Real estate and data centre infrastructure stock Anant Raj Ltd has lost over one-third of its market value within a month. But Emkay Global believes the scrip has 71 per cent potential upside ahead. The upcoming launches in the March quarter would drive pre-sales in the near term, Emkay Global said adding that its channel checks suggest that apart from the balance launchable inventory in Sector 63A Gurugram, there is a possibility of Anant Raj adding a new project in NCR, which would drive pre-sales over the medium term.
For the December quarter, Anant Raj reported a profit of Rs 110 crore, up 55 per cent over Rs 71 crore in the same quarter last year. Revenue for the quarter came in at Rs 544 crore, up 36 per cent over Rs 401 crore YoY.
Emkay Global said Anant Raj has a comfortable launch pipeline, as availability of low-cost land bank and scope of accumulating more would drive 18 per cent growth in real estate bookings and 39 per cent growth in collections compounded annually over FY24-27, generating a healthy cashflow stream.
"This, coupled with a deleveraged balance sheet and likely fund-raise of Rs 2,000 crore, would pave the way for a sharp ramp up of the company’s Data Center (DC) business. Availability of land/civil structures gives competitive advantage and would aid faster capacity addition (expected at 102MW by FY27E; 6MW, as of Q3FY25). A rise in share of cloud-based services would boost profitability," Emkay Global said.
Shares of Anant Raj have fallen 40 per cent from 52-week high level of Rs 947.25 in less than a month. Emkay Global said that the upside potential for Anant Raj has increased to 71 per cent, largely on account of sharp correction in the stock price.
The brokerage sees revenue, Ebitda and PAT of the data center (DC) business to sharply increase to Rs 850 crore, Rs 650 crore and Rs 310 crore by FY27 against nil figures in FY24. Overall, it expects 22 per cent IRR for the DC business till FY45E.
"We maintain BUY on Anant Raj and revise up our SoTP-based target price by 5.4 per cent to Rs 975 (nearly 71 per cent upside). Anant Raj's Q3FY25 revenue, EBITDA and PAT came in line with our estimates. Ebitda margin expanded to 25 per cent (up 202 bps YoY), as gross margins improved to 29 per cent (up 272 bps YoY)," it said."
The brokerage sees DC business margins sustaining at 75-80 per cent levels across the data center’s life, currently culminating into equity value of Rs 18,600 crore i.e. Rs 546 per share.
The real-estate business is likely to witness strong cash inflow on the back of 39 per cent CAGR in collections over FY24-27E, which would fund the growth in data centers. Anant Raj's real-estate business is expected to contribute Rs 437 per share to the target price, Emkay Global said.