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What is the story about?
The initial public offering (IPO) of ESDS Software Solutions was fully subscribed within three hours of opening for subscription on Friday, August 28.
The ₹720-crore IPO received 102% subscription on the first day of bidding, with investors placing bids for more than 1.26 crore shares against 1.23 crore shares on offer, according to NSE data as of 12:30 pm.
Demand was led by non-institutional investors (NIIs), whose portion was subscribed 1.50 times. The retail investor quota was subscribed 1.40 times.
In the grey market, ESDS Software Solutions shares are commanding a premium of 77% today. At the upper end of the IPO price band of ₹429, this indicates a potential listing gain of 77%.
However, investors should note that grey market premiums are unofficial indicators of demand in the unlisted market and can change rapidly.
Brokerage views
SBI Securities: Subscribe
SBI Securities has recommended subscribing to the ESDS Software Solutions IPO at the cut-off price.
At the upper price band of ₹429, the company is valued at 41.6 times its FY26 earnings and 13.2 times EV/EBITDA on a post-issue basis.
The brokerage said ESDS is well positioned to benefit from the rapid expansion of India's cloud and data centre industry. The domestic data centre market is expected to grow at a CAGR of around 20.7% between FY26 and FY30, driven by rising cloud adoption, AI workloads, data localisation requirements and continued digital transformation.
ESDS recorded a 28.4% revenue CAGR, 51.6% EBITDA CAGR and 186.9% PAT CAGR between FY24 and FY26. Its EBITDA margin also expanded from 35.6% in FY24 to 49.6% in FY26, supported by operating leverage and a better business mix.
SBI Securities, however, flagged risks related to government exposure, which accounted for around 27% of FY26 revenue, customer concentration and rapid technological changes. These risks are partly offset by rising enterprise revenues, diversified offerings and healthy customer retention, it said.
Anand Rathi: Subscribe for long term
Anand Rathi has also assigned a “Subscribe - Long Term” rating to the issue, citing ESDS's positioning in India's growing cloud infrastructure, managed services and AI-driven workloads.
The brokerage said the company's integrated offerings, expanding data centre infrastructure and focus on GPU-as-a-Service (GPUaaS) and AI-led solutions could support future growth.
However, it cautioned that ESDS operates in a highly competitive and technology-intensive industry, where it faces competition from global cloud players as well as domestic data centre and cloud service providers. Customer concentration, dependence on government projects and the need for continued investments in infrastructure and technology are also key risks.
At the upper end of the price band, ESDS is valued at 41.6 times FY26 earnings. Anand Rathi believes the company's growth prospects, integrated offerings and improving profitability provide some justification for the premium valuation.
ESDS IPO details
The IPO opened on August 28 and will close on September 1. The price band has been fixed at ₹408-429 per share, with investors able to bid for a minimum of 34 shares and in multiples thereafter.
At the upper end of the price band, one lot will cost retail investors ₹14,586.
Ahead of the IPO, ESDS raised ₹216 crore from anchor investors on Thursday.
The company plans to use ₹576 crore of the IPO proceeds to purchase and install cloud computing equipment and other infrastructure for its data centres. The remaining funds will be used for general corporate purposes.
Incorporated in 2005, ESDS provides cloud, managed services, data centre infrastructure and software solutions. In FY26, it served more than 2,500 customers across banking, financial services and insurance, public sector entities, businesses and enterprises.
Revenue from operations stood at ₹472.21 crore in FY26, while net profit was ₹120.82 crore.
The IPO is managed by DAM Capital Advisors, while MUFG Intime India is the registrar.
The allotment is expected to be finalised on September 2, with the shares likely to list on the NSE and BSE on September 4, subject to the IPO schedule remaining unchanged.
The ₹720-crore IPO received 102% subscription on the first day of bidding, with investors placing bids for more than 1.26 crore shares against 1.23 crore shares on offer, according to NSE data as of 12:30 pm.
Demand was led by non-institutional investors (NIIs), whose portion was subscribed 1.50 times. The retail investor quota was subscribed 1.40 times.
In the grey market, ESDS Software Solutions shares are commanding a premium of 77% today. At the upper end of the IPO price band of ₹429, this indicates a potential listing gain of 77%.
However, investors should note that grey market premiums are unofficial indicators of demand in the unlisted market and can change rapidly.
Brokerage views
SBI Securities: Subscribe
SBI Securities has recommended subscribing to the ESDS Software Solutions IPO at the cut-off price.
At the upper price band of ₹429, the company is valued at 41.6 times its FY26 earnings and 13.2 times EV/EBITDA on a post-issue basis.
The brokerage said ESDS is well positioned to benefit from the rapid expansion of India's cloud and data centre industry. The domestic data centre market is expected to grow at a CAGR of around 20.7% between FY26 and FY30, driven by rising cloud adoption, AI workloads, data localisation requirements and continued digital transformation.
ESDS recorded a 28.4% revenue CAGR, 51.6% EBITDA CAGR and 186.9% PAT CAGR between FY24 and FY26. Its EBITDA margin also expanded from 35.6% in FY24 to 49.6% in FY26, supported by operating leverage and a better business mix.
SBI Securities, however, flagged risks related to government exposure, which accounted for around 27% of FY26 revenue, customer concentration and rapid technological changes. These risks are partly offset by rising enterprise revenues, diversified offerings and healthy customer retention, it said.
Anand Rathi: Subscribe for long term
Anand Rathi has also assigned a “Subscribe - Long Term” rating to the issue, citing ESDS's positioning in India's growing cloud infrastructure, managed services and AI-driven workloads.
The brokerage said the company's integrated offerings, expanding data centre infrastructure and focus on GPU-as-a-Service (GPUaaS) and AI-led solutions could support future growth.
However, it cautioned that ESDS operates in a highly competitive and technology-intensive industry, where it faces competition from global cloud players as well as domestic data centre and cloud service providers. Customer concentration, dependence on government projects and the need for continued investments in infrastructure and technology are also key risks.
At the upper end of the price band, ESDS is valued at 41.6 times FY26 earnings. Anand Rathi believes the company's growth prospects, integrated offerings and improving profitability provide some justification for the premium valuation.
ESDS IPO details
The IPO opened on August 28 and will close on September 1. The price band has been fixed at ₹408-429 per share, with investors able to bid for a minimum of 34 shares and in multiples thereafter.
At the upper end of the price band, one lot will cost retail investors ₹14,586.
Ahead of the IPO, ESDS raised ₹216 crore from anchor investors on Thursday.
The company plans to use ₹576 crore of the IPO proceeds to purchase and install cloud computing equipment and other infrastructure for its data centres. The remaining funds will be used for general corporate purposes.
Incorporated in 2005, ESDS provides cloud, managed services, data centre infrastructure and software solutions. In FY26, it served more than 2,500 customers across banking, financial services and insurance, public sector entities, businesses and enterprises.
Revenue from operations stood at ₹472.21 crore in FY26, while net profit was ₹120.82 crore.
The IPO is managed by DAM Capital Advisors, while MUFG Intime India is the registrar.
The allotment is expected to be finalised on September 2, with the shares likely to list on the NSE and BSE on September 4, subject to the IPO schedule remaining unchanged.
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