Anant Raj Limited

[chikspat]

Anant Raj Limited, Market Cap: ₹ 7,774 Cr.

Company Overview:
ARCP started off as a construction company in 1969 and has worked on government contracts and projects for over 30 years. It gradually transitioned to a significant landowner in Delhi and NCR and entered commercial leasing and residential real estate. Till date, it has delivered more than 20mn sq. ft. of residential real estate projects, developed over 5mn sq. ft. of commercial space, and owns over 240 acres spread across prime locations in NCR. It has a comprehensive portfolio of residential townships, group housing projects, commercial developments, data canters, and hospitality developments spread across Delhi, Gurugram, and NCR.

Data Center:
3MW capacity of IT load is operational and another 3MW development is going on.
Capacity in first phase – 450,000 Sq. Ft. in existing building with 21 MW IT Load which shall be completed by year 2024 and will be further expanded to 50 MW IT Load by year 2025. Depending on the cashflows, this execution can be fast tracked. Existing rentals of Rs.90lacs/month/MW; Cost 15lacs/month/MW of running it. It will come down. Expected rentals of more than INR 200 crores/year once the initial phase of 21 MW becomes operational.
Data center certifications and tie ups in place.
*Scalable to 300 MW:
50 MW in Manesar(ongoing)
200 MW Anant Raj Tech Centre, Rai. 100MW Building in place and 100MW Built-to-Suit.
50 MW Anant Raj Tech Park, Panchkula. 5.25 green field available.
FY2024 Outlook:
Expanding Township
Deleveraging Balance Sheet: focus to be debt free by 2024.
Data Center Expansion: Target to have 21 MW by 2024.
New Projects.

Notes:

1. Data Protection Bill is passed by Parliament. Demand wise not problem. Equipment cause delay, three more sources are tapped. Fully committed to reach 300 MW. Ready building and certified data centers. 3 to 4 years. Funding lowest in industry 25 to 26 cr per MW. Others at 50 to 55 cr per MW. Not taking debt for this. Rents will be used to fund project. After 21MW rent will fund to reach 300MW.
2. Tirupati Housing 2000 houses, it is prestigious project. Next to Tirupati Airport, Land is from AP governments. AP Govt invited to replicate success of company’s project in Rajasthan. Margin will be at least 30%.
3. Lands are fully paid, 10 years old. Margins will further improve with group housing.
4. 640MW Capacity as of now for India. In 3 to 4 years it will 3500MW. Demand will be double to consider disaster management. Escalation every 3 years. Linked to inflation.
5. IRR of data center is much better then competitors. Under cut not going to happen for next 3 to 4 years.
6. Inventory of 10000 cr. in 63A Sector. 100 acre of land in Delhi, far more valuable then 63A. Replenish land bank for real estate. Replenish land bank for data bank not required. Enough for 300MW.
7. Real estate have high demand after 10 years of recession, 75% is consumed by end users. As per broker circle, 250 flats can be sold in 2 to 3 days.
8. For 21MW data center required 450cr. 200cr spend via internal accruals. 250cr. will be generated to other projects. 75 lacs/month/MW rentals will be used to set data centers. No project and balance sheet debt. Max. by 1st quarter by FY2025.
9. Net debt 770cr. FY2024 to FY2025 substantial reduction is planned.

Technical:

1. Trend is in tight area.
2. 50 DMA: 219
3. 200 DMA: 173

Investment Rational:

1. Up surge of real estate, after 10 years of recession.
2. Conservative management, will be near to zero debt in next few years.
3. Data center business have first mover advantage and can execute projects at half price. Annuity type of business’.
4. NPM at 15%.
5. DLF/Godrej Properties/Brigades trade above 65 PE. Anant Raj at 38 PE.
6. Interest rates trajectory will be on down side for next two years, which help to increase real estate demand.

Risk:

1. Inherent risks associated with real estate demand.
2. Data centers do not materialize as per plan.
   Disclosure: Invested.

[chikspat]

Interview from Macrotech developers.
Two main points:

1. Interest rates are picked and intense competition between mortgage providers.
2. Real estate cycle is in 3rd year of long 15 year cycle

Macrotech Developers Adds Seven Land Parcels In H1 To Build Housing Projects...

Provide your views and inputs to understand Anant Raj Limited or real estate cycle in general.

Disclosure: Invested views may be biased

[chikspat]

Preferential issue of 25 cr.
Preferential issue of fully convertible warrants of 50 cr.

[chikspat]

Item No. 1: Issuance of Equity Shares to the Public

• Up to 9,02,527 shares at Rs. 277/- each (premium of Rs. 275/-).
• Allottee: Gagandeep Credit Capital Private Limited.

Item No. 2: Issuance of Convertible Warrants to Promoter Group

• Up to 17,85,714 warrants at Rs. 280/- each.
• Allottee: Shri Ashok Sarin Anant Raj LLP.
• Warrants convertible to Equity Shares within 18 months.

Utilization of Gross Proceeds:

1. Repayment/Prepayment of Borrowings: (current debt. 848 cr., Debt/equity 0.29)

• Amount: Rs. 56.25 Crores
• Timeline: By September 30, 2025

2. General Corporate Purposes:

• Amount: Rs. 18.75 Crores
• Timeline: By September 30, 2025

Total Estimated Amount to be Utilized: Rs. 75.00 Crores
Note: The payment for Equity Shares and Warrants is detailed in the resolutions. For Equity Shares, the entire consideration is to be paid before allotment. For Warrants, 25% of the Warrant Issue Price is paid before allotment, and the remaining 75% is payable at the time of exercising the Warrants.

[chikspat]

Floor price of 310.78 rs. company may give max. 5% discount.

Disclosure: Invested

[Ascendant]

Great results from Anant Raj as expected. Eagerly waiting for concall to hear about Data center updates.

Revenue increased by 47.5% to ₹392 crore
Profit increased by 58.2% to ₹71 crore
EBITDA margin increased from 19.9% ​​to 23%

1843ec02-1a20-4ee6-9533-09bfe9e1d671.pdf

[nav_1996]

Wow. Looks like Anant Raj is getting close to 2008 highs for first time. One of darlings of last bull market based on land banks it had. Then market refused to give any valuation to land banks after market meltdown.

[Agrawal_Saurabh_007]

In January 2024, every investor whether promoters, FII, DII has exited some amount of shares… Any Info?? why such thing happening?

[ashish_agarwal]

Due to qip promotes stake comes down not aware about others. For this u can check investor presentation it is mentioned in the presentation

[chikspat]

For Anant Raj, these two screen shots reveals its potential.
It is similar to Saregam where people chase that stock for Carvaan ( Including me ), but their business had potential in music licensing. For Anant Raj, people may chase it for real estate, if plans for data centers get executed as management described, we will be rewarded handsomely. Of course it require patience, which is in short supply, specially now a days.

Disclosure: Invested

[Karanops]

Where will they get power from, for their data centres. Nothing mentioned in their investor presentation Feb.

[chikspat]

There is nothing mentioned in concall or presentation about how they will get power. What relevance it has here about where they get power?
It was mentioned in concall that cost is approx. 15% to operate data center. Means 85% operating margin.
Disclosure: Invested.

[chikspat]

India’s data centre capacity is projected to grow from 0.9 GW in 2023 to 2 GW in 2026, a 122% increase. Despite generating 20% of global data, India only holds a 3% share of global data centre capacity. The cost per MW of setting up a data centre has risen to Rs 60-70 crore per MW from an average of Rs 40-45 crore per MW. Industry players’ revenue increased by 25% CAGR from FY17 to FY23, and is projected to grow at a 32% CAGR during FY24–26. The industry is expected to see 5 GW capacity addition announcements over 5-6 years. Key drivers of this rapid digitization are e-commerce, internet payments, online streaming, and new technologies such as 5G, IoT, and AI.

Ananat Raj can build data centre at 25 crore per MW due to building is ready.

India’s data centre capacity to double in three years: CareEdge Ratings

D: Invested

[Pinak_Kapadia]

Anant raj uploaded a very nice presentation on data Centers and another comprehensive presentation too. Few concall info nuggets on data center business and comparison with Techno electric that I am jotting down here for my future reference.

As regards to data center, due to cheaper land and ready buildings, Anant raj is saying their capex comes to 28 crore per mw. Techno says 45 crore per mw.

Anant raj saying 300 mw in 4 years, 28 ready soon. 21 in Delhi 63a and 7 in Panchkula. Techno saying 250 mw by 2030. Anantraj saying they will get 90 lakh per mw rent and 15 lakh per mw will be expense so net 75 lakh per mw, for the colocation data Centers. They have a consultant/client with technical know how who has told them to install servers and they are doing it as a pilot project for 0.5 Mw. Can be 5 times this if their server pilot program becomes successful, and apparently they are confident but cautious too.

If we count 28 mw that they say is ready till December, that’s additional 60 crore per quarter net profit if their server experiment fails. And can be 180-200 crore per quarter if it succeeds. Right now 100 crore per quarter profit from real estate, means directly 50 percent addition to profit even if the server experiment fails. If it succeeds, it will be 3 times current profit every quarter.

Also Anant raj current land bank must be 3-5000 crore which gives a little bit comfort to valuation. Still I do not think it’s cheap, and I do not know how big a moat ready access to land and buildings is.

Anantraj is planning to follow the lease model for data Centers whereas I think techno electric will do epc or sell after execution of data Centers. Not sure about this point.

[Mahim701]

About data center business of Anantraj is what’s the entry barrier here, if their contribution is only land and building and they are making good profits , sooner or later all big real estate players will be jumping into it.

[vpwadhwa]

Seems like its priced to perfection. With competitors like Microsoft and Reliance, a small player may not be able to withstand. It has no associated business like Jio has in telecom. It could be exposed to market volatility.

[chikspat]

Concall Highlights Q42024:
Debt.: December 2024 will be net debt free company. Now net debt is 290cr. Cost of borrowing is less then 10%. QIP of 500cr will be used to retire debt and general corporate purpose.

Company can use Lease Rental Discounting (LRD) if required for future data centre projects. Data centres can also be used for LRD.

Real estate:* projects were successful and get better price then projected. Tail wind in sector due to RERA and other reform. Continue to focus on sector 63A.

Company will launch two more projects, land is available. 2.5 million sq. foot.
After those project, 6.57 million sq. foot will be balance. Delhi land parcel and other miscellaneous land parcel company not touching.

Data centre: Become major player in data centre in North India. Agreement with TCIL to provide cloud services with co-location. 21 MW will be operational by December 2024. 7 MW extra will be operational at punchkula site, with server.

With server revenue can go 5 times, rates are at same level in market or little cheaper. Pilot is 1/2 MW. Server cos is 30 cr. for 1/2 MW for client. If company spend 20 rs extra. company can get 120 rs in year. Opex from 15 lacs can go to 25 to 30 lacs.

Land and building is invested. 26 cr per MW. 90 lacs/MW/Month. 75 Lacs/MW/Month is EBIDTA. Pay back is 3 years.

Anant Raj have advantage to competitors for data centre is timeline. Others will require 3 to 4 years to reach where Anant Raj is currently.

300 MW have timeline of 4 years. EBIDTA may change as it is linked to inflation, up or down. When competitor kick in it will change. Anant Raj have edge due to land/building.

Indian data will be in India as per law. Demand will be going to higher phenomenally.

Contract for data centre is 10 to 15 years. 500 CAPEX for data centre for this year. Company will be using internal accruals.

Maintenance CAPEX will be after 10 years for battery.

**Investor Presentation:
https://www.bseindia.com/xml-data/corpfiling/AttachHis/e5e45961-b63c-4120-a5bc-2366e641e73e.pdf

Earning Call transcript:
https://www.bseindia.com/xml-data/corpfiling/AttachHis/e5e45961-b63c-4120-a5bc-2366e641e73e.pdf

Disclosure: Invested

[Raj_A_A]

[chikspat]

Anant Raj going ahead to set Anant Raj Cloud their own data center. As highlighted in concall own cloud service have 4 to 5 times higher margin then renting data center.
Interesting time ahead.

b9d9a98d-ce55-448c-9d86-e3a19901358a.pdf

D: Invested

[Lajja_Shah]

Anant Raj: Transforming Real Estate with Cutting-Edge Data Centres

Data Centre- Becoming Investor’s Centre of Attraction

As we dive deeper into the digital age, think of data centers as the powerhouses behind our online obsessions. They’re the secret sauce that keeps your Netflix running and your Amazon orders flying. As more and more people can’t get enough of digital stuff, data centers are evolving faster than a high-speed wi-fi connection. As digital services and infrastructure demand keeps growing, the data center market remains a vital contributor to the global economy in future as well.

The data center market in India is growing rapidly; by 2026, it is expected to have doubled in capacity to 2,000 MW, growing at a compound annual growth rate of almost 40%. This growth surge is anticipated to draw substantial investments, with an estimated capital expenditure of Rs 50,000 crore over the next three years until 2026, according to CareEdge Ratings.

India’s digital evolution is accelerating as it transitions towards a developed economy, driven by technologies like 5G, IoT, and AI. Data Centre setting up in India offers cost advantages with lower land and labor electricity expenses, making it competitive globally. Government initiatives, such as the Data Center policy and infrastructure status, are further supporting this growth by attracting investments and streamlining regulatory processes. This transformation not only enhances technological capabilities but also positions India as a key player in the global digital landscape.

Currently there is one major player, who is attracting the investor’s attention by doing exceptionally well in the industry, Anant Raj Limited. The company is engaging in developing IT parks, hospitality projects, SEZs, office complexes, shopping malls, and residential projects in Delhi, Haryana, Andhra Pradesh, Rajasthan.

Financial Highlights –

The company’s revenue surge is particularly from its data center operations. With healthy margins of around 18%, Anant Raj demonstrates a strong and profitable business model.

The company launched a QIP of 500 crore in January, 2024. The shares have been issued to Tata Indian Opportunities Fund, Tata Mutual Fund-Tata ELSS Tax Saver Fund, Bofa Securities Europe, Aditya Birla Sun Life Insurance Company, Discovery Global Opportunity (Mauritius), Aditya Birla Sun Life Trustee, Mahindra Manulife Small Cap Fund, and Mahindra Manulife Business Cycle Fund. The Fund will be utilized for further repayment of debt and working capital. After this, the debt of the company will be reduced to negligible level. This will help the company to expedite the development of data centers, launch of new residential projects and expand its rental income substantially.

Con-Call Discussion- Management of the company highlighted that they will be net debt free by December 2024. Currently net debt is Rs. 290 Cr. In Quarter 3, Anant Raj Ltd. successfully raised INR 500 crores through a QIP. 75% of the proceeds are allocated to prepay outstanding borrowings, with the remainder accelerating the expansion of their Data Centre at Manesar. Currently, 3MW IT load centre in Manesar is in operation and contributed Rs. 3 cr income during Q4FY24. Management mentioned that 21 MW will be operational by December 2024. At the Punchkula location, an additional 7 MW will be operational with a server. Top of FormBottom of Form

Projects Highlights- Their revenue is generated from Real Estate residential projects and commercial project. In residential projects, total revenue potential generated from different projects like, Sector 63 A sector Gurgaon and group housing project, estimated to be over 15000cr in next 4 to 5 years. Further company has fully paid land of over 100 crore at prime location of Delhi NCR for future projects.

In commercial projects, total revenue estimated to be generated 3.46 crore per month on rental basis including hospitality segment.

In the Asia-Pacific area, India’s data center market is now expanding at the quickest rate. There will be a surge in demand for data center because of increasing data consumption and government backing Digital India Initiative by approving various laws that support and encourage data to be stored locally.

Anant Raj having an early mover advantage, caters to the emerging demand by converting a 5.66 million square feet commercial property into a 157 MW data center, with plans for further expand it to 307 MW in Rai and Panchkula. They anticipate rentals of INR 3,300 crores once fully operational. The company is a Business Partner with RailTel Corporation of India Ltd. for data centers and has a strategic alliance with TCIL in Manesar, collaborating on cloud and colocation services.

Future Planning: We are well-prepared for future endeavours. We aim to harness the robust demand in the real estate sector, anticipating an estimated revenue potential of ` 15,000 Crore from residential sales, integrated development in Sector 63A, Gurugram, over the next 4 to 5 years. Alongside residential projects, we are also planning to enhance township offerings, acquire additional land parcels, and significantly increase data centre capacity to 307 MW IT Load within the same timeframe. Our efforts are concentrated on executing these projects with the distinctive excellence that Anant Raj is known for. Additionally, our vast, fully-paid, freehold land bank of approx. 100 acres in most prominent locations in Delhi and the National Capital Region and is earmarked for diverse projects including residential developments, warehousing, and hospitality, enabling us to seize the market opportunities as they arise. Furthermore, we are focussed on deleveraging our balance sheet to become a net debt free company by December 2024. This target reflects our commitment to financial health and operational efficiency, positioning Anant Raj to leverage opportunities more effectively and ensure sustainable growth in the future.

Going into the Hospitality Segment: Currently, we have ongoing hotel projects situated in prime hospitality and convention districts within the NCR, each spanning approximately 5 to 7.5 acres. These projects are operated by thirdparty entities under long-term leases. Anant Raj Center 2 features a leased area of 1 lakh sq. ft. Plans are underway to significantly expand this area by developing an additional 6 lakh sq. ft., pending approval to increase the Floor Space Index (FSI) from 0.15 to 1.75. Anant Raj Center 1, South Delhi, has an operational leasable area of 70,000 sq. ft., with further expansion in progress. An additional 4.90 lakh sq. ft. is currently under development, made possible by a previously approved increase in the FSI from 0.15 to 1.75, facilitating this substantial expansion, resulting into substantive rise in rental income from these two assets.

Warehousing Segment explored: The surge in e-commerce and the growing need for efficient cold chain networks in the food and bio-pharmaceutical sectors are driving the demand for high-quality warehouses. Moreover, India’s increasing recognition as a global manufacturing hub, coupled with favourable policies, is bolstering the prospects for this sector. With extensive undeveloped land parcels and robust execution capabilities, we are strategically positioned to capitalise on the burgeoning warehousing market. We intend to develop large, tailor-made warehouses through collaborations with international partners and facilitate generation of consistent rental income streams.

Anant Raj is likely a GROWTH STORY in the coming years. The company will capitalize on the Data Center/Real Estate Story. I invested in this stock at Rs. 150. Since then the price has soared above Rs. 400 levels from where the stock had started to drawdown in 2008 due to Real Estate Slowdown. I have been invested in this stock as of today and planning to increase exposure as and when the fundamental confidence increases in the stock.

Hope this Blog helps you get a better view on the stock!!!

HAPPY INVESTING!!!