Anant Raj: Why the Market Keeps Repricing India's Emerging Data Centre Story

Five years ago, on July 23, 2021, Anant Raj traded at just Rs 68.15. Today, at Rs 587.55, the stock has delivered an extraordinary return of 762.14 per cent, compounding shareholder wealth at 53.86 per cent annually. Yet this remarkable long-term wealth creator has also become one of the market's most volatile stocks in recent times. After touching an all-time high of Rs 947 in January 2025, the stock plunged 61 per cent to Rs 366 within three months, rebounded more than 100 per cent to Rs 744 by October 2025, fell again to its 52-week low of Rs 403 in March 2026, and has since recovered to around Rs 587. Even after this rebound, it continues to trade about 21 per cent below its 52-week high and 38 per cent below its all-time peak—raising an important question: is the market repeatedly mispricing Anant Raj's long-term data centre opportunity, or are these sharp swings justified by changing business fundamentals?

The Business That Changed How Investors Valued Anant Raj

The January 2025 rally wasn't driven by earnings alone. Investors were increasingly viewing Anant Raj not merely as a Real Estate developer but as an emerging digital infrastructure company. That narrative was backed by strong financial execution, with the company delivering consistent revenue growth, expanding margins and robust profit growth over the past three years.

Revenue has compounded at 38 per cent over the past three years, while net profit has grown at 54 per cent annually, supported by consistent quarterly execution rather than one-off earnings spikes. Over five years, profit growth compounded at 120 per cent. Every single quarter from March 2023 to March 2026 has shown higher revenue than the quarter before it. Operating margins have expanded from 21 per cent in FY23 to 26 per cent in FY26, while quarterly operating profit has more than doubled from Rs 74 crore in March 2023 to Rs 167 crore in March 2026.

Alongside this earnings trajectory, Anant Raj's data centre story captured significant investor attention. The company had 28 MW of operational data centre capacity — 21 MW at Manesar and 7 MW at Panchkula and was targeting 357 MW of total IT load capacity by FY2032. Unlike traditional residential real estate, data centres generate long-term, recurring rental income from enterprise customers and typically command higher valuation multiples because of predictable cash flows, long-duration contracts and high switching costs. As investors increasingly viewed Anant Raj as a digital infrastructure company rather than just a real estate developer, the market began assigning significantly higher valuation multiples to the business. With AI infrastructure demand driving massive data centre investment across India, and Anant Raj owning approximately 320 acres of prime, debt-free land in Delhi-NCR with data centre-ready sites already under development, the narrative around the stock expanded well beyond a traditional real estate developer.

Why the Stock Fell 61 per cent and Then Again After Recovering

The earnings were not the problem. The quarterly trajectory remained equally strong. Revenue increased from Rs 541 crore in March 2025 to Rs 647 crore in March 2026, while net profit rose from Rs 119 crore to Rs 149 crore over the same period. Operating margins remained above 25 per cent throughout FY26, reflecting improving profitability alongside growth.

Two factors explain the corrections. The first is valuation: at its January 2025 peak, the stock had re-rated significantly ahead of near-term earnings delivery. The market was pricing future data centre monetisation into current valuations, and any reassesSMEnt of the timeline or scale of that monetisation was enough to compress the multiple sharply. The 3-year median P/E of 43.6x versus the current P/E of 38.1x tells this story — the stock spent significant time at multiples that reflected optimism about what the data centre business would become rather than what it was generating currently.

The second factor is the difference between accounting earnings and cash generation. Despite strong reported profits, the company's operating cash flow is negative Rs 435 crore and free cash flow is negative Rs 796 crore. The data centre buildout from 28 MW to 357 MW requires sustained capital expenditure. Real estate development requires land investment and Construction spending. A business generating accounting profits but consuming cash is one the market reassesses periodically, particularly when macro conditions tighten.

Importantly, the negative free cash flow reflects an investment cycle rather than operational weakness, with substantial capital being deployed towards expanding data centre capacity and real estate development. The key question is whether these investments begin generating sustainable cash flows as new facilities become operational.

Net debt has been reduced dramatically — from Rs 1,626 crore in FY21 to just Rs 50 crore by FY26 — and debt to equity stands at 0.12x with interest coverage at 54.6x. The balance sheet is not stressed. But the negative free cash flow signals that the investment phase is ongoing and earnings will need to catch up with capital deployed.

The Demerger: What Changed on July 21, 2026

On July 21, 2026, Anant Raj's board approved a Composite Scheme of Arrangement that restructures the group into two separately listed companies. The structure approved is as follows: Anant Raj Cloud Private Limited (ARCPL) will first be merged into Anant Raj Limited. Following that merger, the entire data centre and cloud services business will be demerged from Anant Raj Limited and transferred into Ashok Cloud Private Limited (ACPL), which will be separately listed.

The share exchange ratio approved is 1:1 — eligible shareholders of Anant Raj Limited will receive one fully paid-up equity share of Ashok Cloud for every one Anant Raj share held. Following the demerger, ACPL will continue to be a subsidiary of ARL, with ARL retaining 51 per cent and shareholders directly holding 49 per cent.

The rationale stated in the filing is direct: the data centre business has evolved into a distinct platform with its own growth trajectory, capital requirements and operating model. Consolidating it under a separately listed entity enables independent market recognition and valuation, dedicated management focus, and the ability to attract sector-specific capital and strategic partnerships.

The demerger data from the filing shows the data centre turnover at Rs 145.90 crore against total consolidated turnover of Rs 1,627.72 crore — approximately 8.96 per cent of group revenue. This confirms that the data centre business, while growing and strategically significant, is still early in its monetisation cycle relative to the real estate business.

Where the Business Stands Today

The real estate pipeline is meaningful. Group Housing 2 — 0.90 million sq ft in Sector 63A, Gurugram's luxury segment — carries an estimated revenue of Rs 2,180 crore. Group Housing 3 at 1.20 million sq ft carries an estimated revenue of Rs 2,886 crore. The Estate Residences is under construction and achieving an average selling price of Rs 18,000 per sq ft. Phase IV of Anant Raj Estate has commenced on 6.075 acres with potential development of approximately 5 lakh sq ft.

On the commercial side, the portfolio comprises 1.92 million sq ft of leasable area under long-term leases. Plans for FSI increases at Ashok Estate and Anant Raj Center could add rental income of Rs 55 crore and Rs 75 crore per annum respectively once developed. Together, these residential and commercial developments provide meaningful revenue visibility while strengthening the company's recurring rental income base over the medium term.

The data centre roadmap targets 117 MW by FY2028 and 357 MW by FY2032. The MOU with the Government of Andhra Pradesh for 50 MW is part of that expansion. The company has been empanelled with MeitY as a Sovereign Cloud Service Provider and with BSNL as a Data Centre Service Provider. A strategic partnership with Spain-based Submer targets AI-ready, liquid-cooled data centre deployment.

The Valuation

At around Rs 587, Anant Raj continues to trade at a premium to the broader real estate sector, with a P/E of around 38x compared with the industry average of 27.5x. However, the stock is trading below its own three-year median P/E of approximately 43.8x, suggesting that market expectations have moderated despite continued earnings growth. The premium valuation reflects investors' belief that Anant Raj is gradually evolving into a digital infrastructure company rather than a conventional real estate developer. Whether that premium remains justified will ultimately depend on how quickly the data centre business scales, attracts customers and begins generating meaningful cash flows.

EV/EBITDA is 28.9x. Price to book is 3.66x against industry PBV of 2.52x. PEG ratio is 0.71. A PEG ratio of 0.71—below 1—suggests that the stock's earnings growth has broadly kept pace with its valuation, indicating that the premium P/E may be more justified than it appears at first glance. The Piotroski score of 4/9 is below what the earnings growth would suggest, primarily reflecting the negative cash flow dynamics during the investment phase.

Cash on the balance sheet stands at Rs 911 crore. With Rs 681 crore in debt, the company is close to net cash neutral even while funding a major capacity buildout. ROCE of 12.1 per cent is moderate but improving alongside margin expansion.

The Question the Demerger Now Forces

Before July 21, 2026, investors were buying one stock that contained two businesses with very different valuation frameworks — a profitable, cash-generative real estate and commercial leasing business, and an early-stage data centre platform requiring sustained capital investment. The market struggled to price both correctly within a single listed entity.

The demerger separates those two stories. Real estate investors can own ARL cleanly, while investors seeking exposure to digital infrastructure can evaluate Ashok Cloud independently once listed.

Whether the demerger narrows that discount depends on execution — specifically whether the data centre business delivers on the 357 MW target by FY2032 and whether Ashok Cloud attracts the kind of institutional capital and strategic partnerships that a pure-play listed data centre company can command. At 8.96 per cent of current group revenue, the data centre business is being asked to justify a significant portion of the stock's premium valuation. The demerger gives it the structure to do that independently.

The past five years have demonstrated Anant Raj's ability to create significant shareholder wealth. The next five, however, will depend less on land monetisation and more on execution—how quickly data centre capacity is commissioned, utilisation improves and capital expenditure begins translating into sustainable cash flows. The demerger gives investors a clearer way to judge that progress.

Disclaimer: This article is for informational purposes only and not investment advice.