Anant Raj Ltd Q4 FY2024 Concall Summary

Key Takeaways

• Record year, data center pivot begins: FY24 delivered the highest-ever PAT of INR265 crores on a top line above INR1,500 crores, while the company’s first 3 megawatts of data center capacity went live and a cloud services pilot was signed.
• Data center economics are structurally advantaged: Anant Raj’s capex per megawatt runs at INR25-26 crores, roughly half the INR55-60 crores competitors report, because the company already owns the land and buildings.
• Cloud services add a high-revenue kicker: Management expects that spending an additional INR20 on servers can generate close to INR120 in revenue per year, a multiple that would transform the P&L if the pilot succeeds.
• The balance sheet is being rapidly deleveraged: Net debt fell to INR290 crores with a cost of borrowing below 10%, and the company targets being net debt-free by December 2024.
• What to watch next quarter: Whether the cloud pilot converts to a commercial rollout, the pace of data center client move-ins as servers arrive, and the launch cadence of the 25 lakh sq ft residential pipeline.

Data Center Rollout & Economics

• Operational scale-up underway: 3 megawatts already started, with the balance of the initial phase in the handing-over stage; the target is 21 megawatts operational by December 2024, plus an additional 7 megawatts at Panchkula for a total of 28 megawatts by year-end.
• Cost advantage is structural, not marginal: Because Anant Raj already owns the land and buildings, it only needs to strengthen structures at INR4-5 crores per megawatt before adding equipment, bringing total capex to INR25-26 crores per megawatt versus the INR55-60 crores competitors project.
• Revenue and margin profile: Co-location is expected to generate INR90 lakhs per month in revenue per megawatt, with INR75 lakhs per month in EBITDA; leases are linked to inflation and may adjust with competition.
• Ramp-up is deliberately gradual: Q4 FY24 data center revenue was only INR3 crores because the business is brand new; handing over and taking over takes time, servers are about to come, and the company is being flexible to let clients settle in.
• Long-term ambition: Internal planning targets 300 megawatts in the next four years, with the second-year number set at 50 megawatts and work ongoing to increase that to 75 megawatts.

Amit Sarin: "Anybody to be on the stage where we are would take at least three to four years to get to where we are right now."

Cloud Services Pilot

• TCIL agreement signed: Anant Raj entered into a fresh agreement with TCIL, a Government of India Undertaking, for providing cloud services; the agreement is signed and work has started on a trial basis.
• Pilot is deliberately small: The test case uses less than 0.5 megawatt with minimal investment; servers will be provided as per the client’s technical expertise under a signed agreement.
• Revenue potential is the prize: Management estimates that spending an additional INR20 on servers can generate close to INR120 in revenue in one year on that additional part, a multiple that would substantially increase revenues by end of this year itself if the pilot works out.
• Opex increment is modest: The additional opex for cloud versus pure co-location is estimated at INR25-30 lakhs, described as “not much” relative to the revenue uplift.
• Cautious scaling approach: The company will let the pilot get established and start earning money; only then, if clients approach with technical backup, will it multiply the model.

Real Estate: Record Year & Launch Pipeline

• FY24 performance: The company comfortably crossed INR1,500 crores in top line, with PAT of INR265 crores the highest ever, driven by three projects: group housing, fully furnished villas, and independent floors (G+3 and G+2 structures), all of which realized better pricing than projected.
• Demand tailwinds intact: Robust demand continues, supported by RERA and other regulations that have brought clarity to the sector.
• Launch pipeline for the coming year: The company plans to launch another group housing project, two independent-floor projects totaling 8 lakh sq ft, and a 6.5 lakh sq ft housing project, all within the 63A location where land is already done and basic permissions are in place.
• Nine-year land bank visibility: The company has a nine-year roadmap with its present land bank; the current focus is fully on 63A, with Delhi and other parts to kick in later.
• Rental-income DNA: Anant Raj was originally built to create rental income, returning to residential only in 2010-2011 after years focused on commercial buildings and leasing; management states it understands rental income well and wants to focus on it in the future, with data center demand seen as a long-duration rental stream.

Amit Sarin: "We understand rental income pretty well. And we want to focus on this in the future also. Of course, office demand keeps on changing. But this data center demand will keep on increasing."

Balance Sheet & Capital Allocation

• Debt reduction on track: Net debt now stands at INR290 crores, with the cost of borrowing below 10%; the company targets being net debt-free by December 2024 and is fully on track.
• QIP deployed: The company completed a QIP in January 2024, raising exactly INR500 crores; proceeds were used to retire debt and for general corporate purposes.
• Debt aversion is explicit: Management states Anant Raj is very averse to debt; the only debt it is open to taking is lease rental discounting (LRD), which it considers one of the best instruments for its asset base.
• De-merger question deferred: When asked about plans to de-merge the data center business, management responded it is too soon to say anything and the focus remains on execution.

Unanswered Questions & Gaps

• Cloud revenue projections declined: Management said it cannot give projected numbers because the cloud initiative is a trial case; exact server cost per megawatt will be shared only in the next call.
• Server deployment size not disclosed: The company declined to specify how much of the 28 megawatts will be used for servers, saying only “maybe 0.5 megawatt” without committing to an exact number.
• Net margins for data center services not provided: When asked, management answered only with co-location EBITDA (INR75 lakhs per month per megawatt) and did not give a net margin figure.
• Third-year data center target not given: Beyond confirming the second-year number of 50 megawatts and that work is on to increase it to 75, management did not provide a third-year capacity number.
• Real estate investor presentation delayed: The data center presentation was uploaded, but the real estate presentation was still pending at the time of the call, with a commitment to upload it within a day.

Guidance & Commitments

Key Metrics