CtrlS Datacenters on steady growth track even as managed services biz skid in FY23

Hyderabad-based CtrlS Datacenters that commenced business over 15 years ago with its first data center in its home city and provides infrastructure for dedicated hosting and co-location services to its customers recorded a strong growth in the year ended March 2023 even as one of its two units shrank in size.

The company that has nine operational data centres at four locations — Mumbai, Hyderabad, Noida and Bengaluru, grew its topline around 20% during FY23, for the third consecutive year due to rack capacity addition, better capacity utilisation and increase in lease rates.

This took it past the ₹1,000 crore milestone even as the company has been facing a margin squeeze with both net and EBITDA margin shrinking to the lowest level in past four years, as per data collated by VCCEdge, a financial research platform.

Notably, the firm generates revenues from two business wings: co-location services and managed services. Colocation services generated nearly 80% of its total revenues last year while managed services contributed the rest.

It is gathered that the entire topline growth came from colocation unit that grew its total revenues around 28% and was partly neutralised by the 5.7% decline in managed services business.

Nevertheless, the firm is expected to repeat the performance and grow 20-25% again in the current year and improve some of the lost margin.

CtrlS Data Centre spokesperson did not offer any comment till the time of publishing this report.

The firm has over half a dozen other data centres in the pipeline in existing and new cities like Kolkata and Chennai. These are in addition to two existing edge data centres in Patna and Lucknow besides three proposed ones as Ahmedabad, Bhubaneswar and Bhopal.

While the Hyderabad, Mumbai and Noida units are owned and managed by CtrlS, the Bengaluru and another Hyderabad unit are managed by CtrlS and are operated on a revenue-sharing model. Its major customer segments are banking, financial services and insurance (BFSI), e-commerce, telecom, government bodies, IT companies, etc.

Last month, it announced its fifth hyperscale DC campus in Chennai.

CtrlS isn't just growing within India, and is also looking at other countries like Saudi Arabia, UAE, Thailand, Malaysia, Vietnam, and Bangladesh for opportunities.

CtrlS is also working on partnerships and investments to keep growing. It teamed up with Intel last year to host a lab for developing the next generation of processors at its Bengaluru facility.

Moreover, the company signed a memorandum of understanding (MoU) with the Uttarakhand government last November, pledging ₹250 crore towards establishing a greenfield Edge data centre, which is expected to generate over 1,000 jobs and attract significant investments within the state.

The company is believed to be spending ₹2,000-2,500 crore for setting up of new data centres and solar power project for captive consumption.

CtrS is in a sweet spot in terms of opportunities. Data localisation needs coupled with jump in data consumption due to increasing internet usage, government’s stress on egovernance besides adoption of new age technologies such as cloud computing, IoT, 5G etc has catapulted the demand for data centres.