ESDS Software

ESDS Software

By Geetanjali Kedia
about 15 days ago

IPO Size: Rs. 720 cr, entirely Fresh Issue  

  • For capex of Rs. 576 cr

Price band: Rs. 408-429 per share

M cap: Rs. 5,028 cr, implying 14% dilution

IPO Date: Fri 28th Aug to Tue 1st Sep 2026, Listing Fri 4th Sep 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

 

Cloud and Software Solutions Provider

ESDS Software Solution is a 20 year old Thane-headquartered provider of entire spectrum of GPUaaS, cloud, managed services, data centre, infrastructure as a service (IaaS) and software solutions.

Business is split under 4 broad segments:

  1. Managed Services (41% of Rs. 472 cr FY26 revenue): company’s fastest growing segment, services to customers across BFSI, Government and Enterprises comprising development operations services, consultancy, operations management, cloud deployment etc.
  2. Cloud services and Cloud computing (36% of revenue): comprises indigenous cloud platform ‘Swaraj Cloud’ patented in India and US, has bagged Rs. 1,177 cr contract for new GPUaaS, advance for which has been received from customers.
  3. Software as a Service (SaaS, 15% of revenue): well-architected cloud-adoption solutions for cost reduction, security, flexibility, scalability and reliability.
  4. Colocation and Data Centre services (8% of revenue): operates 5 data centres in India at Nashik, Navi Mumbai, Bengaluru, Mohali, Noida aggregating 75,266 sq ft.

 

Large Foreign Contract

On 31.3.26, company entered into a strategic AI cloud infrastructure agreement with Sharon AI, an Australia-based neocloud AI compute service provider, for deployment of a dedicated AI infrastructure cluster of ~8,208 NVIDIA B300 GPUs, within an existing data centre facility in Australia, by Sep 2026. For this, company will pay Sharon Rs. 11,831 cr for 5 years and start generating revenue from its customers own Q3FY27E. This is a new stream of business, wherein company is leasing AI from abroad and offering it to its customers. Long term success of this arrangement rests in higher GPU utilisation and prices of GPU continuing to remain stable.

 

High Growth Financials

FY26 revenue rose 31% YoY to Rs. 472 cr with EBITDA up 51% YoY to Rs. 234 cr, implying 49% EBITDA margin. PAT doubled YoY in FY26 to Rs. 121 cr, leading to 25% net margin and an EPS of Rs. 11.81. On net worth of Rs. 544 cr, company clocks healthy RoE of 25%. It is debt free with cash of Rs. 1,250 cr, on account of advance received from customer.

 

Priced for Growth

M cap of Rs.5,028 cr and Enterprise Value of Rs.3,800 cr implies a PE multiple of about 19.5x on current year basis, estimating FY27E EPS at Rs. 22. This is attractive for high margin and huge growth opportunity in cloud and managed services.

Company has undertaken Rs. 210 cr capex between FY24 to FY26 and now plans a sizeable Rs. 576 cr. It plans capex over FY27E and FY28E to fund purchase of cloud computing and other equipment and infrastructure for its data centres.

 

Premium Justified

In the past 5 years, company has raised Rs. 330 cr from external investors, and counts UHNIs like Sundar Iyer, Mukul Agarwal, Ashish Kacholia as shareholders. Thus, promoter holding is only 46% and will drop to sub-40% post IPO.

In Feb 2025, company undertook a follow-on private placement worth Rs. 65 cr at Rs. 225 per share. After 18 months, the IPO price has doubled from the last transaction price. This is justified as FY26 net profit grew at 116% YoY.