Anant Raj Global Soars from 52-Week Low, Gains 326% in Just 9 Months!

Anant Raj Global’s Record Surge to a New All-Time High

The all-time high of Anant Raj Global can be a result of many factors. Its previous all-time high was made on 20 December 2023 at ₹ 145. It took 19 days to create a new all-time high at ₹ 147.45 on 08 January 2023. In between, it made a low of ₹ 126.3 on 20 December 2023, implying a correction of over 12%. It may represent a change in the investors’ sentiment about the company due to improved financial condition or may represent overvaluation. Let’s go through the factors contributing to its all-time high.

Factors Contributing to a Stock’s All-Time High

Positive Earnings Reports

• In FY23, its revenue increased by 47.03%. The total revenue reached ₹ 372 crores.
• In Q2 FY24, the losses under the non-operating income have reduced by 6.64% year-on-year. It suffered a loss of ₹ 25.2 crores in the mentioned quarter.
• In 2022, its net margin increased to 5.46%, which resulted in a net income of ₹ 20.34 crores.

Favorable Industry Trends

•  The new housing supply is continuously increasing, as owning a home is a dream of almost every Indian family. At a time when, due to inflation, the interest rates of almost every country are increasing, India has kept its interest rates almost similar. Anant Raj Global can take advantage of it by selling as many units at the time of lower interest rates before it starts to align with the global trends.
• Every business has risks involved in their respective industries. To reduce such risks, the companies focus on diversifying their business. Anant Raj Global’s (TARC) portfolio includes IT parks, independent floors, plots, hospitality projects, etc., which have diversified its risk in the real estate industry.
• People’s disposable income is increasing, and their aspirations concerning the design of homes and the amenities provided are also increasing. Anant Raj Global can focus on this high volume and low price segment to boost its revenue further and make a name amongst the home buyers in the particular category.

Analyst Ratings

According to Simply Wall Street, based on the discounted cash flow model, the fair price of Anant Raj Global (TARC) is ₹ 5.98, whereas its current price is ₹ 142.9. It means that the stock is 2289.9% overvalued. TARC is a good value stock based on its price-to-sales ratio of 12x compared to the peer average of 12.5x. Historically, investors have been ready to pay more for the stock on a comparison based on price-to-sales. It fails in the test for being in a good financial position as the interest payments are not well covered by earnings.

Potential Scenarios Following an All-Time High

Converting numbers and candles into information can provide us with the market’s stance on the stock, which may help us make correct investment decisions. Since the listing of Anant Raj Global Limited (TARC) in December 2020, it has converted an investment of ₹ 21 into ₹ 149.1, which means it gave 7.1x returns in around 3 years. In April 2023, it started its bull rally with higher highs and higher lows every month. We can expect the trends to continue so the investors may enter the stock at the price of their liking but keep the stop loss at the low made in the previous month.

Making Informed Investment Decisions

For any stock, reaching an all-time high is a significant milestone. Still, conducting thorough research and considering various factors is essential before making investment decisions. To make informed choices that align with your investment goals and risk tolerance, one needs to analyze the company’s fundamentals, industry trends, management’s strategy, and overall market conditions.

Company’s Financial Health

• In FY23, Anant Raj Global had a debt of ₹ 1386 crores with a negative free cash flow of ₹ 194 crores and cash & equivalents of ₹ 115 crores. It shows a huge difference between the debt and funds, which makes it essential for the company to increase the amount under free cash flow or cash & equivalents.
• In Q2 FY24, it had total liabilities of ₹ 1888 crores covered by the assets of ₹ 3248 crores. It may need to sell a few of its assets to improve its free cash flow and be better positioned to handle adverse financial situations that may arise in the future.

Industry Outlook

• As India grows and moves to a $ 5 trillion economy, the spread of the population to Tier-II & III cities will increase. It will provide an opportunity for real estate developers who have already proved their worth in delivering big projects in Tier-I cities and nearby areas to expand in new areas.
• As people’s disposable income and the number of nuclear families increase, the demand for apartments will increase. It is also possible that if the real estate prices go beyond the reach of most people in areas near high business activity, big players may enter the market in the form of make-rent-manage businesses.

Market Sentiment

Anant Raj Global’s share price reached an all-time high due to several factors, but one of the most significant factors was investors’ confidence in the stock’s prospects. On the financial front, it has reported a 47.03% increase in revenue and a margin of 5.46%, which may improve in the coming financial years. Compared to the international trend, the real estate market may continue to grow due to increased demand for housing and stable interest rates. Analysts’ suggestion of stock being overvalued is a point of caution, and the investor’s sentiment may align with it over some time. Investors need to conduct detailed research, considering factors like company fundamentals, industry trends, and financial health, to make informed investment decisions.