Meta's Second-Largest Indian Supplier Has An AI Data Centre Story Beyond Its Stock Rally

Black Box is positioning itself to benefit from rising global spending on AI infrastructure and hyperscale data centres, even as supply chain delays weigh on near-term revenue growth.

The company provides networking, cybersecurity, workplace modernisation and data centre infrastructure services. Its Global Solutions Integration segment contributes 84% of revenue and houses its data centre business, which now accounts for nearly 40-50% of overall revenue. The remaining business comes from enterprise networking, wireless infrastructure and cybersecurity services, giving the company exposure beyond data centres alone.

Management said the AI-led infrastructure cycle remains in its early stages, with more than 390 active projects underway across over 55 players in North America. Installed data centre capacity is expected to nearly double between 2024 and 2028, while colocation vacancy rates have fallen to 2.3%, reflecting limited available capacity.

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North America Focus

North America contributed nearly 67% of revenue during 9MFY26 and remains the company's largest market. Black Box is concentrating on six US local markets where it already has delivery capabilities, certifications and client relationships.

The company works with three of the world's top five hyperscalers and supports companies within the "Magnificent Seven" ecosystem.

Among its hyperscaler relationships, Meta Platforms remains one of Black Box's key customers, according to data available on Bloomberg. The company derives nearly 4.6% of its overall revenue from Meta and participates in infrastructure deployments linked to the social media company's expanding AI and data centre operations. Management views hyperscaler partnerships as a major driver of future order growth. It also maintains partnerships with technology companies including Microsoft, Oracle, Dell Technologies and HP.

AI workloads are increasing the complexity of data centre infrastructure, requiring higher power density, liquid cooling systems and advanced fibre connectivity. Black Box builds fibre and cabling networks for these facilities and is increasingly deploying liquid- and immersion-cooling infrastructure for AI workloads.

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Its offerings also include green data centre solutions, facility management, RunOps and IT support services. Management is seeking to increase the contribution of recurring managed services revenue, which currently accounts for nearly 30% of revenue.

Management said a $100 million data centre project can generate an additional $10-15 million in recurring managed services revenue over several years. It cited a European hyperscaler deployment initially valued at $20-30 million that later expanded into a multi-year services engagement.

The company aims to increase recurring managed services contribution to more than 40% in the near term and eventually to 50%. A $382 million managed services and maintenance order book supports that target.

Order Book Expansion

Black Box has restructured its data centre operations and expanded its dedicated team to capture rising demand.

Annual data centre order bookings, which earlier ranged between $100 million and $200 million, are now expected to rise to $400 million-$600 million. Recent wins include multi-year service contracts worth more than Rs 225 crore from global hyperscalers.

Management said the current demand cycle remains at an early stage and expects growth in bookings to continue.

By Q3FY26, the total order backlog rose to $601 million. Management expects the backlog to exceed $800 million by March 2026, supported by large data centre contracts.

The company currently operates at a quarterly order booking run rate of $230 million-$250 million and aims to increase this to $300 million-$350 million over time. Management said the stronger pipeline should support revenue growth from FY27 onwards.

India Expansion Plans

India contributed nearly 7% of revenue during 9MFY26 and remains another long-term growth market for the company.

India's installed data centre capacity has risen from 0.3 GW in 2018 to nearly 1.3 GW in 2024 and is projected to exceed 5 GW by 2030. The sector is expected to attract investments of $20-25 billion over the next five to six years.

Black Box recently secured orders from an Indian internet company, telecom-related mandates linked to 5G rollouts and a five-year cybersecurity services contract covering 20,000 employees for a municipal corporation.

The company has allocated Rs 100 crore for domestic expansion and is expanding its Bengaluru centre of excellence. It plans to double the workforce there to 1,000 employees over the next 12 months. Management aims to double India revenue over the next three to four years.

Brazil Acquisition

Latin America contributes nearly 3% of revenue, but the company is increasing its focus on the region through acquisitions.

Black Box signed a definitive agreement to acquire Brazil-based 2S Inovações Tecnológicas for nearly Rs 275 crore, subject to working capital adjustments. The deal values the company at an EV/EBITDA multiple of nearly 5-5.5x.

An additional earnout payment of up to Rs 100 crore is linked to performance targets over two years.

The acquisition brings more than 650 enterprise customers and a Cisco Gold Partnership, giving Black Box access to larger enterprise networking opportunities. Management expects the acquisition to contribute Rs 500 crore in revenue by FY27.

Europe, which contributes nearly 9% of revenue, is also emerging as a growth market as demand rises for sustainable data centre infrastructure.

Supply Chain Delays Hit FY26 Guidance

Revenue rose 5% year-on-year to Rs 4,631 crore during 9MFY26, while EBITDA increased 6% to Rs 406 crore. EBITDA margin stood at 8.8%. Net profit rose 6% to Rs 153 crore.

The company said industry-wide shortages of optical fibre, GPUs and power infrastructure delayed project execution and revenue recognition.

Black Box said it does not source hardware directly and must wait for clients to complete material deliveries before deployment work can begin.

Management said revenue worth nearly $40-45 million expected during FY26 has shifted to later periods due to these delays.

As a result, the company lowered FY26 revenue guidance to Rs 6,325-6,375 crore from Rs 6,750-7,000 crore. It also guided for EBITDA of Rs 555-575 crore and net profit of Rs 220-230 crore.

Valuation in Focus

After an 80% rally over the last month, Black Box shares, at Rs 943 apiece, trade at nearly 73 times FY26 estimated earnings.

The valuation stands above peers including Affle 3i and L&T Technology Services.

Risks include slower data centre capital expenditure, project execution delays and competition in infrastructure services.

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