7 Stocks to Benefit from Booming $2.5 Billion Data Centre Cooling Market

Synopsis: India’s $2.5B data centre cooling market is booming, driven by AI workloads and hyperscale expansion, benefiting companies like Aeroflex Industries, Hitachi Energy India, and a few more, with efficiency and sustainability as key growth drivers.

India’s data centre sector is experiencing rapid growth, fueled by the surge in digital adoption and high-performance computing. This expansion is creating an urgent need for advanced cooling and thermal management solutions to maintain efficiency and reliability.

As data centre capacities rise and AI workloads intensify, traditional air cooling methods are no longer sufficient. The market is shifting toward innovative liquid cooling technologies, while sustainability and energy optimisation remain critical considerations for operators and policymakers alike.

Massive Capital Influx for Thermal Management

India’s data center sector is witnessing a significant surge in investment, with an estimated $2 billion to $2.5 billion expected to flow into advanced cooling and thermal management solutions over the next few years. 

This financial push is a direct response to the quadrupling of data center capacity since 2020, which currently stands at 1.5 GW and is projected to reach 3–3.5 GW by 2030. As high-performance computing becomes the norm, the cost of cooling infrastructure is now estimated at approximately $1.3 billion per GW of new capacity.

The AI-Driven Shift to Liquid Cooling

The primary catalyst for this infrastructure overhaul is the explosive growth of Artificial Intelligence (AI). Traditional air cooling methods are proving insufficient for the intense heat generated by high-density AI workloads, which are expected to drive 75% of future data center growth. 

Consequently, operators are pivoting toward liquid immersion and direct contact liquid cooling. While global giants lead the market, Indian startups are emerging to provide localised liquid cooling solutions to bypass global supply chain bottlenecks.

Environmental Hurdles and Sustainability Goals

Despite the technological progress, the rapid expansion faces critical environmental risks, particularly regarding water and energy consumption. A single 100 MW facility can consume up to 800,000 liters of water daily, a concerning figure given that many new centers are located in water-stressed regions. To combat this, innovative firms are developing water-positive technologies that convert waste heat back into water using liquid desiccants.

Future Outlook and Market Growth

The long-term prospects for the industry remain bullish, with analysts projecting the Indian cooling market to reach $9.28 billion by 2031, maintaining a compound annual growth rate (CAGR) of over 25%. While high upfront costs and a lack of specific water-use regulations present challenges, government initiatives like the National Data Centre Policy are helping to formalise the sector and encourage domestic manufacturing of these critical cooling components.

Stocks that could benefit 

Aeroflex Industries Ltd

Aeroflex supplies specialised liquid cooling components such as hoses, skids, and fluid networks used in high-density AI data centres. With the shift from traditional air cooling to advanced liquid and immersion technologies, Aeroflex stands to gain directly from increased demand for these critical thermal management solutions.With a market capitalisation of Rs. 3,831.64 cr, the shares of Aeroflex Industries Ltd closed at Rs. 289.55, up from its previous close of Rs. 274.20 per share.

Hitachi Energy India Ltd

Hitachi Energy provides power infrastructure, including transformers and grid solutions, that large data centres require to operate efficiently. As hyperscale facilities and AI workloads increase energy demands, Hitachi benefits from contracts and upgrades tied to expanding power and distribution needs. With a market capitalisation of Rs. 1,26,447 cr, the shares of Hitachi Energy India Ltd closed at Rs. 28369, up from its previous close of Rs. 27306.75 per share.

Schneider Electric Infrastructure Ltd

Schneider Electric offers integrated energy management and precision cooling solutions for data centres. With India’s hyperscale data centre expansion and the move to liquid cooling, its systems for efficient thermal management and power optimisation become essential, boosting demand for its products.

With a market capitalisation of Rs. 24,161 cr, the shares of Schneider Electric Infrastructure Ltd closed at Rs. 1010.50, up from its previous close of Rs. 968.60 per share.

KRN Heat Exchangers and Refrigeration Ltd

KRN manufactures heat exchangers and HVAC components that are central to data centre cooling. As rack densities rise and AI workloads generate more heat, KRN benefits from higher orders for thermal management solutions to maintain efficiency and uptime. With a market capitalisation of Rs. 6,041 cr, the shares of KRN Heat Exchanger and Refrigeration Ltd closed at Rs. 972, up from its previous close of Rs. 964 per share.

Amber Enterprises Ltd

Amber produces HVAC components and assemblies used in commercial and industrial cooling systems. While it’s not a pure data centre player, it benefits indirectly as the growing data centre ecosystem drives demand for HVAC parts, copper tubing, and related cooling hardware. With a market capitalisation of Rs. 25,535 cr, the shares of Amber Enterprises India Ltd closed at Rs. 7256, up from its previous close of Rs. 6894.50 per share.

Voltas Ltd

Voltas provides chillers and commercial HVAC solutions suitable for data centre applications. The increasing adoption of precision cooling systems for high-density servers positions Voltas to secure more projects and revenue from new builds and upgrades. With a market capitalisation of Rs. 43,349 cr, the shares of Voltas Ltd closed at Rs. 1310.10, up from its previous close of Rs. 1284.40 per share. 

Blue Star Ltd 

Blue Star specialises in commercial and data centre-specific cooling solutions, including precision chillers and HVAC units. As India’s data centres expand and focus on energy-efficient, high-performance cooling, Blue Star gains from the rising demand for tailored thermal management systems. With a market capitalisation of Rs. 34,646 cr, the shares of Blue Star Ltd closed at Rs. 1685, up from its previous close of Rs. 1654.20 per share. 

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