Whalesbook
Anant Raj Shifts Focus to Data Centers
The plan to separate Anant Raj's growing data center business from its main real estate operations marks a key moment. This strategic move aims to direct capital and management attention toward securing a larger slice of India's rapidly expanding digital infrastructure market. This sector is seeing fast growth fueled by increasing digitalization, artificial intelligence, and government programs.
Ambitious Data Center Expansion Plan
Anant Raj is strongly focusing on data centers, targeting a significant 357 MW IT load capacity by 2032 with an estimated investment of ₹20,000 crore. A ₹1,100 crore QIP in October 2025 provides key capital for this expansion. This focus is well-timed, as India's data center market is predicted to grow substantially, potentially reaching over 2 GW by 2026 from 0.9 GW in 2023. The company also holds empanelment with MeitY as a sovereign cloud service provider and has an MoU for an extra 50 MW capacity in Andhra Pradesh. The demerger intends to establish focused leadership and capital plans to compete with existing players and seize opportunities in this high-demand sector.
FY26 Results: Growth and Valuation Debate
Anant Raj finished FY26 with improved financials, reporting total assets of ₹5,590.55 crore, up from ₹4,346.27 crore in FY25, and ₹806.90 crore in cash reserves. Net profit for FY26 rose 30.81% year-on-year to ₹557.02 crore on revenue of ₹2,511.60 crore. Despite this strong performance, investor sentiment has been cautious. The stock fell after its Q4 FY26 results, mainly due to concerns about its high valuation. With a market value between ₹17,000-₹20,000 crore, Anant Raj's P/E ratio is 33-45x, and its P/B ratio is about 4.11x, both considerably higher than many real estate competitors. An ROE of roughly 11.20% also raises questions about its current high valuation.
Market Growth Meets Fierce Competition
India's data center market is growing strongly, driven by major investments in digitalization, AI, and data localization rules. Major cloud providers like Google and Microsoft are investing billions, and Indian firms like Reliance and Adani are planning significant expansions. Leading players including NTT, STT GDC, Nxtra (Airtel), CtrlS, AdaniConneX, and Yotta are rapidly increasing capacity. Anant Raj's target of 357 MW, though ambitious, is much smaller than that of these major companies. While Anant Raj's cost per MW for brownfield conversion is competitive at ₹29–34 crore, meeting its target will require substantial investment and strong execution to compete with the established infrastructure and scale of its larger rivals.
Execution Risks and Valuation Doubts
Although the demerger is framed as a way to improve efficiency, it raises significant execution risks. The data center business requires huge capital and operates differently from traditional real estate. Anant Raj has a long history in property development, but becoming a major data center operator demands specific expertise, reliable power, and complex network connections. The company's modest Return on Equity and high valuation suggest the market expects future growth that might be difficult to deliver. The recent addition of Anish Sarin, representing new leadership with a global view, could energize the company. However, balancing this new area with its existing real estate business will be challenging. Management focus will be key to avoid spreading resources too thin or diverting attention.
The Path Ahead
The committee evaluating the demerger plan holds a crucial role in shaping Anant Raj's future. A successful separation could unlock shareholder value and launch the company into a new growth phase in digital infrastructure. Anant Raj's solid finances, boosted by the QIP and ongoing profits, offer a base for expansion. Anish Sarin's appointment shows a commitment to evolving leadership. However, the company must manage fierce competition, significant capital needs, and prove its execution ability to justify its ambitious goals and current market value. The proposed final dividend of Re 1 per equity share for FY26 signals board confidence, but the demerger's outcome will ultimately decide future shareholder returns.