1 hr ago
ESDS Software Shares Surge 201% From IPO Price
ESDS Software is a company that provides cloud-related services.
Its shares began trading much higher than the price offered in its IPO.
The shares opened at Rs 757 on the National Stock Exchange and Rs 746.30 on BSE Limited.
The IPO received far more demand than the number of shares available.
Choice Institutional Equities believes the shares could reach Rs 1,550 within 12 months.
It expects India’s cloud market to grow quickly.
ESDS serves businesses, government customers and banks and financial companies.
A large AI contract could help the company grow further.
However, the brokerage warned that executing the contract and managing costs and competition could be difficult.
ESDS Software shares listed at Rs 757 on the National Stock Exchange, a 76.46% premium over the issue price.
The shares debuted at Rs 746.30 on BSE Limited, marking a 73.95% premium.
The IPO, open from August 28 to September 1, was subscribed 135.88 times and attracted over 63.01 lakh applications.
Choice Institutional Equities initiated coverage with a BUY rating and a 12-month target price of Rs 1,550.
The brokerage cited cloud-market growth and ESDS’s $1.25 billion AI contract, while flagging execution, concentration, capex and competition risks.
- Who
- ESDS Software and Choice Institutional Equities.
- What
- ESDS Software shares made a strong market debut, and Choice Institutional Equities issued a BUY rating with a Rs 1,550 target price.
- Where
- The shares debuted on the National Stock Exchange and BSE Limited.
- When
- The IPO was open from August 28 to September 1; the shares debuted last Friday.
- Why
- The brokerage expects cloud-market expansion, enterprise digitisation, BFSI adoption, government workloads and ESDS’s AI contract to support growth.
Growth and Upside Case
Risks and Caution Case
Cloud and AI growth
Growth and Upside Case
Choice Institutional Equities expects India’s cloud market to grow at a 23.6% compound annual growth rate from Rs 65,100 crore in FY25 to Rs 1.9 lakh crore in FY30, with ESDS positioned across enterprise, government and BFSI segments.
Risks and Caution Case
The brokerage said slower execution or ramp-up of the AI contract could delay earnings growth and affect the company’s valuation.
Earnings outlook
Growth and Upside Case
Choice expects ESDS revenue, EBITDA and profit after tax to grow at CAGRs of 120.9%, 72.6% and 81.3%, respectively, over FY26-FY29E.
Risks and Caution Case
High capital expenditure, customer concentration and competition could pressure utilisation, margins and returns.
AI contract potential
Growth and Upside Case
Successful execution and faster monetisation of ESDS’s $1.25 billion AI contract could provide additional earnings and valuation upside.
Risks and Caution Case
The contract’s contribution depends on successful execution, making it a key source of uncertainty in the earnings outlook.
Key facts
- National Stock Exchange debut
- Rs 757 per share
- BSE Limited debut
- Rs 746.30 per share
- Premium over issue price
- 76.46% on the National Stock Exchange and 73.95% on BSE Limited
- IPO subscription
- 135.88 times overall
- IPO applications
- More than 63.01 lakh
- Brokerage target
- Rs 1,550 over 12 months
- AI contract
- $1.25 billion
Sources
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