Why Anant Raj Shares Are Still a ‘Buy’ Opportunity Despite Q1 Results – A Closer Look

Anant Raj Ltd., a leading real estate developer in India, has maintained its ‘Buy’ recommendation from Motilal Oswal despite a cut in its target price. The company’s Q1 results, which were recently announced, have raised concerns among investors about its growth prospects. However, a closer look at the company’s performance and future outlook suggests that Anant Raj shares remain a ‘Buy’ opportunity.

In its Q1 results, Anant Raj reported a decline in its net profit, which was attributed to higher expenses and lower sales. However, the company’s residential segment, which is expected to deliver 14 million square feet of space over FY25-30, generated a cumulative net operating profit after tax of Rs 72 billion. The residential business cash flow, discounted at an 11.6% weighted average cost of capital (WACC) with a 5% terminal growth rate, accounts for Rs 2.5 billion in annual business development expenses, yielding a gross asset value of Rs 87 billion, or Rs 253 per share.

The company’s data center business is also expected to grow materially, with capacity increasing from 6 megawatts (MW) in FY24 to 307 MW by FY32. The shift towards cloud services, which will expand from 0.5 MW to 77 MW over the same period, is expected to drive growth in this segment.

Despite the concerns about its growth prospects, Anant Raj shares have maintained their ‘Buy’ recommendation from Motilal Oswal. The company’s strong residential segment and data center business growth prospects have led to a revised target price of Rs 807, which is lower than the earlier target price of Rs 1,085.

In conclusion, Anant Raj shares remain a ‘Buy’ opportunity despite the cut in target price. The company’s strong residential segment and data center business growth prospects make it an attractive investment opportunity for investors looking to benefit from the growth of the Indian real estate and data center sectors.

Key Highlights:

• Anant Raj Ltd. maintains its ‘Buy’ recommendation from Motilal Oswal despite a cut in target price.
• The company’s residential segment is expected to deliver 14 million square feet of space over FY25-30, generating a cumulative net operating profit after tax of Rs 72 billion.
• The residential business cash flow, discounted at an 11.6% WACC with a 5% terminal growth rate, accounts for Rs 2.5 billion in annual business development expenses, yielding a gross asset value of Rs 87 billion, or Rs 253 per share.
• The company’s data center business is expected to grow materially, with capacity increasing from 6 MW in FY24 to 307 MW by FY32.
• The shift towards cloud services, which will expand from 0.5 MW to 77 MW over the same period, is expected to drive growth in this segment.