Black Box Secures ₹410 Crore for Digital Infrastructure Expansion

On August 2, 2024, Black Box Limited announced to the stock exchanges that it has secured commitments totalling ₹410 crore through a preferential issue aimed at accelerating growth and expansion in the digital infrastructure sector.

The Board of Directors approved the issuance of up to 98,32,123 fully convertible warrants, priced at ₹417 each, aggregating to ₹410 crore. Each warrant can be converted into one fully paid-up equity share of ₹2 face value at a premium of ₹415, at the option of the proposed allottee, within 18 months from the allotment date, in accordance with SEBI ICDR Regulations.

The funding round includes ₹200 crore from existing promoters, reflecting their continued confidence in the company’s growth plans, ₹200 crore from a consortium of marquee investors, including foreign institutional investors and high-net-worth individuals, and ₹10 crore from key management personnel. Following the warrant conversion, promoter shareholding will slightly decrease from 71.1% to 69.8%. Black Box remains a key investment for Essar in the technology sector.

In recent years, the company has focused on improving margins through cost rationalisation and productivity enhancements, resulting in a significant increase in EBITDA margins and Profit After Tax (PAT). For FY24, Black Box achieved an EBITDA of ₹428 crore, a 59% increase from FY23, and a PAT of ₹138 crore, 5.8 times higher than FY23. The company expects continued growth in EBITDA and PAT in the current financial year.

The raised capital will be invested in several key areas:

• Expansion of Data Centre Build Capabilities: The company plans to significantly grow its data centre capacity over the next 3-5 years, driven by cloud and AI adoption. Black Box aims to enhance its presence and offer expanded services to hyper scalers, multi-tenant data centre operators, and large enterprise data centres.
• Advancement in Network Infrastructure: Capital will be allocated to expand solutions for enterprise customers and data centre operators, including connectivity infrastructure and networking, to support increasing data traffic and improve user experience at the edge.
• Innovation and Delivery: A portion of the funds will be directed towards innovation and development of new digital infrastructure solutions, including advancements in cloud computing, cybersecurity, artificial intelligence, and IoT.
• Go-To-Market Expansion: The investment will support strategic expansion into key industry verticals, including leadership hiring and enhanced sales and business development efforts in North America and emerging markets.

Commenting on this, the Chief Executive Officer of Black Box Limited, Mr Sanjeev Verma, stated, “We are thrilled to have secured this capital, which will enable us to embark on an ambitious growth trajectory and enhance our digital infrastructure offerings and drive innovation in a rapidly evolving market.”

Mr. Deepak Bansal, Chief Financial Officer of Black Box Limited, said, “Thankful to the existing investors for the continued confidence and welcoming of new investors as we embark on the next phase of growth and profitability. The company remains committed to invest in the areas of growth and maintain sharp focus on operational efficiency and return on capital.”

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.