Motilal Oswal Sees 31% Upside in Anant Raj Shares: Here’s Why

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The stock market was abuzz on Friday, December 20, 2024, as Anant Raj share price surged by 3.74% to hit a record high of Rs 869 per share. The rally came after domestic brokerage firm Motilal Oswal Financial Services Limited (MOFSL) initiated coverage on the stock with a bullish ‘Buy’ rating. Analysts at Motilal Oswal have set a target price of Rs 1,100, indicating an upside potential of 31.3% from the previous close of Rs 837.60.

Why Motilal Oswal Is Bullish on Anant Raj

Motilal Oswal’s analysts—Abhishek Pathak, Abhishek Lodhiya, Keval Bhagat, and Tushar Dhonde—highlighted several factors that make Anant Raj share price a strong investment candidate. In their note, they stated:

“While execution risks remain, we expect significant revenue and Ebitda margin expansion, driving long-term value creation. We initiate coverage on the stock with a ‘Buy’ rating and a target price (TP) of Rs 1,100.”

Diversification Beyond Real Estate

One of the key drivers of Anant Raj share price is the company’s strategic shift from its traditional real estate focus to a more diversified business model. The company is making significant investments in data centres (DCs) and cloud services, tapping into India’s growing demand for data localisation and digital transformation.

Data Centre Expansion

Anant Raj plans to achieve 300MW of data centre capacity over the next four to five years. By leveraging its existing technology parks, the company aims to execute these projects efficiently, both in terms of speed and cost.

Cloud Services Partnership

Another significant move is the company’s entry into higher-margin cloud services through its partnership with Orange. This initiative positions Anant Raj to capture a share of the rapidly expanding cloud infrastructure market. By FY32, cloud capacity is expected to contribute 25% of the company’s overall revenue, further strengthening its profitability potential.

Residential Segment Growth

While the diversification strategy is exciting, Anant Raj’s core real estate segment continues to perform well. The company expects to deliver 14 million square feet (msf) of residential projects by FY30, generating a cumulative net operating profit after tax (NOPAT) of Rs 8,510 crore. This robust pipeline underpins the sustained growth in Anant Raj share price.

Analysts Weigh In

Motilal Oswal is not the only brokerage firm optimistic about Anant Raj share price. Earlier this month, Emkay Global Financial Services also initiated coverage with a ‘Buy’ rating, setting a target price of Rs 925. This target reflects an upside of 37% from current levels.

Emkay analysts noted, “Anant Raj has garnered a strong brand name as a reputed real estate developer in the NCR market over the last five decades. A comfortable launch pipeline, availability of low-cost land banks, and potential for further acquisitions will drive bookings and collections at a compound annual growth rate (CAGR) of 18% and 39%, respectively, during FY24-27E, generating healthy cash flows.”

Financial Strength and Operational Excellence

Anant Raj’s pre-sales, collections, and operational cash flows have provided a solid foundation for growth. The company’s ability to maintain strong operational metrics is a significant factor supporting the positive outlook for Anant Raj share price.

Risks and Challenges

Despite the optimism, there are challenges that investors should consider. Execution risks remain a concern, especially as the company diversifies into unfamiliar territories like data centres and cloud services. However, analysts believe that Anant Raj’s existing infrastructure and strategic partnerships mitigate some of these risks.

Stock Market Reaction

The bullish sentiment from analysts has clearly resonated with investors. As of 11:00 AM on December 20, Anant Raj share price was trading at Rs 867.60, up 3.58% for the day. In comparison, the BSE Sensex was marginally lower, trading 0.03% down at 79,196.84.

Growth Outlook

Looking ahead, analysts expect multiple growth levers to drive Anant Raj share price higher. These include:

Diversification into Data Centres: The 300MW capacity target positions the company well to capitalise on India’s growing digital infrastructure needs.

Cloud Services Expansion: The partnership with Orange ensures a foothold in the high-margin cloud services sector.

Residential Segment Deliveries: With 14 msf in deliveries by FY30, the company’s core business remains robust.

Low-Cost Land Bank: A comfortable land bank allows for strategic project launches, supporting consistent cash flow growth.

Conclusion

The rise in Anant Raj share price to record highs reflects the market’s confidence in the company’s strategic direction and growth prospects. With a strong focus on diversification, operational excellence, and a robust residential pipeline, Anant Raj is well-positioned to deliver long-term value to its investors.

Both Motilal Oswal and Emkay Global’s bullish ratings underscore the company’s potential. As the company continues to execute its plans and navigate challenges, investors will be keenly watching its performance in the coming quarters.