What is L&T’s ₹100-billion data centre business model?

Larson & Toubro (L&T) has allocated Rs 100 billion towards the data centre business under ‘Lakshya 2031’, to create about 200-megawatt worth of capacity between Vizag, Bengaluru, and Mumbai catering to global hyperscalers and quantum computing clients.

The company objective is to scale the data centre business via hyper scale alliances, AI-ready infrastructure, and sovereign private cloud offerings. It is currently evaluating multiple business and partnership models and the pace and scale of investments may change depending on the final structure adopted, according to the management.

The data centre business rebranded as Larsen & Toubro Vyoma advanced its growth agenda by commissioning the 12 MW capacity at Kanchipuram, with an additional 6 MW at an advanced stage of commissioning, bringing the total capacity available to 30 MWs, positioning the platform to drive L&T's hyperscale data centre expansion, catering to high-performance computing and advanced data storage requirements.

What is L&T’s business model?

R. Shankar Raman, President and Chief Financial Officer, L&T said that the company wants to make sure its data centre is AI enabled with GPUs which will enable high computing to be done.

“About 200-megawatt worth of data centre capacity we could create over time. And as you might know, initially we've created 30 MW, and another 30 MW is under construction in Mahape. The first 30 MW is in Kanchipuram in Chennai. Our idea is between Vizag, Bengaluru, and Mumbai. We should be able to put together this 200 MW capacity but that will come in modules,” Raman said at the company’s Q4FY26 earning call last week.

The company is looking at build-to-suit arrangement, a tie up with both the server chip supplier, GPU supplier, as well as the end user.

“The MoU that we have with Nvidia is precisely towards that, that once we assure a certain capacity being created and of the type that would interest certain large organizations, then we'll also go into the market and generate.

What are the returns expected?

The company is expecting to give about 13-14% return at the optimal level, which will have combination of hyperscalers and non-hyperscalers.

Raman said that the returns will be driven by how you populate the data centre.

“At the moment we are trying to curate the market, develop supply chain, and also create facility from the ground up. That's the thinking. Maybe the full benefit of these investments will flow in the 2031-2036 plan,” he added.