From Rs 74 to Rs 558! This real estate firm rallies over 650% in 2 years. What’s next?

A mid cap real estate company has been buzzing on Dalal Street for three reasons. First, shares of the company have delivered more than 650% return in just two years. Secondly, the firm is aiming to get net debt-free status by December 2024. Thirdly, it has been strengthening its position in the data centre space.
 
The company is Anant Raj, whose shares have rallied to nearly Rs 558 on July 29, 2024 from Rs 74 on the same day in 2022. DAM Capital is positive on Anant Raj with a target price of Rs 620.
 
For the latest quarter ended June 2024, the company reported a 63.50% year-on-year (YoY) rise in net profit at Rs 42.28 crore. It reported a profit of Rs 25.86 crore in the corresponding period a year ago. On the other hand, total income increased by 50.90% YoY to Rs 284.29 crore in Q1FY25 against Rs 188.36 crore in Q1FY24.
 
DAM Capital expects revenue of Anant Raj to rise at a CAGR of 35% from FY24 to FY26 and Ebitda to rise at 65% CAGR in the same period.
 
Of late, it has commissioned an additional 3MW at Manesar in Q1FY25, bringing the total data centre operational capacity to 6MW. Additionally, strengthening work in Panchkula is ongoing, where Anand Raj will operationalise the data centre with an initial IT load of 7MW. In an investor presentation, the company said it is on track to deliver 28MW IT load by FY25-end.
 
“Ebitda margin is likely to improve from 23% in FY24 to 34% in FY26 driven by high-margin data centre business and launch of luxury residential projects. We expect residential operating cash flows to remain robust and support data centre capex going ahead. We see operating cash flows to rise to Rs 1,700 crore in FY26 from Rs 400 crore in FY24. We believe that the data centre potential is not yet priced in, and the street is waiting for further execution of capacity expansion,” DAM Capital said in a report on July 1.