Techno Electric - Diversification At Play: ICICI Securities

ICICI Securities Report

We interacted with the management of Techno Electric and Engineering Ltd. to take an update on the company’s new initiative, its data centre business, and the long-term opportunities which the company foresees.

Techno Electric has plans to develop ultra-scalable hyper-density data centres of 250 mega watt by FY30 across India, starting with 36 mw (capex of Rs 13 billion) in Chennai, followed by Delhi NCR, Maharashtra, Kolkata, Hyderabad and Bihar.

Data centre market in India is expected to grow from ~870 mw to 1,800 mw by FY25. With its data centre business, Techno Electric is expecting to leverage its in-house core competency in engineering, procurement and construction and create a robust opportunity for executing third-party data centre projects.

We expect the company to benefit with growth in order inflow led by expected data centre capex in the country.

We remain positive on Techno Electric with its asset-light business model (EPC return on capital employed 60% in FY22), strong orderbook with 3.2 times book/bill and strong balance sheet with cash of Rs 12 billion.

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