Top 5 Digital Infrastructure Stocks to Watch Out in 2024

India's digital journey, marked by initiatives like the Citizen Stack, has transformed into a model for inclusive growth.

This framework, comprising digital identity, payments, and data management, has laid the foundation for seamless service delivery and economic participation.

The COVID-19 pandemic showcased India's digital resilience, with platforms like CoWIN efficiently managing vaccination drives.

Central to this transformation is robust digital infrastructure, encompassing data centres, fibre networks, and cloud platforms.

As the nation accelerates its digital transformation journey, the demand for these infrastructure components is soaring.

Companies at the forefront of building and managing this digital backbone are poised for substantial growth.

Let's delve into 5 key companies shaping India's digital infrastructure landscape.

#1 Indus Tower

Leading the list is the Indus Tower.

Indus Towers is a cornerstone of India's digital infrastructure, serving as a provider of tower and related infrastructure-sharing services.

As one of the largest telecom tower companies in India, it plays a pivotal role in supporting the nation's growing mobile connectivity.

The company's business model revolves around owning, operating, and maintaining telecom towers, which are leased to multiple mobile operators. This infrastructure-sharing approach optimises resource utilisation and reduces the overall cost of network deployment for telecom companies.

The company is driving up its investments in the rural parts of the country. The goal is to bridge the digital divide that the government of India wants to achieve as early as possible.

Further, the majority stake in the company is owned by Bharti Airtel, another leading telecom service provider based in India.

Additionally, Airtel plans to merge the high-growth data centre business, Nxtra, with Indus Towers. This move is designed to unlock value, provide an exit to Carlyle, and make Airtel more asset-light.

The integration of Nxtra's data centre business is expected to add another high-growth area, enhancing Indus Towers' prospects in the future infrastructure sector.

Indus Towers has been pivotal for the growth of digital India by creating telecom infrastructure and providing it to the telcos for rolling out new technologies faster.

For more details, see the Indus Towers company fact sheet and quarterly results.

#2 Adani Enterprises

Next on the list is Adani Enterprises.

Adani Enterprises has emerged as a dominant player in India's digital infrastructure landscape. The conglomerate, traditionally known for its prowess in energy, ports, and logistics, has made significant strides in building a robust digital ecosystem.

It has a big play in digital infrastructure planned and is looking to capitalise on the 350 million user base on its core infrastructure platform.

A pivotal move was the formation of a joint venture with EdgeConneX, a global leader in edge data centre solutions. This strategic partnership aims to develop and operate a vast network of hyperscale data centres across India.

The joint venture will invest US$ 5 billion (bn) in the next five years, of which more than half could be ploughed in this year itself.

AdaniConneX plans to develop 1 GW of data centre capacity before 2030.Adani's aggressive expansion plans position it as a key beneficiary of India's burgeoning digital economy.

For more details, see the Adani Enterprises company fact sheet and quarterly results.

#3 Power Grid Corporation of India

Next on the list is Power Grid Corporation of India.

Power Grid Corporation of India (PGCIL) is traditionally known for its role in power transmission and distribution, but it has also carved out a strong position in the digital infrastructure sector.

By building and managing a comprehensive network of optical fibre cables (OFC) across India, PGCIL supports high-speed data transmission and plays a crucial role in the nation's digital connectivity.

In the telecom space, PGCIL's extensive fibre optic network is vital for meeting the increasing demand for reliable internet services. This infrastructure forms the backbone of digital communication across the country.

Additionally, PGCIL has been a leader in advancing digital substation technology, a modern approach that enhances the reliability, efficiency, and flexibility of power systems.

The company's early adoption of this technology is evident in its commissioning of India's first 400 kV digital substation in Punjab in 2020, followed by the launch of a greenfield 220/66 kV digital substation in Chandigarh in January 2023.

These initiatives highlight PGCIL's pivotal role in driving the digital transformation of India's power sector, establishing it as a key player in the digital infrastructure space.

For more details, see the Power Grid company fact sheet and quarterly results.

#4 RailTel

Next on the list is RailTel.

RailTel Corporation of India has steadily established itself as a pivotal player in the digital infrastructure sector, leveraging its unique position as a subsidiary of Indian Railways.

This strategic advantage has allowed RailTel to build and maintain an extensive network of optic fibre cables, which are laid alongside railway tracks across the country.

This infrastructure forms the backbone of telecommunications in many parts of India, especially in areas where traditional telecom operators might not have ventured.

The core strength of RailTel lies in its vast fibre optic network, which spans over 61,000 kilometres.

In addition to this, RailTel has developed a city access network that spans over 21,000 km, further bolstered by over 9,300 points of presence (PoPs) strategically located to optimise connectivity. This expansive infrastructure positions RailTel as a key enabler of India's digital transformation.

The company offers a comprehensive suite of Information and Communication Technology (ICT) services, including data centre services, cloud solutions, and cybersecurity services. These services cater to a wide range of clients, including government bodies, private enterprises, and individual consumers.

Recognising the growing demand for localised digital services, RailTel has also ventured into setting up edge data centres in rural and semi-urban areas.

These edge data centres are crucial for enhancing the delivery of digital services, reducing latency, and improving the overall user experience in less urbanised regions.

RailTel's role as a one-stop solution provider for digital transformation is further underscored by its recent international ventures. The company has embarked on an ambitious expansion into Vietnam, where it aims to replicate its successful model of providing telecom infrastructure services.

In Vietnam, RailTel is offering its expertise in building and operating fibre optic networks, data centres, and other critical components of digital infrastructure.

This move not only contributes to Vietnam's digital transformation but also marks RailTel's entry into the global market, signalling its ambition to become a significant player on the international stage.

This expansion into the international market is a testament to RailTel's growing influence and ambition in the digital infrastructure space.

For more details, see the RailTel Corporation of India company fact sheet and quarterly results.

#5 IRCTC

Last on the list is IRCTC.

Indian Railway Catering and Tourism Corporation (IRCTC) is traditionally known for its role in railway catering, tourism, and online ticketing. However, it has increasingly positioned itself as a significant player in the digital infrastructure space in India.

One of IRCTC's most prominent contributions to digital infrastructure is its online ticketing platform, which has transformed the way millions of Indians book railway tickets.

This platform handles massive volumes of transactions daily, showcasing its robust and scalable digital infrastructure. IRCTC's website and mobile app are among the most visited and used platforms in the country, offering a seamless digital experience to users.

Beyond ticketing, IRCTC has expanded its digital services portfolio to include e-catering, tourism packages, and even a payment gateway - IRCTC iPay.

This diversification into digital services highlights the company's commitment to leveraging technology to enhance customer experience and streamline operations.

IRCTC's digital infrastructure is supported by its robust IT systems, data centers, and cybersecurity measures. The company has continuously invested in upgrading its digital platforms to handle growing traffic and provide a secure environment for online transactions.

Additionally, IRCTC's entry into other digital services, such as online hotel bookings and air ticketing, further underscores its role as a key player in India's digital landscape.

For more details, see the IRCTC company fact sheet and quarterly results.

Conclusion

India's digital infrastructure sector is undergoing a period of rapid growth and transformation. The country's drive towards digitalisation, coupled with increasing internet penetration and a thriving startup ecosystem, has created fertile ground for investment and innovation.

According to a report by the National Association of Software and Service Companies (NASSCOM), digital public infrastructure (DPI) could propel India to become a US$ 8 trillion (tn) economy by 2030.

The successful adoption of both mature and emerging DPIs could also help the nation achieve its goal of becoming a US$ 1 tn digital economy.

The government's 'Digital India' vision not only positions the country as a future technology powerhouse but also integrates digital transformation into its broader developmental policies. This momentum is likely to further fuel growth in the digital infrastructure sector.

However, investors should conduct careful research, evaluate financials, and consider their own risk tolerance before investing in this dynamic and fast-growing industry.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...