Anant Raj Riding Wave Of India's Digital Transformation, Says Motilal Oswal Initiating 'Buy'
Anant Raj's pivot to digital infrastructure aligns with market tailwinds such as 5G, AI, and data localisation, the brokerage said.
Motilal Oswal Financial Services Ltd. has initiated coverage on Anant Raj Ltd. with a 'buy' rating and a target price of Rs 1,100 per share, indicating a potential upside of 32% from the market price of Rs 837.65 at the previous close.
Anant Raj is "riding the wave" of India's digital transformation, said Motilal Oswal, expanding into data centers and cloud services. As India emerges as a global data hub, Anant Raj's pivot to digital infrastructure aligns with market tailwinds such as 5G, AI, and data localisation. With plans to add 300MW data centres capacity over four to five years, the company is transforming tech parks in Manesar, Panchkula, and Rai into data centres.
The company's early-mover advantage enables completion within six to nine months, compared to the industry average of three to five years, ensuring cost efficiency and competitive lease rates.
Its partnership with Orange Business Services marks its foray into infrastructure as a service, a high-margin business expected to grow cloud capacity from 8% in fiscal 2024 to 25% by fiscal 2032. Motilal Oswal projects cloud services, with 4–5 times higher margins than traditional co-location, to deliver net operating profit after tax of Rs 6,000 crore by fiscal 2032.
The residential business remains a cornerstone, according to the brokerage. Pre-sales and collections are set for exponential growth, with a 23% compound annual growth rate in pre-sales and an 87% compound annual growth rate in collections over the next two fiscals.
While Anant Raj is in a capital expenditure phase, with debt peaking at Rs 5,900 crore by fiscal 2028, robust cash flow generation is set to turn positive by fiscal 2030, says Motilal Oswal. Its real estate business has 45% operating margins, while DC and cloud services exceed 75%, contributing to a projected Ebitda margin expansion to 77% by fiscal 2030.
Motilal Oswal's projections highlight the real estate mogul's potential for 47% compound annual growth rate in profit after tax over fiscals 2024 to 2027. The brokerage also expects significant improvements in return ratios, with return on equity climbing to 14.6% and return on capital employed to 13.8% by the next two fiscals.
