Crisil Ratings expects the revenue of India’s data center operators to reach around Rs 20,000 crore annually by fiscal 2028. This translates to an annual growth of 20-22 percent. It further finds that to cater to the buoyant demand, capacity in the industry is expected to double to 2.3-2.5 GW by March 2028.
In a press release CRISIL said, “While capital expenditure (capex) is set to rise and will require sizeable debt funding, credit profiles should remain healthy as stable cash flows from operating capacities will keep leverage (gross debt / earnings before interest, taxes, depreciation and amortisation [Ebitda]) in control.”
“The healthy revenue growth of 20-22 percent for data center operators will emanate from robust industry capacity addition, which is expected to double by March 2028,” says Anand Kulkarni, Director, Crisil Ratings. “The incremental capacity of 1.1-1.3 GW estimated to be commissioned during fiscals 2026-2028 is expected to achieve timely tie-up backed by strong demand and India’s data center density of just ~65 MW per exabyte, one of the lowest globally. This will translate into comfortable utilisation of 90-95 percent, in line with the past three fiscals.”
According to Nitin Bansal, Associate Director, Crisil Ratings, “The industry is expected to incur capex of Rs 55,000-65,000 crore over fiscals 2026-2028 to cater to the surging demand. While this would require sizeable debt funding, growing Ebitda from operational capacities will keep leverage steady at 4.6-4.7 times and support credit profiles.”
As per Crisil Rating’s analysis of data center operators making up 75-80 percent of the operational capacity in India, the data center industry growth will be driven by three factors:
- The rapid adoption of public cloud by enterprises amid ongoing digital transformation and technological advancements.
- Growing investments in artificial intelligence (AI) technologies, which will accelerate the demand for high-density computing infrastructure.
- Proliferation of 5G technology, which drives demand for low latency applications, such as video streaming, gaming, and internet of things based devices, requiring data center capacity in close proximity to demand.
Crisil Ratings also finds that the share of hyperscalers in the overall revenue mix has been rising. They now account for more than half of the capacity tie-ups, providing stable and predictable cash flow visibility to data center operators. Additionally, they are expected to set up captive data centers over the medium term, potentially leading to competitive pricing for third-party data center operators.
Crisil Ratings is a subsidiary of Credit Rating Information Services of India Limited (CRISIL) Ltd, which is in turn is majority owned by S&P Global Inc., a renowned provider of independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.