An avalanche begins with a small movement but can bring down an entire mountain. In financial markets, a similar phenomenon occurs when a single piece of news changes the perception of an entire industry.
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Avalanche is similar to what is happening in the Indian data center sector. New information has sent shockwaves through the market. It has dragged down all data center stocks.
The Indian data center industry is a booming space. With increasing digital adoption and cloud services. It was seen as a sunrise sector with immense growth potential.
However, today’s trading has painted a different picture. All Indian data center stocks are trading in the red, shaken by recent developments.
Among them, Anant Raj has seen the sharpest decline. Its share price plunged by a staggering 20% in a single trading session.
Anant Raj, known for its strong real estate footprint, is perceived as a prominent player venturing into data centers. This sudden fall has caught investors by surprise.
Let’s explore the reasons behind Anant Raj’s steep decline.
Fears of Low Cost AI
A major announcement from China-based start-up Deepseek has sent ripples through global markets. In December 2024, the company launched a large language model (LLM) reportedly developed in just two months at a cost of under US$ 6 million (m).
Now, it has unveiled a reasoning model that, according to third-party tests, is outperforming OpenAI’s equivalent. This development has raised questions about the efficiency and costs of existing AI systems.
US tech giants, which have invested billions of dollars in AI, particularly in data centers and high-performance hardware, are now under scrutiny. The Deepseek revelation is making investors rethink the sustainability and scale of spending on AI infrastructure.
With concerns about whether such heavy investments are justified, AI-linked stocks, including data center players, have taken a hit. Nvidia, for example, saw its shares fall by 12% as the news spread.
The Indian data center industry, closely tied to the global AI ecosystem, has also felt the impact. Investors fear that a shift in AI development priorities could reduce demand for large-scale data infrastructure. As a result, Indian data center stocks have seen sharp declines.
Anant Raj, which has a strong foothold in real estate and is diversifying into data centers, experienced the steepest fall. Its share price plummeted by 20% in a single day.
This drop reflects fears that reduced investments in AI hardware and data centers, spurred by the Deepseek breakthrough, could hurt Anant Raj’s growth prospects.
With AI infrastructure spending under question, Anant Raj’s reliance on the data center boom now appears riskier, prompting significant investor caution.
Expensive Valuations
Anant Raj is facing increased scrutiny as its valuations appear stretched. The company’s stock is trading at a price to earnings (PE) ratio of 52 and a price to book (PB) ratio of 6.
These figures are significantly higher than typical valuations for real estate and data center businesses, leading to concerns about whether its market price reflects its true value. The correction in data center-related stocks, coupled with these high valuations, has amplified selling pressure.
In October 2024, the company raised Rs 21 billion (bn) through the issuance of fully convertible warrants at Rs 730 per share has added to the debate. If the company itself is pricing the warrants at this level, market participants question whether the stock should trade at a higher price.
Such doubts are further fueled by the fact that Anant Raj’s data center operations contributed only Rs 80 m to its Q2 EBITDA of Rs 1.1 bn (less than 8%). This shows that the business is still predominantly reliant on its real estate segment.
These developments highlight the risks associated with overvaluation. Anant Raj’s expensive metrics, combined with its limited data center contribution and evolving market conditions, have caused investors to reassess its future growth potential. This has led to the sharp fall in its share price.
What Next?
Anant Raj is focusing heavily on its data center and cloud businesses to drive growth. The company plans to scale its data center capacity to 63 MW by FY26, with 14 MW allocated to cloud services.
This is a shift from its co-location-heavy model to a more diversified offering, which includes infrastructure as a service (IaaS).
The introduction of Ashok Cloud, named after its founder, has already received positive market feedback and positions Anant Raj as a one-stop solution for cloud and data center needs.
By March 2026, Anant Raj aims to have its three main data center locations – Manesar, Panchkula, and Rai – fully operational. The company is confident in its ability to cater to increasing demand, with nearly all its planned 28 MW for FY25 already tied up.
Its focus on leveraging internal funds to partially finance expansions shows discipline, even as it plans to raise Rs 21 bn for future projects.
On the real estate front, the company continues to expand, adding 20 acres of prime land in Gurgaon to its portfolio, with plans to develop 3 m square feet of saleable area.
However, the management has clearly stated its priority lies with data centers and cloud services as growth engines. In the coming years, Anant Raj aims to diversify further into platform as a service (PaaS) and software as a service (SaaS).
All being said, investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.
In the past five days, Anant Raj share price has tumbled 36.4%. Over the last six months, its share price has fallen 4.2%.
In 2025, so far, its share price has slipped 37.6%. Over the past one year it has rallied 71.9%.
The stock touched its 52-week high of Rs 947.3 on 8 January 2025 and a 52-week low of Rs 281.2 on 14 March 2024.
About Anant Raj
Anant Raj was incorporated in 1985 as Anant Raj Clay Products by Ashok Sarin.
It is primarily engaged in the development and construction of IT parks, hospitality projects, SEZs, office complexes, shopping malls and residential projects in the state of Delhi, Haryana, Andhra Pradesh, Rajasthan and NCR.
