Anant Raj shares rally 57% in 6 months; JM Financial sees more upside

JM Financial has initiated coverage on Anant Raj with a ‘Buy’ recommendation, suggesting a potential 21 per cent upside from its current market price of Rs 697. The brokerage has set a target price of Rs 844 per share for the real estate developer, which is increasingly pivoting towards digital infrastructure. 

Anant Raj shares have gained about 57 per cent in 6 months. In Friday’s trade, Anant Raj stock was down 1.59 per cent at Rs 687.95. 

The brokerage highlighted Anant Raj’s evolution from a "traditional real estate developer to a high-growth digital infrastructure player". Following the launch of its Qualified Institutional Placement (QIP) to raise up to Rs 1,100 crore, the stock saw a decline of about 5 per cent. JM Financial views this weakness as a "buying opportunity in the Rs 660-700 range," citing strong fundamentals and the company's transformative strategy.

Anant Raj is aggressively scaling up its data center capacity to capitalize on India's digital boom. The company plans to expand its capacity from the current 28 MW to 63 MW by FY27, with a long-term goal of reaching 307 MW by FY32. Management is targeting data center and cloud services revenue of approximately Rs 1,200 crore by FY27 and Rs 9,000 crore by FY32, driven by increasing demand from digital, cloud, and AI workloads. A second 7 MW data center in Panchkula has recently become operational.

While the digital segment grows, the company's core real estate business remains "Steady and Profitable". A launch pipeline of around 10.9 million square feet in luxury and high-end housing provides strong pre-sales visibility. This, combined with operational commercial assets on long-term leases, supports stable annuity income and creates a well-balanced growth engine.

Financially, the company has demonstrated robust performance, with Sales/EBITDA/PAT growing at a CAGR of 69 per cent/76 per cent/149 per cent between FY21-25. Prudent financial management is evident in the sharp reduction of net debt, which has fallen from Rs 1,494 crore in FY21 to just Rs 50 crore in FY25.

JM Financial's valuation, leading to the Rs 844 fair value, is based on valuing the residential real estate business at Rs 12,000 crore and the data center segment at Rs 16,800 crore. Key risks to this outlook include potential delays in the launch of real estate projects and increased competition in the data center market, which could impact profitability.