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ESDS Shares Hit Lower Circuit for Sixth Session Despite IPO Gains
ESDS is a company that works on data centres and AI infrastructure.
Its shares fell by the maximum allowed amount for six trading sessions in a row.
Even after falling, they were still much higher than the price at which they were first offered to investors.
Brokerage Choice Institutional Equities gave the shares a Sell rating because it saw more risk in the near term.
It said a delay in an AI deployment could postpone some expected revenue from October to November.
ESDS reported Rs 133.6 crore in revenue and Rs 29.2 crore in profit after tax for the June quarter.
Choice remains positive about the company's longer-term opportunities but says execution and funding needs should be watched.
It kept its target price at Rs 1,550.
ESDS Software shares fell to the 5% lower circuit for a sixth consecutive session.
Despite the decline, the shares remained 217.05% above the IPO price of Rs 429.
Choice Institutional Equities assigned a Sell rating, citing less favourable near-term risk-reward and execution concerns.
The brokerage said delayed Sharon AI deployment shifts expected AI-led revenue contribution from October to November.
For the June quarter, ESDS reported revenue of Rs 133.6 crore and profit after tax of Rs 29.2 crore.
- Who
- ESDS Software and brokerage Choice Institutional Equities.
- What
- ESDS shares hit the 5% lower circuit for a sixth straight session, while Choice assigned a Sell rating.
- Where
- ESDS shares were listed on the stock market; the company is described as focused on data centres and AI infrastructure.
- When
- The share decline lasted six consecutive sessions; the company reported results for the June quarter.
- Why
- Choice cited less favourable near-term risk-reward, delayed AI deployment, and execution and funding risks.
Near-term concerns
Long-term opportunity
Investment view
Near-term concerns
Choice assigned a Sell rating, saying the near-term risk-reward had become less favourable after the steep share-price run-up.
Long-term opportunity
Choice remained constructive on ESDS's longer-term prospects in sovereign cloud, AI infrastructure, and rising GPU demand.
AI deployment and execution
Near-term concerns
The delayed Sharon AI deployment pushes the key AI-led revenue contribution from October to November and raises near-term execution risk; pipeline conversion, timelines, utilisation, and funding needs remain variables.
Long-term opportunity
Choice pointed to a domestic order book of around Rs 3,000 crore and an international pipeline exceeding 50,000 GPUs as indicators of potential opportunity.
Key facts
- IPO price
- Rs 429 per share
- Gain from IPO price
- 217.05% despite the recent decline
- Share movement
- 5% lower circuit for six straight sessions
- June-quarter revenue
- Rs 133.6 crore; down 20.2% sequentially and up 7.2% year-on-year
- June-quarter EBITDA
- Rs 55.9 crore; down 45.5% sequentially and up 6.6% year-on-year
- June-quarter profit after tax
- Rs 29.2 crore; down 56.8% sequentially and up 13.8% year-on-year
- Choice valuation and target
- 18 times FY28 estimated EV/EBITDA; target price retained at Rs 1,550
- Order book and pipeline
- Domestic order book of around Rs 3,000 crore and international pipeline exceeding 50,000 GPUs, according to Choice
Quotes
Choice Institutional Equities
Brokerage that assigned ESDS a Sell rating
“ESDS reported in-line numbers, with the core standalone business remaining stable. However, the delayed Sharon AI deployment pushes the key AI-led revenue contribution from October to November and increases near-term execution risk.”
businesstoday.in
Sources
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