Anant Raj Ltd: The Zero-Debt Real Estate Stock FIIs Are Betting On

The Nifty Realty Index has tanked over 20% in the past year, despite the Reserve Bank of India (RBI) cutting interest rates by 125 basis points. Generally, lower interest rates reduce EMIs, which should boost demand for real estate. However, inflated valuations of Indian realty stocks have taken a toll, causing many major developers' stock prices to double in the past 12-18 months. As a result, interest in these stocks has waned.

Amidst this downturn, Foreign Institutional Investors (FIIs) have shown a unique interest in one real estate stock during the July-September quarter. Out of the ten stocks in the Nifty Realty Index, only one saw an increase in FII holdings. The other nine stocks experienced a decline in FII ownership.

So, which stock has caught the attention of FIIs?

Anant Raj Ltd.

Anant Raj Ltd: A FII Favorite

Anant Raj Ltd. is a prominent real estate developer involved in a wide range of projects, including IT Parks, shopping malls, residential complexes, and hospitality projects. A key factor in its recent limelight is its data center business.

The company operates across states such as Haryana, Andhra Pradesh, Rajasthan, and the capital region of Delhi and its surroundings. FIIs increased their stake by 3.06 percentage points in Anant Raj during the second quarter of FY26, bringing their total holding to 13.7% by the end of the quarter.

A Diversified Real Estate Powerhouse

The continuous interest from FIIs can be attributed to Anant Raj's diversified portfolio of real estate projects. Some of their flagship residential projects include:

- The Estate Floors : This luxury project offers 3-4 BHK homes. Phase 1 has been completed and is occupied. - The Estate Apartments : Launched in Q1FY26, this luxury project is currently under construction and is expected to generate revenues of around ₹750 crore. - Aashray 2 : Also under construction, this project is expected to be completed by June 2027, with projected revenue of around ₹350 crore.

Anant Raj also generates revenue through its annuity business, including data centers, commercial buildings, hotels, and IT parks.

Strategic Growth Drivers

One of Anant Raj's biggest assets is its substantial land bank of 83.43 acres, primarily located in Delhi. The company is also expanding its data center business, with an operational capacity of 28 megawatts (MW) and plans to increase this to 307 MW by 2032.

Consistent Growth Through Market Cycles

While other leading real estate companies have seen sluggish sales growth in Q2FY26, Anant Raj has remained resilient. The company's sales increased from ₹513 crore in Q2FY25 to ₹631 crore in Q2FY26, a 23% Year-on-Year (YoY) growth. Net profit also rose from ₹106 crore to ₹138 crore during the same period, a 31% YoY increase.

Zero-Debt – High Dividend

Anant Raj has significantly reduced its net debt from ₹1,497 crore in FY21 to just ₹50 crore in FY25. The company has maintained this low debt level for the past five consecutive quarters, effectively becoming a near-zero-debt company. Additionally, Anant Raj consistently pays dividends to its shareholders. The dividend as a percentage of face value has increased from 5% in FY21 to 36.5% in FY25.

Reasonably Valued

The stock is currently trading at a Price/Earnings (P/E) ratio of 36.8x, slightly higher than the industry median of 34.3x, indicating that the stock is fairly valued at its current market price.

Potential Risk Factors

Despite its compelling story, there are risks to consider:

- Inherent Sectoral Risk : The real estate sector is cyclical, leading to fluctuations in property sales and revenue realization. Anant Raj's focus on luxury properties adds to the challenge of maintaining consistent demand. - Government Regulations : The real estate sector is heavily regulated, requiring multiple approvals for each project. Changes in property laws and government regulations can impact future projects. - Slow Demand for Physical Data Centers : Anant Raj is investing profits from its residential business into expanding its data center business. However, demand for physical data centers may not grow as expected. Competition from big players like Reliance and Adani, who are building large-scale data centers, poses a significant threat to Anant Raj's 307 MW target.

Wrapping Up

Anant Raj Ltd. stands out in a sector that is otherwise being shunned by investors. Its diversified business ventures, steady growth, low-cost land bank, and zero-debt profile, coupled with its interests in the fast-growing data center business, make it an intriguing stock. Whether the company can continue to meet expectations remains to be seen. For now, keeping this stock on your watchlist might be a prudent move.

We have relied on data from Screener.in throughout this article. Only in cases where the data was not available have we used an alternate, widely accepted source of information.