooling Segment
The demand for data center cooling solutions has grown substantially, allowing the segment to contribute nearly 15% of KRN’s revenue in 9MFY26, up from 7% last year. The company reports receiving larger single-purchase orders over the past few months.
It maintains a strong pipeline of inquiries, leading management to expect data centers to deliver strong results over the next three to four years. KRN currently generates the majority of its data center revenue from the Indian market, alongside some exports to Europe. It already supplies heat exchangers to almost all major data center HVAC providers in India.
Beyond HVAC: Targeting 50% Market Share in Data Center Liquid Cooling
Management has stated a target to capture at least 50% of the total orders for data center heat exchangers in the Indian market going forward. To capitalise on the opportunity, KRN recently expanded its capacity.
The Capacity Pivot: Scaling Infrastructure for Large-Scale Data Center Units
Overall, KRN operates across two manufacturing facilities, with a combined annual production capacity of 10 lakh units. Its primary legacy facility was operating at near maximum capacity. The new facility is currently in its ramp-up stage and is expected to achieve around 20% capacity utilization in FY26 and 50% in FY27.
6x Revenue Potential: How New Facilities are Driving a 65% PAT Surge
The expanded capacity allows KRN to manufacture entirely new product lines, including Bar & Plate Heat Exchangers, Oil Cooling Units, and Roll Bond Evaporators. Management noted that the total capacity of both the new and existing facilities aims to expand its top-line by around 6x the earlier baseline of around ₹300 crore.
Financial momentum is also showing this shift. Revenue increased 33.3% year-on-year to ₹155.1 crore in Q3FY26, driven by disciplined execution and an improving solutions mix. EBITDA was up 96.5% to ₹31 crore, while margins increased by 610 bps to 20.3%. Net profit surged 65.1% to ₹22.7 crore.
#3 TD Power Systems: The ‘silent’ Generator Giant Winning the Data Center Race
TD Power Systems (TDPS) manufactures electrical generators and motors. TDPS manufactures a wide array of customized power solutions, including Steam and gas turbine generators up to 250 MVA, hydro generators up to 45 MVA, and wind turbine generators.
TDPS Product Portfolio
Captive Power Pivot: Solving the Escalating Grid Costs for Global AI Hubs
TDPS is experiencing a boom in business opportunities driven by the rapid expansion of data centers and AI infrastructure. The demand for gas engines and gas turbine generators in the US and Europe is currently very high, with many orders directly linked to data centers.
As data centers need high power, grid power prices have escalated. In response, data centers are moving towards using captive power from the electrical grid. This means they generate their own independent power. This shift to independent power generation significantly increases the market opportunity for TDPS’s generator products.
The 25 MW Breakthrough: Replacing Aircraft Engines with Data Center Turbines
TDPS is actively providing solutions tailored to this booming market. For instance, the company recently received an engineering order from an OEM in the US for a 25 megawatt (MW) 2-pole generator. A subsequent production order for this project is expected.
This OEM is converting popular aircraft engines into 25 MW aeroderivative gas turbines to provide flexible, efficient energy to data centers, AI infrastructure, and grid support. TDPS also dismissed any signs of AI slowdown. In fact, it expects demand to grow annually until 2030.
In addition, TDPS is pursuing new product initiatives involving much larger machines, specifically 20 MW, 40 MW, and up to 100 MW generators. TDPS expects to fully ramp up production for these larger generator products in 2027. Beyond this unit, the existing plant is fully booked.
Export Dominance: Why 57% of the Order Book is Driven by Exports
TDPS recently commissioned a third manufacturing plant. The ramp-up of this new facility is expected to start in Q4FY26. Management has explicitly stated that exports will be the primary driver of the business growth in FY27 and FY28. Exports (including deemed exports) accounted for 57.6% of the total order book of ₹1,845 crore.
Financial momentum remained strong. Revenue increased 27% year-on-year to ₹444.9 crore in Q3FY26, driven by a massive increase in the generator business and strong export order inflows. EBITDA was up 33% to ₹82.6 crore, while margins increased by 100 bps to 18.6%. Net profit surged 25% to ₹56.3 crore.
The Verdict: Execution is the Final Frontier.
Dynacons’ return ratios, including Return on Capital Employed (RoCE) and Return on Equity (RoE), are the strongest amongst peers, followed by TDPS and KRN. Valuations, however, reflect a mixed picture.
KRN valuation is at a premium to the industry median, and even on a standalone basis, it remains pretty high. Dynacons’ valuations have eased following the recent sell-off, while TDPS continues to trade at a premium multiple.
| Peer Comparison (X) | |||||
| Company | Current P/E | 3Y Median | Industry P/E | ROCE (%) | ROE (%) |
| Dynacons | 13.3 | 19.1 | 22.8 | 39.2 | 37.3 |
| KRN | 87.4 | 87.6 (1.5Y) | 23.1 | 20.8 | 16.8 |
| TD Power | 63.1 | 42.6 | 32.5 | 30.4 | 22.3 |
| source: screener.in | |||||
India’s data center expansion is creating opportunities across the broader infrastructure ecosystem. Companies supplying IT infrastructure, cooling systems, and power equipment are emerging as key enablers of this growth.
While the opportunity is big, sustained execution, capacity ramp-up, and order conversion will ultimately determine which of these players can translate demand into durable growth. Keep them on your watchlist to track how the opportunity unfolds.
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 was unavailable have we used an alternative, widely used, and accepted 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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