Anant Raj (ARCP) is a company that is undergoing a significant shift in its business model, moving from a focus on real estate to a more diversified approach that includes investments in data centres and cloud services. This strategic pivot is aimed at capitalizing on the growing trends of data localization and digital transformation in India.
The company is planning to build a data centre capacity of 300MW over the next 4-5 years, utilizing its existing technology parks to expedite the process and reduce costs. By partnering with Orange, ARCP is also entering the higher-margin cloud services market, with cloud capacity expected to reach 25% by FY32.
In addition to its data centre and cloud services ventures, ARCP’s residential business remains strong, with deliveries of 14msf expected by FY30, generating a cumulative NOPAT of ₹8,510 crore. The company is forecasting significant revenue and EBITDA margin expansion, supported by strong pre-sales, collections, and operational cash flows.
Despite the inherent risks in executing such a significant business transformation, we believe that ARCP has a solid foundation for long-term value creation. As a result, we have initiated coverage on the stock with a Buy rating and a price target of ₹1,100.
In conclusion, Anant Raj’s strategic shift towards data centres and cloud services positions the company well to capitalize on India’s digital transformation trends. With a strong residential business as a foundation, ARCP has the potential for significant growth and value creation in the long term. Investors may want to consider adding this stock to their portfolios for potential returns.
