Anant Raj Share Price Firms Up by 1 Percent: Emkay Suggests BUY with Target Price Rs 925
Emkay Global Financial Services has initiated coverage on Anant Raj Limited (ARL) with a BUY recommendation, setting a target price of Rs 925, representing a 37% upside from its current price of Rs 675. The firm highlights ARL’s robust positioning in real estate and the data center business. With a diversified portfolio, significant land reserves, and a strong financial framework, ARL is poised for sustainable growth in both residential and commercial sectors.
Key Investment Highlights
1. Target Price and Upside: The report sets a 12-month target price of Rs 925, implying a potential 37% return.
2. Diversified Business Operations: ARL operates in real estate, data centers, and hospitality, showcasing a balanced growth strategy across sectors.
3. Financial Performance Outlook: Emkay projects revenue CAGR of 26.4% and EBITDA CAGR of 51.7% for FY24–27, driven by robust demand in residential and data center segments.
Residential Business Insights
1. Strategic Land Reserves: ARL holds 220 acres of prime land in Gurugram’s Golf Course Extension Road (GCER), including 120 acres of developable land with potential gross development value (GDV) of Rs 150–180 billion.
2. Strong Sales Pipeline: Residential bookings are expected to achieve an 18% CAGR, reaching Rs 46 billion by FY27, while collections are projected to grow at 39% CAGR to Rs 26.3 billion.
3. Ongoing and Planned Projects: Key projects include Ashok Estates and Birla Navya, contributing significantly to future sales and collections.
Data Center Business Expansion
1. Growing Capacity: ARL plans to expand its data center capacity to 307 MW by FY27, benefiting from its strategic land holdings and efficient cost management.
2. Revenue Potential: The data center business is expected to generate Rs 8.5 billion in revenue by FY27, with EBITDA margins projected at 75–80%.
3. Long-Term Returns: With an internal rate of return (IRR) of 21%, the data center business is set to be a key driver of profitability.
Financial Metrics and Valuation
1. Consolidated Performance: ARL’s EBITDA is expected to grow from Rs 3.3 billion in FY24 to Rs 11.6 billion in FY27, reflecting robust operational efficiency.
2. Valuation Components: The target price of Rs 925 includes Rs 501 from the data center business and Rs 436 from the real estate segment.
3. Debt Management: ARL has successfully deleveraged its balance sheet, with net debt projected to decrease to Rs 3.1 billion by FY25.
Strategic Advantages
1. Competitive Land Cost: Historical land acquisitions at lower prices position ARL favorably against competitors.
2. Established Presence: ARL’s reputation as a reliable developer in the NCR region enhances customer confidence.
3. Synergies Across Segments: Revenue from residential sales is reinvested to fuel data center expansion, ensuring sustainable growth.
financial Performance
| Metric | FY24 | FY25E | FY26E | FY27E |
|---|---|---|---|---|
| Revenue (Rs mn) | 14,833 | 18,981 | 22,578 | 29,955 |
| EBITDA (Rs mn) | 3,338 | 4,985 | 7,152 | 11,658 |
| PAT (Rs mn) | 2,659 | 3,408 | 4,099 | 6,546 |
| EPS (Rs) | 7.8 | 10.0 | 12.0 | 19.1 |
Actionable Insights for Investors
1. Long-Term Potential: Investors are recommended to capitalize on ARL’s multi-sector growth strategy, targeting a 12-month price of Rs 925.
2. Monitoring Key Developments: Keep track of new project launches and data center capacity additions for updated valuation metrics.
3. Risk Factors: While the prospects are strong, factors such as macroeconomic conditions and regulatory changes should be monitored.
