Anant Raj Ltd: Data Center Foray and Future Potential

Anant Raj Ltd., one of the leading real estate players in the Delhi NCR region, is expanding into the data centers business. Over the last 5 years, the company has grown its sales and profits at a staggering 49% and 74% CAGR, respectively, delivering 109% CAGR returns to its shareholders.

Finology Research Desk has analysed the company this week, providing an insight into its business model, future outlook and Finology’s opinion about the company’s potential.

What makes the Data Center industry special?

Every time you binge a show on Netflix, make a UPI payment, or upload photos to Google Drive, your data doesn’t just vanish into “the cloud.” It lands in a very physical warehouse — a data center. Think of them as factories, except instead of machines, they’re filled with racks of servers. Around them hum industrial-scale air conditioners, power backup systems, and tight security, keeping your digital life alive.

Globally, data centers come in different flavours. Some are enterprise-run, built for internal use. Others are hyperscale data centers, the kind Amazon Web Services or Microsoft Azure set up to run their clouds. Sitting in the middle is the colocation model — where data center operators build and maintain facilities, and clients simply rent racks, cooling, and power.

Why do investors love this business? Because once data goes in, it rarely comes out. Switching costs are high, so customers sign long contracts. That means annuity-style income — predictable, sticky, and often growing as clients’ digital needs rise. It’s like owning a toll road. The upfront cost is heavy, but once built, every passing vehicle (or byte of data) keeps paying you back.

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For most players, building 1 MW of data center capacity costs nearly ₹50 crore. But once operational, it turns into a cash cow, thanks to recurring monthly rentals.

Colocation Data Center rates across key global cities:

 

Source: Motilal Oswal

India adds another kicker. Regulations force sensitive data to stay within the country. Meanwhile, digital consumption is exploding — more UPI transactions, more OTT streaming, more cloud adoption. Despite generating nearly 20% of the world’s data, India accounts for just 3% of global data center capacity. The gap is glaring, and demand is rising faster than supply. No wonder the Indian market is expected to grow at ~18% CAGR from 2024–29.

 

Source: Motilal Oswal

Yes, it’s capital-intensive. Yes, it requires land, power, and regulatory clearances. But the rewards, once scale is achieved, are among the fattest margins in infrastructure businesses. And that’s why a traditional real estate company like Anant Raj Ltd. is changing lanes.

Business Model of Anant Raj Ltd.

For decades, Anant Raj was known for building residential projects, commercial complexes, and leasing IT parks. Real estate still accounts for more than 95% of reported revenues. But today, the company is betting on a second engine — data centers and cloud infrastructure.

At the base is colocation — converting their IT parks in NCR into data centers where clients lease racks. This works much like rent: predictable, recurring, and long-term.

On top of that, they’re rolling out cloud infrastructure services under the Ashok Cloud brand. Instead of just leasing space, Anant Raj now wants to sell computing power and storage. To make that leap, they’ve tied up with partners like Orange Business and CSC. Cloud yields are far superior: colocation earns ~₹90 lakh per MW monthly, but cloud can fetch nearly ₹10 crore per MW per month, with margins four to five times higher.

What is the biggest edge Anant Raj has? Land and speed. Competitors often need 3–5 years to acquire land, fight approvals, and set up greenfield projects. Anant Raj, with its existing IT parks in Manesar, Panchkula, and Rai, can roll out brownfield conversions in just 6–9 months, at a setup cost of ₹29–34 crore per MW — far cheaper than the industry’s ₹50 crore benchmark.

In a business where clients demand capacity today, not three years later, that time advantage matters. The play is clear: swap the cyclical, lumpy earnings of real estate with the steady, high-margin income of digital infrastructure.

But bold strategies sound exciting only until you ask — do the numbers actually add up?

Future Prospects: Why is Anant Raj entering this space?

Do the math, and the attraction becomes obvious. At a setup cost of ₹29–34 crore per MW, the payback period is just 2–3 years. Colocation at ₹90 lakh/MW per month comes with operating costs of only ₹15–18 lakh, leaving the bulk of revenue to flow into profits. That’s how operating margins of 70–80% are achievable.

But there’s a catch. These spreadsheets depend on utilisation. Empty racks stretch your two-year payback into five. Rising power or cooling costs shrink margins. Aggressive competition can squeeze pricing.

So yes, on paper, it’s a cash machine. But projections don’t build moats. The bigger question is: why is Anant Raj betting its future here, and how does the long-term picture look?

Zoom out, and the pivot makes sense. Real estate is cyclical, tied to demand swings, raw material prices, and regulatory hurdles. Data centers, by contrast, offer visibility, predictability, and annuity-like revenues.

Anant Raj’s positioning comes from three levers. First, asset advantage — they already own land and IT parks in NCR. Second, location advantage — Delhi NCR is one of India’s densest IT load clusters, housing banks, government agencies, and enterprises. Third, partnership advantage — with Orange and CSC, they bring global credibility.

But advantages don’t guarantee victory. Globally, Equinix scaled into a $70+ billion giant, compounding shareholder wealth at ~15% CAGR over two decades. Digital Realty also created value by scaling fast. Yet others in the same industry over-expanded, over-leveraged, and failed. Even in Asia, Singapore’s early movers thrived, while late entrants struggled.

That’s the challenge for Anant Raj. Land and speed they have. But can they win clients against global hyperscalers building their own facilities? Can they maintain pricing power in an increasingly crowded domestic market?

The opportunity is massive, but the moat will depend on execution. This story can turn into an Equinix… or fade like those who tried and failed.

Finology’s Stance: Are We Buying the Theme?

The short answer — no, not yet.

Here’s why.

We love the theme. India’s data center industry is real, growing, and here to stay. The economics look fantastic on paper, and Anant Raj has land, speed, and partnerships. But Finology 30 doesn’t buy themes. We buy moats — businesses that have proven they can defend turf through cycles, not just those with exciting blueprints.

In Anant Raj’s case, the moat isn’t visible yet. Real estate remains the core business, while data centers are in the build-out phase. Utilisation risks are high, competition is rising, and the track record of Indian players in this space is too short. Globally, even giants have stumbled when execution slipped.

Existing Capacity of Key Players in the Delhi-NCR Region: 

Source: Motilal Oswal

Upcoming Capacity Plans in Delhi-NCR Region by FY26: 

 

Source: Motilal Oswal

So yes, the story has potential. But our framework demands more than potential. Until Anant Raj demonstrates consistent, profitable scale in digital infrastructure, we’ll stay on the sidelines.

The Bottom Line

Anant Raj Ltd. wants to shed its old skin as a cyclical real estate developer and rebrand itself as a digital infrastructure provider. The pivot is bold, and on paper, the numbers are mouth-watering — high utilisation, two-to-three-year paybacks, and fat margins.

But industries can grow while individual players struggle. Globally, data centers have produced runaway successes and outright failures. Today, Anant Raj’s story sits somewhere in between - promising, but unproven.

For long-term investors, the question isn’t “Will the data center industry grow?” That’s almost certain. The question is “Will Anant Raj carve a moat, or simply ride along?”

At Finology 30, we prefer businesses with moats already tested by time, not just opportunity. That’s why, for now, Anant Raj doesn’t make the cut. The business may transform, but investors will need one thing above all else — patience. The next few years will show if Anant Raj can combine size with speed and truly earn a permanent place in investors’ portfolios.