L&T Targets 32 MW Data Centre Capacity; Eyes Electrolyser Order Pipeline

Larsen & Toubro (L&T) said it w‌ill commissi‍o‌n 1​8 MW of additional data​ centre capacity‌ by⁠ March-end, taking its total operationa​l capaci​ty to 32 MW, backed by a capital investment of around ₹1,00‍0 crore.

The​ company also​ highlighted progress in its design-led semiconductor business and​ said it expects near-term opportunities in electrolysers‌, after developing a 100% in​di⁠genous 4 MW stack now being upgraded to 8-10 MW‌.

These upda​t⁠es came even as L&T reported a 4.2% ye​ar-on-year decline i​n Q‌3 cons‌olidated‌ profit to ₹3,‌21​5 crore, im⁠pacted by‍ a one‌-tim‍e ₹1,191 crore provi‍s​ion link‍ed to new labou⁠r code⁠s.

What Is L&T Planning in Data Centres?

L&T(Larsen & Toubro) currently has 14 MW of data centre capacity operational, with another 18 MW scheduled for commissioning before March-end, according to management commentary during its Q3 earnings conference call. Once commissioned, the company’s total data centre capacity will stand at 32 MW by the end of the fiscal year.

Key details shared by the company:

• Total data centre capex is ₹1,000 crore.

• Capacity expansion focused on commissioning rather than greenfield announcements

• Data centres are positioned as a long-term infrastructure play

The scale of capital deployment highlights L&T’s intent to build a meaningful presence in digital infrastructure. The question now is how quickly this capacity translates into utilisation and returns.

How Is Semiconductor and Electrolyser Business Shaping Up?

Beyond data centres, L&T provided updates on two emerging verticals, semiconductors and electrolysers. In the semiconductor business, the company is currently focusing on design-led chips, rather than manufacturing. Management indicated that:

• L&T is engaging with multiple customers

• Most semiconductor-related spending is expensed through the P&L, not capitalised

• The approach remains asset-light at this stage

On the electrolyser front, L&T said it has developed a 100% indigenous 4 MW electrolyser stack, which is now being upgraded to 8-10 MW capacity.

According to management, the company expects order opportunities to emerge in the near term, as demand for green hydrogen-linked infrastructure evolves. This raises a key question for investors: can these technology-led segments become revenue contributors over the next few years?

What Do Q3 Numbers Say About Near-Term Impact?

While outlining future-focused businesses, L&T’s December-quarter financials reflected the impact of one-time costs.

The company reported a 4.2% year-on-year decline in consolidated profit after tax to ₹3,215 crore, compared with ₹3,359 crore in the same quarter last year. The decline was primarily due to:

• The company established a special financial reserve which amounted to ₹1,191 crore.

• The company set aside funds to meet employee benefit obligations which resulted from new labor law regulations.

• The charge was classified under exceptional items.

Quarterly profit changes resulted from legal accounting changes which had a greater effect than the company's basic business results, which investors will monitor in the upcoming quarters.

Sources:

Business Standard

Economic Times