Motilal Oswal Expects 43% Rally in This Multibagger Post Q1 Results, But Cuts Target Price; Here's The Reason

Motilal Oswal has maintained its 'Buy' rating on Anant Raj Ltd., a leading real estate developer, but has revised its target price downward from Rs 1,085 to Rs 807 per share. The revision comes despite the company's strong financial performance in Q1 FY26 and promising growth prospects in both its residential and data centre businesses.

Anant Raj Q1 Results:

In Q1 FY26, Anant Raj reported a strong financial performance with revenue reaching Rs 590 crore, which is a 26% increase compared to the same period last year and 10% higher than the previous quarter.

This revenue figure also exceeded Motilal Oswal's estimates by 35%. The company's earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at Rs 150 crore, marking a 46% rise from last year.

The EBITDA margin improved to 25.4%, up by 3.6 percentage points. Adjusted profit after tax (PAT) was Rs 130 crore, showing a 38% year-on-year increase, while the PAT margin also rose to 21%, up by 2 percentage points.

Why Motilal Oswal Revised the Target Price?

"Revenue from completed projects, such as Birla Navya Phase 1-3, has picked up. Other costs spurted as the company is in the process of launching new projects in FY26, leading to a dip in operating profits.

Earlier, we increased our debt estimates, assuming the company would require funds for capex. However, as the company continues to reduce debt, we have made changes to our debt assumptions accordingly," said Motilal Oswal in its report.

Latest Business Update:

Recently, Anant Raj launched a new version of independent floors under the brand name "The Estate Apartments" at its township in Sector 63A, Gurugram. The launch received strong customer interest, reflecting positive market sentiment toward the brand and its products, noted Motilal Oswal report.

Residential Segment Outlook:

Motilal Oswal expects Anant Raj's residential segment to play a key role in the company's growth. Between FY25 and FY30, the developer is projected to deliver around 14 million square feet of saleable residential space, which could generate a net operating profit after tax (NOPAT) of Rs 7,200 crore.

The brokerage has valued Anant Raj's residential business at Rs 8,700 crore, or Rs 253 per share, in terms of gross asset value. This valuation is based on a weighted average cost of capital (WACC) of 11.6%, along with a terminal growth rate of 5%. It also factors in annual business development expenses of Rs 250 crore.

Data Centre Businesses Update:

Motilal Oswal has also valued Anant Raj's annuity income, which includes earnings from leased commercial assets at Rs 1,000 crore or Rs 30 per share, based on a 9.5% capitalization rate.

In addition, the company is expanding rapidly in the data centre business. Current capacity of 6 megawatts (MW) in FY24 is expected to grow to 307 MW by FY32. Of this, cloud service capacity is projected to increase from 0.5 MW to 77 MW in the same period, according to Motilal Oswal.

"This growth, coupled with a projected EBITDA margin expansion to 77% by FY30E, reflects ARCP's ability to scale operations and achieve strong profitability.," observed the brokerage.

"We model the free cash flows for the data center business till FY32, using a discount rate of 11.6%, a rental escalation of 3%, and a terminal growth rate of 3%, resulting in an EV of INR149 billion or INR435/share post deferral of the cloud capex in initial years," said Motilal Oswal.

Anant Raj Share Price Movement:

Anant Raj shares closed at Rs 581 up by 12.90 points or 3.18% on Tuesday, 29 July. It has hit 52-week high at Rs 947.25 and 52-week low at Rs 366.15. Market capitalisation is 19,855.91 crore. However, the stock is down 32.46% so far in 2025.

Disclaimer
The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.