ESDS Software Solution IPO

Strengths · 9

• 01Profit has grown very fast, from Rs 13.61 crore in FY2024 to Rs 55.61 crore in FY2025 and Rs 120.82 crore in FY2026.
• 02Sales have grown steadily, from Rs 292.14 crore in FY2024 to Rs 376.64 crore in FY2025 and Rs 480.65 crore in FY2026.
• 03EBITDA more than doubled in two years, from Rs 101.88 crore in FY2024 to Rs 234.23 crore in FY2026.
• 04The margin is strong for an infrastructure business, with a PAT margin of 15.39% and RoCE of 24.73%.
• 05The company cut its debt sharply while growing, from Rs 149.04 crore in FY2024 to Rs 42.92 crore in FY2026, against a net worth of Rs 528.81 crore.
• 06It owns real infrastructure, with five Tier 3 data centres across India covering more than 75,266 square feet.
• 07The customer base is wide at 2,501 customers in FY2026, spread across banking and insurance, government and enterprises.
• 08It has its own patented technology in SWARAJ Cloud, and offers newer services such as GPU as a Service, which is in demand for AI workloads.
• 09The whole issue is fresh capital, and Rs 576 crore of it goes into cloud computing equipment and data centre infrastructure.

Risks · 8

• 01The issue is priced high on earnings. At the upper band of Rs 429 the P/E is about 41.61 times on an EPS of Rs 10.31.
• 02Return on net worth is only 13.71%, which is modest against that valuation and much lower than the RoCE of 24.73%.
• 03Total assets almost tripled in one year, from Rs 655.95 crore to Rs 1,937.90 crore. That is a very large build up, and the earnings from it are still to come through.
• 04Data centres need money all the time. Servers, GPUs and cooling equipment date quickly and have to be replaced, so capital spending never really stops.
• 05Rs 576 crore of the Rs 720 crore issue goes into equipment. The whole case rests on filling that new capacity with paying customers.
• 06Promoter holding is already low at 46.06% before the issue and falls further to 39.47% after it, so there is no dominant promoter holding.
• 07Competition comes from global hyperscalers such as AWS, Microsoft Azure and Google Cloud, which have far deeper pockets and larger scale.
• 08Government and BFSI customers usually buy through tenders, which means price pressure and slow payments.

ESDS Software Solution Limited was started in August 2005. It provides cloud services, managed IT services, data centre infrastructure and software, and describes itself as an AI enabled provider. Its customers are in banking and insurance, government and large enterprises, and it served 2,501 customers in FY2026.

The company offers three things together. Infrastructure as a Service covers colocation and data centre services, along with public, private, virtual private, hybrid and community cloud, and GPU as a Service. Managed services cover cloud and data centre management, cybersecurity, IT infrastructure and network management, backup and disaster recovery, database management and DevOps. Software as a Service covers its own tools such as data centre management software, vulnerability scanners, web access firewalls, VPN solutions and AI powered GPU monitoring.

It runs five Tier 3 data centres across India covering more than 75,266 square feet, with backup power, disaster recovery setup and round the clock service. It has also built its own technology, including SWARAJ Cloud, a patented cloud autoscaling system that has since been developed into an AI enabled cloud platform focused on data sovereignty, security and compliance. As on 30 June 2026 it had 993 employees.

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