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On Monday, Nomura/Instinet initiated coverage on Anant Raj Ltd (ARCP:IN), issuing a Buy rating with a price target of INR750.00. The recommendation comes after Anant Raj’s share price experienced a 30% decline over the past month, contrasting with the Nifty50’s 1% drop. This decrease in Anant Raj’s stock value is attributed to the global sell-off in technology stocks, spurred by worries about the advent of a low-cost artificial intelligence (AI) model.
Nomura/Instinet’s analyst highlighted the company’s potential to generate substantial cash flows from its residential projects, particularly in Sector 63A, Gurugram. This projection is based on Anant Raj’s strong launch pipeline and the advantage of having already paid for the land parcels. The analyst also noted the company’s ability to meet its medium-term goals for data center (DC) and Cloud infrastructure, with approximately half of the required capital expenditures expected to be covered by internal accruals.
Despite the broader market concerns regarding pricing risks within the DC/Cloud segment, Nomura/Instinet is optimistic about Anant Raj’s prospects. The firm’s analysis suggests that the concerns may be exaggerated, considering India’s current underrepresentation in data centers. Additionally, the implementation of the Digital Personal Data Protection Act, 2023 (DPDP, 2023) is anticipated to boost demand for India-based DC/Cloud services.
The analyst’s comments reflect a positive outlook for Anant Raj, emphasizing the company’s strategic position to capitalize on the growing demand for data centers and cloud services in India. The new legislation is expected to act as a catalyst for the sector, potentially benefiting Anant Raj as it progresses with its development plans.
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