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The revenue of India's data centre operators is likely to reach nearly Rs 20,000 crore annually by fiscal 2028, said a report by Crisil Ratings on Tuesday.
This translates into robust annual growth of 20-22% as both enterprises and retail consumers dial up their use of digital technologies and platforms. Crisil noted that to meet the growing demand, industry capacity is likely to double, reaching 2.3-2.5 gigawatt (GW) by March 2028. While capital expenditure is set to increase substantially, necessitating significant debt funding, the agency expects operators' credit profiles to remain stable due to steady cash flows from existing facilities, which will help keep leverage metrics, including Ebitda, under control. According to Crisil's assessment of operators accounting for 75-80% of India's current capacity, the sector's expansion will be fuelled by three key factors. These included rapid adoption of public cloud services as enterprises continue large-scale digital transformation, growing investments in artificial intelligence (AI), driving demand for high-density computing infrastructure, and spread of 5G technology, which is increasing the need for low-latency applications such as video streaming, gaming, and IoT devices, in turn boosting the requirement for edge-proximate data centres. The report highlights strong customer stickiness in the sector due to high switching costs and long-term contracts, especially with hyperscalers. These large cloud service providers now contribute over half of all capacity tie-ups, providing operators with predictable and stable cash flows. However, Crisil cautioned that hyperscalers' significant bargaining power and their expected move toward establishing captive data centres could intensify competition and potentially pressure pricing for third-party operators. Although contract pricing has remained largely stable over the past two years, it remains a key monitorable. Going forward, the agency said the sector's performance will hinge on operators' ability to commission new capacity on schedule and secure customer commitments at sustainable pricing levels. (ANI)
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