Anant Raj Limited, Market Cap: ₹ 7,774 Cr.
Company Overview:
ARCP started off as a construction company in 1969 and has worked on government contracts and projects for over 30 years. It gradually transitioned to a significant landowner in Delhi and NCR and entered commercial leasing and residential real estate. Till date, it has delivered more than 20mn sq. ft. of residential real estate projects, developed over 5mn sq. ft. of commercial space, and owns over 240 acres spread across prime locations in NCR. It has a comprehensive portfolio of residential townships, group housing projects, commercial developments, data canters, and hospitality developments spread across Delhi, Gurugram, and NCR.
Data Center:
3MW capacity of IT load is operational and another 3MW development is going on.
Capacity in first phase – 450,000 Sq. Ft. in existing building with 21 MW IT Load which shall be completed by year 2024 and will be further expanded to 50 MW IT Load by year 2025. Depending on the cashflows, this execution can be fast tracked. Existing rentals of Rs.90lacs/month/MW; Cost 15lacs/month/MW of running it. It will come down. Expected rentals of more than INR 200 crores/year once the initial phase of 21 MW becomes operational.
Data center certifications and tie ups in place.
*Scalable to 300 MW:
50 MW in Manesar(ongoing)
200 MW Anant Raj Tech Centre, Rai. 100MW Building in place and 100MW Built-to-Suit.
50 MW Anant Raj Tech Park, Panchkula. 5.25 green field available.
FY2024 Outlook:
Expanding Township
Deleveraging Balance Sheet: focus to be debt free by 2024.
Data Center Expansion: Target to have 21 MW by 2024.
New Projects.
Notes:
- Data Protection Bill is passed by Parliament. Demand wise not problem. Equipment cause delay, three more sources are tapped. Fully committed to reach 300 MW. Ready building and certified data centers. 3 to 4 years. Funding lowest in industry 25 to 26 cr per MW. Others at 50 to 55 cr per MW. Not taking debt for this. Rents will be used to fund project. After 21MW rent will fund to reach 300MW.
- Tirupati Housing 2000 houses, it is prestigious project. Next to Tirupati Airport, Land is from AP governments. AP Govt invited to replicate success of company’s project in Rajasthan. Margin will be at least 30%.
- Lands are fully paid, 10 years old. Margins will further improve with group housing.
- 640MW Capacity as of now for India. In 3 to 4 years it will 3500MW. Demand will be double to consider disaster management. Escalation every 3 years. Linked to inflation.
- IRR of data center is much better then competitors. Under cut not going to happen for next 3 to 4 years.
- Inventory of 10000 cr. in 63A Sector. 100 acre of land in Delhi, far more valuable then 63A. Replenish land bank for real estate. Replenish land bank for data bank not required. Enough for 300MW.
- Real estate have high demand after 10 years of recession, 75% is consumed by end users. As per broker circle, 250 flats can be sold in 2 to 3 days.
- For 21MW data center required 450cr. 200cr spend via internal accruals. 250cr. will be generated to other projects. 75 lacs/month/MW rentals will be used to set data centers. No project and balance sheet debt. Max. by 1st quarter by FY2025.
- Net debt 770cr. FY2024 to FY2025 substantial reduction is planned.
Technical:
- Trend is in tight area.
- 50 DMA: 219
- 200 DMA: 173
Investment Rational:
- Up surge of real estate, after 10 years of recession.
- Conservative management, will be near to zero debt in next few years.
- Data center business have first mover advantage and can execute projects at half price. Annuity type of business’.
- NPM at 15%.
- DLF/Godrej Properties/Brigades trade above 65 PE. Anant Raj at 38 PE.
- Interest rates trajectory will be on down side for next two years, which help to increase real estate demand.
Risk:
- Inherent risks associated with real estate demand.
- Data centers do not materialize as per plan.
Disclosure: Invested.
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