Anant Raj data-centre scale-up drives margins as real estate funds expansion

Investment View and Target Price

Motilal Oswal Financial Services (MOFSL), in its August 11, 2026 results update on Anant Raj, reiterated its Buy rating and revised its target price to Rs710. The investment thesis combines Anant Raj’s real-estate business, which is expected to remain a steady cash generator, with the rapid scaling of its data-centre and cloud operations, which MOFSL expects to drive a material improvement in profitability.

MOFSL’s sum-of-the-parts valuation implies approximately 17% upside from the report CMP of Rs606.

Real-Estate Launches and Cash Generation

Anant Raj has received RERA clearance for Group Housing 2, The Estate One, comprising approximately 0.90 million square feet of saleable area and an estimated gross development value (GDV) of Rs2,000-2,200 crore. The project is expected to be launched in Q2 FY27.

The company is also likely to launch Group Housing 3 in Sector 63A, Gurugram, with a GDV of Rs2,900 crore. MOFSL expects projects with total GDV of Rs5,000-5,500 crore to be launched in FY27.

MOFSL expects the real-estate business to generate cumulative free cash flow of Rs2,200 crore over the next two years, which will help fund data-centre capital expenditure.

Data-Centre and Cloud Expansion

The data-centre segment reported revenue of Rs90 crore in Q1 FY27, with an EBITDA margin of approximately 71% and a PAT margin of approximately 45%. IT-load capacity stood at 28MW, comprising 21MW at Manesar and 7MW at Panchkula, and is planned to rise to 63MW by FY27-end.

Anant Raj has retained its plan to scale capacity to 357MW by FY32, with 117MW expected to be operational by FY28. The company has signed an MoU with Haryana Enterprise Promotion Centre to facilitate investment and adoption of its data-centre and cloud services across Haryana.

MOFSL forecasts a 134% CAGR in data-centre revenue over FY26-FY28E, with revenue reaching Rs960 crore, driven by capacity additions and improved utilisation.

Demerger and Cloud Strategy

Management said the board has approved a composite scheme to demerge the data-centre and cloud operations into Ashok Cloud Pvt Ltd (ACPL). Anant Raj shareholders will receive one ACPL share for each Anant Raj share held, while ACPL will remain an Anant Raj subsidiary.

Management expects data-centre revenue to grow 3-3.5 times as incremental capacity becomes operational. Cloud services are intended to be a major value driver, with approximately 25% of the planned 357MW capacity earmarked for cloud and the balance for co-location.

Management stated that cloud capacity carries a higher return profile, with an approximately one-year payback period versus about three years for co-location, although cloud services require additional capital expenditure.

Q1 FY27 Financial Performance

Anant Raj reported revenue growth of 7% year on year to Rs630 crore in Q1 FY27, broadly in line with MOFSL’s estimate. EBITDA grew 22% year on year to Rs180 crore, 8% above the broker’s estimate, while the EBITDA margin expanded 310 basis points sequentially to 29.0%, aided by strong data-centre performance.

Adjusted PAT rose 19% year on year to Rs150 crore, while the PAT margin was 23.7%.

Earnings Outlook

MOFSL retained its estimates and forecasts revenue to grow at an 18% CAGR over FY26-FY28E, reaching Rs3,515 crore in FY28E. EBITDA is projected at Rs1,239 crore, with an EBITDA margin of 35.3%, while adjusted PAT is projected at Rs931 crore.

The report specifies no revisions to its FY27E or FY28E revenue, EBITDA or adjusted PAT estimates.

Sum-of-the-Parts Valuation

MOFSL values Anant Raj using a sum-of-the-parts approach. Residential cash flows are discounted at a 12.4% weighted average cost of capital, with a 25% premium applied to reflect the growth potential from land aggregation in Sector 63A. Commercial cash flows use an 8.0% capitalisation rate and 4% terminal growth. The data-centre and cloud business is valued using a discounted cash flow methodology.