Anant Raj Ltd

Today i am gonna discuss a company called Anant Raj . I hope everyone knows well about that company . I was not so convinced about this company until today i got a detail chance to look after the company . Let me explain you few reasons why i love this company .
In India as everyone knows Realty sectors are down . But when i was reading Dalal Street journal i found that in NCR particularly (Delhi) there are large numbers of flats which are unsold out compared with all the regions in India ( Like south , east and west ) . NCR region has a highest unsold houses . So this can be a opportunity for any player .
You might ask me why i selected Anant raj today . The recession in realty sector started in starting of 2013 and still the sector has not been good . When you see anant raj balance sheet,you can see that they made a 30% return in 2011 and 2012 . So if the sector would have been bullish this company revenues would be sitting around 600 crores . Unfortunately the realty sector went down and this company was not able to improve their top line growth . As everyone knows there are multiple companies like Unitech who have properties in Delhi but there is a huge debt in those balance sheets . So there are chances for banks to pull back those properties and leave the company with no rewards . I can give you alot of companies who has a highest number of debt coz of properties sitting just without selling . The reason given by property owners was the interest rate of RBI had not been reduced ,so the improvement in property is not so great .

Anant Raj is a company who were having no debts in their company before this realty sector went poor . Unfortunately the properties are not sold out but anant raj will be selling those properties once this sector gets a bullish ride . Remember they have lots of properties on hold and they are completing some more . So if realty sector wakes up ,anant raj would be booking all the revenues in huge scale . The revenues might even double from here . Selling all 5 or 10 properties together is going to bring huge revenue to their income statement . Anant raj has taken debt of around 1500 crores recently . The company networth is around 3500 crores. You might ask why they have bought that 1500 crores of debt . Well as far i have researched i found that ananth raj has bought 1100 acres which has been fully paid when you see their balance statement . 420 acres are within delhi and some are around 50km radius of delhi .

Let me say you some interesting facts about this company . Their EBITA normally is around 250 crores . But as the realty sector went down their EBITA margins dropped to around 160 crores ,since they want to sell those properties very cheap to push it . Secondly the business of Anant raj is highly profitable business . The margin of the business is great . They are making 400 crores - 500 crores in revenue while their profit margins are around 250 crores which is almost 50% . You might ask me why the profit margins are so high and the other companies profit margins are so low . Well Anant raj is following a statergy which the investors would do normally . Buying properties cheap and selling at high price . You might ask me how is it so ? Well The thing is Anant Raj was having the same situation in 2008 when the whole world was in Recession . But Anant raj was a debt free company and what they did was really creating value for investors . They leveraged when the recession came by buying debt , buy properties using the debt at very cheap rate . Then they invested on those land and sit calmly . As i have few friends in construction business,they used to say me that land is the real investment for real estate investors . Building cost would be cheap compare to land . But buying a land is a major expenses . So Anant raj already finished the major expenses at a very cheap rate . They reduced the debt by selling the properties which they have already built once the recession is over . With the profit , they reduced the debt to a debt free company by holding the land for a very cheap rate . Same Statergy they have right now . They took debt of 1500 crores , then bought land worth of 1100 acres which i have mentioned above . Now they are aiming to reduce the debt from 1500 crores to 1000 crores by selling some of the properties which they were planning to construct a hotel . So those lands they are reducing in order to reduce the debt . So again when this realty sector wakes up anant raj will be having huge property of land for a very cheap rate . I am very much impressed with the statergy what management is doing and am very bullish with this company .

The property which they purchased in 2008 recession for 1000 crores , they are about to complete a big project in 2018 which they have said the worth would be 5000 crores once the lands are sold out . Again the property which they have purchased in 2014 would be used to build properties again in future which would generate future revenue and can generate more money around 2025 . As you see the major Indian population is below 50 , people would tend to buy homes . And there is a huge opportunity for the realty sector . These are just my views from my analysis . Anant Raj would be one company which can be seen turning from mid cap to large cap company in a next decade.

Regarding Valuations : The company has made a EBITA of around 240 Crores in FY2015 and with that price ,ananth raj market cap right now is around 1200 crores . Still a Cheap valuation at the present rate . A little further upside from here, then the company will not be a undervalued stock anymore.

Feedbacks are welcome

 

porinju sir is also bullish on this stock. Anyways a lot of depends on the reality sector revival. Can keep good real estate companies on the radar

 

https://goo.gl/gdUCmT : Anant Raj Fundamentals. Just sharing the Valuations for JP Associates. Fundamentals are https://goo.gl/sRV0sU. From a 3 year high of 104 it is trading around 10. Our Investors were safe

 

Eventually rain will stop one day and every one will go back to work . its a nature of business.

 

Are you still bullish about this scrip? It seems to going in to a downward movement.

 

i am a long term investor , let it go even 50% down , i dont care,this is the cheap price u can get and i got it .

 

I think in India realty sector was living on Black Money.But after lot of noise about black money and also Modi govt IT deptt is very watchful about property transection.So people having black money are already invested heavily and also now they they don't want to invest to avoid IT dept surveillance. More over prices are already very high and with job market in doldrums,no real buyers.So no need to follow porunju or prof baxhi.Dump realty stocks on every rise, otherwise so called experts will dump their dirt in your portfolio.Take care of your hard earned money.Already big players like JP,HCC,IVRCL ,Punj Llyod etc had burnt their core business in search of gold mine in realty sector. Stay Away,let the expert loose their shirts,as they had made huge money in underwear Page industry,with out any strong fundamentals. Any body can start making underwear with few thousand rupees.Even you can start the business on job work in few hundred rupees.No rocket science in underwear or realty sector.

 

Well you have to see realty companies with less debts , not just like picking closing your eyes . Also you need to know management statergies . If you take Brigade entreprises management is focusing on architecture. I have not seen those kinda architechture much in India , so there are scopes for their statergy and if you take anant raj ,its a debt free company and they have bought debt to acquire land parcel when lands are selling at a discount price ( Just like 2008 recession) .So buying companies which does not have any statergy or you dont beleive the statergy which they are having does not make any sense in investing . Every big business has some statergies to become a big leader . For example : Indocount industries : if you read their annual report each and every line , the company management has said that they are having office in abroad inorder to create trust for their suppliers . I feel its a excellent statergy coz in export trust is more important . The only problem with indocount is too expensive right now . So when you feel a statergy would work and you get a right value , you can get in safely without worries . As buffet says stock market rain happen often to distract investors , if you pick a good company you wont sell it .

Regarding Page industries , i feel i missed a good ride . Because i know people who were crazy about jockey brand before 5-7 years . As peter lynch says this is a kinda business which was infront of each and every indian citizen eyes . But only few took the ride Page industries has a great brand and people are still crazy about their brand . If page industries become cheap people can obsolutely grab it unless there is value . Value in the sense i mean unless the brand is more popular by people . If they feel people are moving from jockey to someother brand , then they should not invest in this stock . Its not just luck without value . Luck can be created once . But if investors are making money continously ,then they have the tallent .As you said the competition in underwear business is very easy to enter . I agree with you . But no one can get the rights of jockey brand . In order to become more popular brand than jockey ,then the guys have to market it as jockey and that too in premier segment before page industry sees you . if they notice that you are overtaking their brand ,then they would try to do different statergies to pull you out of market . Its not so easy to spend money in marketing . Its going to take atleast 5 years to beat page industries if some new underwear company wants to beat the jockey brand .

 

It is better to invest directly in property at least U have title in your name.If there will be appreciation ,U will be benefited.But in realty sector ,there is no surity that even in case of profit It will trickle down to small invester.This is very opaque industry.More over , realty prices are likely to go down in NCR and nationally. So why to go down with that cycle.More over if property prices don't rise,interest burden Meter ,still runs at same speed,doing hole bigger and bigger on daily basis.Similarly all those fancy stocks of textiles will definitely go down ,as they are future alok industries.Vardhman Textiles is real rock solid stock ,with strongest fundamentals and history of bonus and dividends.RSWM is distant second,a good quality stocks.All other so called fancy stocks are just trap,let the so called experts lose their shirts.No need to lose your hard money to clean their dirt.As a discloser I am having self intrest in Vardhman Textiles as a stake holder.In realty sector ,they have to mange land conversions by polishing politicians.So this is not at all enterpenureship in many cases. Realty sector can be better and safely played through private banks housing finiance compnies, paint industry, tiles ,sanitary,Cement etc.It is really difficult to make money by investing in realty stocks,although not impossible. So why to make one's life complicated and challenging, when there are so many Secular growth stories.

 

If you feel its complicated dont invest in realty stocks coz as far I see your motivations is negative and u wont hold for long time . If people has money to invest in land , let them invest , it will take atleast sometime to double your investment. But in stocks these people are already having built the houses, they just need to sell so shareholders ll make money .

 

It is not question of investing fresh,I had already lost heavily in compnies likeJP,IVRCL,HCC,Punj Llyod etc and one time these compnies were darling of market,But these compnies invested in real estate by ignoring their core competence.Now these are bank defaulters ,cdr candidates, and virtually sick with no capital available for day to day working.Real Estate is bubble ,going to burst.If I lost my 90% of capital invested in these stocks ,what will happen in future.

 

Real estate industry in india is sleeping for past 2 -3years . So very less downside from here.rbi interest rates plays a key role to boost the industry.

 

I am disappointed to see that a forum that started as a promising foundation to help retail investors gain and share knowledge and experience on stocks markets and investing has deteriorated in platform for vested interests to make their own silly points. I hope the moderators do something about this

 

@Investor2008 , I also like the stock. it is available at 1/6th off book value and at 6pe.
Now when will the sales take off is the big question.
I read the chariman's letter and the Anant Raj estate is their big bet it seems.
That itself will contribute to 3000 - 5000 crores sales he claims.

I think the margin of safety is huge in this one as it has already been beaten down severely.

I think when RBI cuts the rate, the sentiments will improve and when the hunt for value starts Anantraj should come as a top pick.

I think its just a matter of time.

 

Every Bull run has a theme. Participants of last theme never participate in the next one. NOTE THIS

 

I agree but I am not commenting on this company in general as I don't know anything about it, but if a company is undervalued for a long period and show sustainable earnings in its profits then it won't need the support of bull market to have a re-rating. Smart money would notice it and take advantage of the less price. Again this is a general observation to the quote and I was not referring to any particular company.

 

I believe this is one of the best companies to invest in real estate. Debt free(!), a lot of cash on books, tremendous land banks and assets. It just that how long are you willing to invest. Can you SIP it for 2-3 years without fail? Because if you can, then only will you be able to reap the benefits as till that time that stock might not move much.

 

Dear all I read many views.so I think I also express my view which is something different
Firstly I have to say many realty company stock price at historical los so become attractive.7the pay commission will give report in jan2016 after this it company definitelr raise pay of his employee.and so that every IT employee have extra cash.but at the same time I think flat price will not go up at the same pace.so obviously certain percentage of sale go up..and reflected in result
Now the big question which company will be benefited.certainly those company which have big investment in bigIT hub like Bangalore.chennai.Hyderabad.pune.etc
It is clear all of u my choice always in multibagger capability stock
So I like nitesh estate at cup
What are u thinking about this company..kindly express own view

 

Today nitesh estate 11%up closed as I said earlier good for long term investment also.cheers...

 

Do you see corporate governance issues or massaging of the balance sheet? I agree at these rock-bottom prices, even that seems to be priced in.

Thanks for your excellent analysis.