6 days ago
ESDS Software Shares Extend Fall Despite 269.78% IPO Gain
ESDS Software is a company that works with data centres and artificial intelligence infrastructure.
Its shares fell another 5% and reached the lower trading limit.
Even after this fall, the shares are still 269.78% above their IPO price of Rs 429.
ESDS was listed on the stock market on September 4.
Choice Institutional Equities gave the stock a ‘Sell’ rating but kept its target price at Rs 1,550.
The brokerage said the company’s regular business was stable.
However, it said the Sharon AI project was delayed from October to November.
Choice remains hopeful about ESDS’s longer-term AI and cloud opportunities but warned that expanding GPU capacity could be difficult and costly.
ESDS Software shares hit a 5% lower circuit as the stock extended its recent decline.
The stock has gained 269.78% from its IPO price of Rs 429 per share.
ESDS was listed on September 4 and became India’s second-best new listing by first-month returns.
Choice Institutional Equities assigned a ‘Sell’ rating while retaining its Rs 1,550 target price.
The brokerage cited delayed Sharon AI deployment, pipeline conversion, deployment timelines and GPU-utilisation risks.
- Who
- ESDS Software and Choice Institutional Equities are central to the report.
- What
- ESDS shares hit a 5% lower circuit, while Choice Institutional Equities issued a ‘Sell’ rating and retained a Rs 1,550 target price.
- Where
- India’s stock market; ESDS has a domestic order book and an international pipeline.
- When
- The company was listed on September 4; its reported results were for the June quarter.
- Why
- The decline and cautious rating were linked to the delayed Sharon AI deployment and risks involving pipeline conversion, deployment timing, utilisation, execution and funding.
Long-Term Opportunity
Near-Term Risks
Business prospects
Long-Term Opportunity
Choice Institutional Equities remains positive about sovereign cloud, AI infrastructure and rising GPU demand.
Near-Term Risks
The brokerage said the near-term risk-reward had become less favourable after the stock’s sharp run-up.
AI deployment
Long-Term Opportunity
ESDS has an international pipeline exceeding 50,000 GPUs and a domestic order book of around Rs 3,000 crore.
Near-Term Risks
The delayed Sharon AI deployment shifts expected AI-led revenue contribution from October to November and raises execution risk.
Growth execution
Long-Term Opportunity
The company’s longer-term opportunity could benefit from scaling GPU capacity and converting its pipeline.
Near-Term Risks
Choice warned that pipeline conversion, deployment timelines, utilisation, execution requirements and funding needs remain key uncertainties.
Key facts
- IPO price
- Rs 429 per share
- Gain from IPO price
- 269.78%
- Listing date
- September 4
- Lower circuit
- 5% lower
- June-quarter revenue
- Rs 133.6 crore
- June-quarter EBITDA
- Rs 55.9 crore
- Analyst target price
- Rs 1,550
Quotes
Choice Institutional Equities
Brokerage that reviewed ESDS Software’s quarterly performance and investment outlook
“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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