Data Center Stock: Promoters Invest Rs 200 Crore for Data Center Expansion; Marquee Investors Also Join

In FY24, the company achieved an EBITDA of Rs 428 crores, a 59 per cent increase from FY23, and a PAT of Rs 138 crores, a 5.8x increase from FY23.

Indian markets witnessed a sharp sell-off on Friday amid fragile global cues, however, there were some stocks which outperformed the markets, and, one such stock was Black Box Limited. Shares of Black Box were locked at an upper circuit limit of 5 per cent on Friday amid an interesting development.

Black Box Limited, a leading global digital infrastructure solutions integrator, has announced a significant capital infusion of Rs 410 crores through a preferential issue of convertible warrants. This strategic move is set to accelerate the company's growth and expansion in the digital infrastructure sector, highlighting its robust market position and future-ready vision.

Details of the Funding Round

The Board of Directors approved the issuance of 98,32,123 fully convertible warrants at a price of Rs 417 per warrant. Each warrant is convertible into one equity share of face value Rs 2 each, fully paid-up, with a premium of Rs 415 per share. The conversion can be exercised in one or more tranches within 18 months from the date of allotment, in compliance with relevant SEBI regulations.

The funding round garnered Rs 200 crores from existing promoters, showcasing their continued confidence in Black Box's growth plans. An additional Rs 200 crores came from a consortium of marquee investors, including foreign institutional investors and high-net-worth individuals, while key management personnel contributed Rs 10 crores. Post-conversion, promoter shareholding will slightly decrease from 71.1 per cent to 69.8 per cent.

Strategic Investment Areas

1. Expansion of Data Center Capabilities:

The funds will significantly bolster Black Box's data center build capabilities. With data center capacity projected to grow exponentially over the next 3-5 years due to the adoption of cloud and AI technologies, Black Box aims to enhance its presence in this segment. The company will invest across the value chain to provide expanded services to hyperscalers, multi-tenant data center operators, and large enterprise data centers.

2. Advancement in Network Infrastructure:

Capital will be deployed to expand Black Box's solutions portfolio for enterprise customers and data center operators, including hyperscalers. This expansion will focus on connectivity infrastructure and networking, essential to support increasing data traffic and demands for improved user experiences at the edge.

3. Innovation and Delivery:

A portion of the funds will be allocated to innovation and development efforts, pioneering new digital infrastructure solutions. These include advancements in cloud computing infrastructure, cybersecurity, artificial intelligence, and the Internet of Things (IoT).

4. Go-To-Market Expansion:

The investment will also support strategic growth initiatives in key industry verticals with relevant technology solutions. This includes leadership hiring and significant expansion of sales and business development efforts, both in North America and emerging markets.

Financial Performance and Outlook

Black Box has demonstrated significant improvement in financial performance, focusing on cost rationalization initiatives and productivity enhancements. In FY24, the company achieved an EBITDA of Rs 428 crores, a 59 per cent increase from FY23, and a PAT of Rs 138 crores, a 5.8x increase from FY23. The company expects continued growth momentum in EBITDA and PAT in the current financial year.

About Black Box Limited

Black Box Limited is a global digital infrastructure integrator offering network and system integration services, support services, and technology products to businesses worldwide. The company operates in the United States, Europe, India, Asia Pacific, the Middle East, and Latin America, employing around 4,000 professionals globally. Black Box provides robust service offerings in network integration, digital connectivity infrastructure, data center build-out, modern workplace solutions, and cybersecurity across various industries, including financial services, technology, healthcare, retail, public services, manufacturing, and more.

Disclaimer: The article is for informational purposes only and not investment advice.