Anant Raj: Q2-25 Earnings Call Highlights
Both real estate & data centre businesses are strong. Expanding data centre capacity. New cloud services platform is attracting customer interest. Expects rental income to triple in the next 2 years
anantrajlimited.com | NSE: ANANTRAJ
1. Key Takeaways
1.1 TLDR
Anant Raj is firing on all cylinders, with both its traditional real estate business and its newer data centre ventures performing exceptionally well.
They're aggressively expanding their data centre capacity and are particularly enthusiastic about their new cloud services platform, "Ashok Cloud", which is already attracting substantial customer interest.
Their financial health is robust, with zero debt on the horizon. They also plan to significantly ramp up their rental income by focusing on leasing commercial properties with the goal of tripling its rental income over the next two years.
1.2 Operational Highlights:
Record-breaking quarter and half-year results: Anant Raj Limited reported its best financial performance to date, driven by strong growth in both its real estate and data center businesses.
Revenue growth: Revenue increased by 54% YoY in Q2 FY25 and 51% in H1 FY25.
Profitability: EBITDA grew by 40% YoY in Q2 FY25 and 49% in H1 FY25, while PAT surged by 75% YoY in Q2 FY25 and 78% in H1 FY25.
Debt Reduction: Anant Raj remains on track to become debt-free by the end of the next quarter, with net debt reduced by INR 124 crore in Q2 FY25 to reach INR 95 crore.
Data Center Expansion: The company's data center capacity has reached 6 megawatts and is on track to reach 28 megawatts by the end of FY25.
Launch of Ashok Cloud: Anant Raj launched its own cloud services platform, "Ashok Cloud," on October 7th, 2024, positioning itself as a one-stop solution for data center and cloud needs.
Land Acquisition: Anant Raj acquired an additional 20 acres of land in Gurugram to support its real estate development plans.
Fundraising Plan: The company announced plans to raise INR 2,100 crore, with INR 100 crore coming from promoters and the remaining INR 2,000 crore from the market. The funds will be used to further expand its data center and cloud businesses.
1.3 Key Themes:
Data Center Business Growth and Strategy:
Anant Raj's data center business is experiencing strong growth, with the initial 6 megawatts already operational and fully leased.
The company plans to expand its capacity to 63 megawatts by the end of FY26, allocating 25% (14 megawatts) to its new cloud services platform.
This expansion will involve investing approximately INR 100 crore per megawatt for cloud infrastructure, on top of the INR 25-30 crore per megawatt for the core data center facilities.
Anant Raj aims to compete with hyperscalers by offering a comprehensive range of services, including colocation, infrastructure-as-a-service (IaaS), and eventually platform-as-a-service (PaaS) and software-as-a-service (SaaS).
The revenue potential for cloud services is estimated at INR 150 crore per megawatt per year, with operational expenses around INR 24 crore per megawatt annually.
Fundraising and Deployment:
The INR 2,100 crore fundraising will be primarily allocated to the data center business, specifically for cloud infrastructure expansion.
The company emphasized that its real estate projects are fully funded and do not require external funding.
The fundraising timeline will be determined based on the company's cash flow needs and market conditions.
Real Estate Development:
Anant Raj remains committed to its real estate business and has several ongoing projects, including the launch of a group housing project in Gurugram.
The company plans to launch 1.8 million square feet of real estate projects in FY25.
Anant Raj intends to maintain a significant portion of its commercial real estate portfolio for leasing purposes, with the goal of tripling its rental income over the next two years.
Partnership with Orange:
Anant Raj's cloud services platform is powered by a technical partnership with Orange, a French telecommunications company.
The partnership involves Orange providing technical expertise and support, while Anant Raj owns and manages the infrastructure.
Revenue sharing with Orange is based on a fixed fee and a variable component tied to Anant Raj's cloud service revenue.
Other Notable Points:
The company addressed a recent news article regarding a court order halting a 20-acre residential project, clarifying that the land in question was only 1,000 square yards and that no licenses have been cancelled.
Anant Raj expressed confidence in its ability to continue delivering strong financial performance, driven by its robust real estate and data center businesses and the launch of its new cloud services platform.
1.4 Management Guidance from the Earnings Call
Data Center Expansion: The company plans to expand its data center capacity to 63 megawatts by March 2026. This expansion will include a mix of colocation and cloud services. The company has already secured clients for the full 28 megawatts of capacity planned for FY25.
Cloud Services Growth: The company is focusing on growing its cloud services business, with plans to allocate 25% of its data center capacity to cloud services. The company expects to generate revenue of approximately 150 crores per megawatt per year from its cloud infrastructure as a service offering.
Zero Debt Target: The company remains on track to achieve its goal of becoming debt-free by the end of the next quarter. As of September 30, 2024, the company's outstanding net debt stood at 95 crores.
Real Estate Development: The company plans to launch 1.8 million square feet of real estate projects in FY25. This will include the launch of a group housing project called Estate Residences in Gurugram. The company also acquired 20 acres of land in Gurugram, which will be used for future group housing and plotted development.
Rental Income Growth: The company plans to increase its focus on leasing commercial properties and expects rental income to triple in the next two years.
Fundraising: The company plans to raise 2,100 crores, with 100 crores coming from promoters and the remaining 2,000 crores from the market. The funds raised will be used to support the expansion of the data center business, particularly the cloud services segment.
Anant Raj Limited Q2 FY25 Earnings Call FAQ
1. What is the company's growth plan for its data center business?
Anant Raj is aggressively expanding its data center business. They are aiming to increase capacity from the current 28 megawatts to 63 megawatts by the end of FY26. This expansion includes a focus on cloud services, with a target of allocating 14 megawatts (around 25%) to this segment. The company plans to raise ₹2,100 crore, with ₹2,000 crore coming from the market and ₹100 crore from promoters, to fund this expansion.
2. What is the difference between Anant Raj's colocation and cloud services?
Anant Raj offers both colocation and cloud services. Colocation involves providing space, power, and cooling for clients' servers, while cloud services involve providing infrastructure as a service (IaaS), where Anant Raj owns and manages the hardware and software, and clients rent virtual machines and other resources. Anant Raj plans to expand their cloud services to include platform as a service (PaaS) and software as a service (SaaS) in the future.
3. What is the revenue potential of Anant Raj's cloud services?
The company estimates a topline revenue of ₹150 crore per year per megawatt for its IaaS cloud services. This excludes potential additional revenue from PaaS and SaaS offerings.
4. What is the status of Anant Raj's data center projects in Manesar, Panchkula, and Rai?
The Manesar facility is operational with 6 megawatts, with expansion to 28 megawatts underway. The Panchkula site is expected to be operational by December 2024. The Rai location is planned to start in the coming year.
5. What are Anant Raj's plans for the newly acquired 20 acres of land in Gurugram?
The company plans to utilize the land primarily for group housing projects, with a portion allocated for plotted development within their existing township. This acquisition will add approximately 3 million square feet of saleable area to their portfolio.
6. What is the status of the "Estate Residences" project?
Construction on the "Estate Residences" group housing project has commenced and is progressing as per schedule. The project is expected to be launched in January 2025, following a delay due to election-related code of conduct restrictions.
7. What is the expected impact of the data center business on Anant Raj's future revenue?
Anant Raj expects its data center business, particularly cloud services, to become a major contributor to its overall revenue in the coming years. While real estate remains a key focus, the growth of data centers is anticipated to accelerate, potentially surpassing real estate revenue eventually.
8. Will Anant Raj provide separate financial reporting for its real estate and data center businesses?
In response to investor requests, Anant Raj has confirmed they will begin reporting revenue for real estate and data center segments separately in future investor presentations and financial reports. This will provide greater transparency and insights into the performance of each business division.
Source: Link to Earning Call Recording
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