Riding the Schneider-Nvidia AI wave: Is this Indian small-cap the next big winner?
The growing demand for artificial intelligence (AI) and semiconductors is further fueling infrastructure requirements, boosting the stock prices of companies catering to energy and automation solutions.
One such company is Schneider Electric Infrastructure Ltd. (SEIL), an electric equipment provider. The company's stock surged 1,080% over five years, largely propelled by India's infrastructure growth story. SEIL's rally began in FY22, when it posted its first full-year profit of Rs 28 crore after a decade of balance sheet challenges.
What truly caught investors' attention, however, is its 66% rally since May 8, 2025, outpacing peers like ABB India and CG Power and Industrial Solutions during the recovery from the Trump-induced tariff uncertainty.
Stock Price Momentum of SEIL and Peers in 2025
This rally is part of a multi-year growth phase for the three companies, which began in July 2022 after the Indian government announced PLI scheme beneficiaries. Subsequent investments in manufacturing, power infrastructure, and digitalisation led to a surge in order books. Faster execution of orders supported by the government's Viability Gap Funding (VGF) scheme, which provides financial assistance to projects that are not commercially feasible, drove revenues and profits.
Foreign Institutional Investors (FIIs) had steadily increased their stakes in SEIL, ABB India, and CG Power until late 2024. But when Donald Trump was elected the US president and introduced policy changes, FIIs began pulling funds, except from SEIL.
In December 2024, SEIL's parent company, Schneider Electric, announced a partnership with Nvidia to design cooling systems for AI-powered data centres using Nvidia's flagship AI chips. With Nvidia's GPU-based servers projected to consume up to 50 times more power than current systems by 2027, energy-efficient cooling infrastructure is critical.
Schneider Electric aims to make India a global manufacturing hub that caters to the global data centre market. Until now, Schneider Electric operated its India operations through a joint venture where it owned a 65% stake. In July, it announced plans to acquire the remaining 35% stake in its Indian joint venture from Temasek to get full ownership of Schneider Electric India. The company is also investing Rs 3,200 crore to expand its manufacturing capabilities in its third-largest market, India.
One of the investments is Schneider Electric India's Rs 100 crore cooling factory in Bangalore that will cater to both domestic and global data centre cooling solutions.
The government has recognised the data centre sector as infrastructure, attracting investments. According to CBRE, India's data centre market has attracted over Rs 5 lakh crore investments in the past six years, with inflows projected to exceed Rs 8.5 lakh crore by FY27. Another report by ICRA forecasts data centres to attract investments worth Rs 40,000–45,000 crore in FY26-27, increasing operational capacity to 2,000-2,100 MW from approximately 1,150 MW in December 2024.
India's Data Centre Investment (2019-2027 Estimated)
ICRA sees a data centre development pipeline of 3.0-3.5 GW over the next 7-10 years, requiring investments of Rs 2.0-2.3 lakh crore.
SEIL has already started seeing results, with data centre orders contributing around 15% of FY25 revenues, a figure expected to rise significantly.
Between FY22 and FY24, peers ABB India and CG Power and Industrial Solutions overtook SEIL in terms of revenue growth as they have a larger market share in the Power and Industrial segments.
SEIL's share price rallied 789% between April 1, 2021, and October 11, 2024, outperforming ABB India (512%) but underperforming CG Power and Industrial Solutions (1148%). In April 2024, Goldman Sachs initiated coverage on SEIL as it was bullish on India's $500 billion investment in power transmission in the next 25 years. At that time, it had a Sell rating on SEIL.
The dip since October 2024 made Goldman Sachs change its rating on SEIL to Buy in a report dated June 16, 2025, with a target price of Rs 910, representing a 21.3% upside from the then market price of Rs 750.15.
SEIL's share recovered and surged, and made a new high, while ABB and CG Power shares continue to trade 20-35% below their October 2024 levels.
Goldman Sachs upgraded the FY32 total addressable market (TAM) for SEIL to $14.53 billion from $9.02 billion as rising electricity demand and widening power deficits increase the urgency to upgrade India's power distribution infrastructure. It expects the urgency could expedite the Revamped Distribution System Scheme (RDSS), which faced delays, and $33 billion worth of projects could get approval.
Meanwhile, Nomura downgraded ABB India's rating to Reduce due to the slowdown in order inflows. The brokerage reduced its earnings per share estimate for calendar years 2025 and 2026. For ABB India, UBS noted, 'Sequential drop in orders for three quarters in a row was a clear negative surprise for the Street, raising concerns on calendar year 2025/26 top-line growth assumptions.' Although ABB India stated that this slowdown in orders is 'transient' and will pick up momentum later, the near-term outlook remains uncertain.
SEIL specialises in energy management, industrial automation technologies, such as transformers, power transformers, switchgears, protection relays, differential relays, electricity distribution management systems, a software suite for self-healing smart grid, e-house & smart cities applications. These are capital goods used in four main verticals:
Power & Grid Segment: SEIL is benefiting from the government's Rs 35,000 crore investment in digitalisation and renewable energy.
Mining, Metals and Minerals: The government's infrastructure spending on metros and airport projects is driving investment in the expansion of steel and cement factories, where SEIL provides energy and automation solutions.
Transportation/Mobility: Investments in electric vehicle (EV) battery facilities and EV infrastructure drove demand for energy management and automation solutions.
Industry and Buildings: The real estate investment drove demand for building management systems and energy distribution systems in residential and commercial buildings like hotels, healthcare, retail, and data centers.
These sectors are cyclical, making policy support and macroeconomic stability critical.
SEIL reported its first net profit in 2022. In the following years, profits grew, and equity value increased. Its debt-to-equity ratio improved from 153.54x in FY21 to 0.93x in FY25 as its equity value improved while debt remained at similar levels.
SEIL's Balance Sheet Parameters (FY21-FY24)
The company reported its highest revenue of Rs 2,637 crore, up 19.5%, and profit of Rs 268 crore, up 55.8%, in FY25. Material cost makes up almost 70% of its expenses. Hence, any change in the order book or commodity prices affects the company's revenue and earnings directly.
SEIL has delivered a 101% ROE over the last three years, driven by long-term growth levers like AI, sustainability, and energy transition.
With a price-to-earnings (P/E) ratio of 88.1x, it is trading higher than ABB India's 88x but lower than CG Power & Industrial Solutions' 104x. Comparing P/E with its 3-year median of 68.1x suggests that SEIL is currently overvalued.
SEIL stock has multiple long-term growth levers such as a strong balance sheet, growing investments in infrastructure, semiconductors, power, and data centres. But the company is tied to global economic uncertainty and the possible slowdown it could bring to investments in the short term.
Investors should closely watch this stock as the company participates in India's growth story.
Note: We have relied on data from http://www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
Puja Tayal is a financial writer with over 17 years of experience in the field of fundamental research.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
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