Anant Raj Plans Data Center Demerger to Boost Growth

Anant Raj plans to separate its growing data center operations from its main real estate business. This strategic move aims to focus capital and management efforts on capturing a larger share of India's rapidly expanding digital infrastructure market, driven by increasing digitalization, AI adoption, and government support.

Ambitious Data Center Expansion

The company is targeting a significant expansion in data centers, aiming for 357 MW of IT load capacity by 2032 with an estimated investment of ₹20,000 crore. A ₹1,100 crore Qualified Institutional Placement (QIP) in October 2025 provides funding for this ambitious plan. India's data center market is poised for substantial growth, projected to exceed 2 GW by 2026, up from 0.9 GW in 2023. Anant Raj also holds empanelment with MeitY as a sovereign cloud service provider and has an agreement for an additional 50 MW in Andhra Pradesh. Separating the business could allow for dedicated leadership and tailored capital strategies to compete effectively.

Strong Financials, Valuation Concerns

Anant Raj ended FY26 with stronger financials, reporting ₹5,590.55 crore in total assets, up from ₹4,346.27 crore in FY25, and ₹806.90 crore in cash. Net profit rose 30.81% year-on-year to ₹557.02 crore on revenue of ₹2,511.60 crore. However, investor sentiment has cooled. The stock fell after Q4 FY26 results, mainly due to valuation worries. With a market cap around ₹17,000-₹20,000 crore, its P/E ratio is 33-45x and P/B ratio is about 4.11x, both higher than many real estate peers. An ROE of around 11.20% also raises questions about its high valuation.

Market Growth vs. Fierce Competition

The Indian data center sector is booming due to increased digitalization, AI needs, and data rules. Major global players like Google and Microsoft, alongside Indian firms Reliance and Adani, are investing heavily. Leading competitors including NTT, STT GDC, Nxtra, CtrlS, AdaniConneX, and Yotta are all expanding rapidly. Anant Raj's 357 MW target is ambitious but smaller than these giants. While its brownfield conversion cost per MW (₹29–34 crore) is competitive, achieving its target requires massive capital and execution to overcome the scale and established networks of rivals.

Execution Risks and Valuation Doubts

The proposed demerger, while aiming for efficiency, brings significant execution risks. Data centers are capital-intensive with different operational needs than traditional real estate. Anant Raj needs specialized expertise for power, connectivity, and operations. Its current valuation and modest ROE suggest the market expects high future growth, which may be hard to deliver. The addition of Anish Sarin signals a leadership evolution, but balancing this new venture with the existing real estate business will demand sharp management focus to avoid diluting resources.

What's Next for Anant Raj

A committee is evaluating the demerger structure, which could unlock shareholder value and launch Anant Raj into a new growth phase. The company's financial stability from the QIP and profits supports this expansion. Anish Sarin's appointment suggests a focus on evolving leadership. However, Anant Raj must overcome tough competition, manage large capital needs, and prove effective execution to meet its goals and justify its current valuation. A proposed final dividend of Re 1 per share for FY26 shows board confidence, but the demerger's outcome will ultimately shape future returns.