Value Stock is to benefit from Ethanol Blending
August 15, 2026
ESDS Software Solution’s ₹720 crore IPO opens on 28 August 2026 at a price band of ₹408–429 per share. Unlike many IPOs, this is a 100% fresh issue with no offer for sale, with ₹576 crore earmarked largely for cloud-computing equipment and data-centre infrastructure. At the upper band, ESDS is valued at about ₹5,028 crore.
What has created the BUZZ is the current GMP it commands – which is close to 360 today, meaning at indicative listing price of 789 (already > 80% high !).
Its biggest USP is its integrated technology stack. ESDS combines data centres, cloud infrastructure, managed services, SaaS and GPU-as-a-Service under one roof. According to the industry report incorporated into the RHP, it is one of only two Indian players offering this entire spectrum and was also an early mover in community cloud solutions aimed at regulated customers. Its client base spans enterprises, government organisations and BFSI customers.
The financial improvement has been substantial. Revenue from operations grew from ₹286.5 crore in FY24 to ₹472.2 crore in FY26, while PAT increased from just ₹13.6 crore to ₹120.8 crore. FY26 EBITDA margin reached an unusually strong 49.6%, PAT margin 25.6%, ROCE 32.8% and debt/equity fell to only 0.08x. The company also expanded its customer base to 2,501 customers in FY26.
Growth is increasingly coming from managed services, whose contribution jumped to 41.2% of FY26 revenue, versus 20.9% in FY25. ESDS currently operates five data centres and plans to add Kolkata by Q3 FY27 and Sahibabad by Q1 FY28. The RHP-cited Nexdigm report expects India’s cloud-services market to grow at about 23.6% CAGR through FY30, while the much smaller cloud-GPU segment is projected to grow around 50% CAGR. These are industry forecasts, not guaranteed ESDS growth rates.
A major talking point is ESDS’s 8,208 NVIDIA B300 GPU project in Australia. However, investors should understand the contract correctly. Media reports have highlighted a five-year agreement worth about US$1.25 billion, but the counterparty SharonAI’s SEC filings show SharonAI as the service provider and ESDS as the customer purchasing GPU compute capacity. Therefore, the US$1.25 billion figure should not automatically be presented as ESDS’s future revenue or order book. ESDS may monetise that capacity through its own customers, but that downstream revenue needs separate evidence.
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Valuation is the other important consideration. At ₹429 and FY26 diluted EPS of ₹11.81, ESDS is priced at about 36.3x historical FY26 earnings; adjusting the denominator for the fresh shares issued, the multiple would be roughly 41.6x if earnings remained unchanged. The business therefore enters the market with strong growth and profitability already reflected to a meaningful extent in the asking valuation.
The key risks are also material: the top ten clients contributed 45.36% of FY26 revenue, government-linked business contributed 27.37%, and the RHP highlights technology obsolescence, cybersecurity, receivable collection and execution risks.
In summary, ESDS is an interesting combination of profitable cloud infrastructure, managed services and an emerging AI/GPU opportunity. Its FY26 numbers are strong and leverage is low, but investors should separate confirmed operating performance from headline AI contract values and assess whether future growth can justify the post-issue valuation.
Disclaimer: This article is purely for information purpose only. This is NOT a stock recommendation and should not be treated as such. Please consult your financial advisor before investing. Investing in securities market is subject to market risks. Please read full disclosures here.
Sources: nseindia (financial reports, company data and announcements via NSE website in RHP), company website.
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Disclaimer: This article is for information and education only and is not a stock recommendation. Investments in securities markets are subject to market risks. Read the full disclosures.
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