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What is the story about?
ESDS Software Solutions shares hit a fresh high on Friday, September 11, as the stock remained locked in a 10% upper circuit for the sixth consecutive session.
The recently listed stock has delivered a blockbuster run since its market debut. Shares had surged 112% on the listing day on September 4, followed by 20% upper circuits on Monday and Tuesday, and 10% upper circuits on each of the next three sessions.
Amid the sharp post-listing rally, brokerage firm Choice Broking has initiated coverage on ESDS Software with a 'Buy' rating and a target price of ₹1,550.
Choice Broking expects ESDS Software's revenue to scale up sharply over the next three years. The brokerage estimates revenue at ₹472 crore in FY26, ₹2,263 crore in FY27, ₹4,581 crore in FY28 and ₹5,092 crore in FY29.
Profit After Tax (PAT) is estimated at ₹120.8 crore in FY26, rising to ₹251.6 crore in FY27, ₹577 crore in FY28 and ₹719 crore in FY29.
Choice Broking has arrived at its target price based on a valuation of 31 times FY28E forward price-to-earnings (P/E).
What is driving Choice Broking's bullish view?
The brokerage highlighted the growth potential of India's cloud services and cloud GPU markets as key drivers for ESDS Software.
India's cloud services market is expected to grow at a CAGR of 24.1% between FY26 and FY30, while the country's cloud GPU market is projected to expand at around 50% CAGR through FY30, according to Choice Broking.
Another key trigger is ESDS Software's $1.25 billion AI infrastructure contract with Sharon AI, which the brokerage sees as a potential inflection point for the company.
Under the agreement, ESDS plans to lease around 8,208 NVIDIA B300 GPUs, which will be deployed for Sharon AI and used to provide services to its clients.
Choice Broking believes a key source of potential earnings upside will be ESDS Software's ability to replicate its GPU leasing model beyond the anchor contract.
ESDS Software IPO and business
ESDS Software Solutions made a blockbuster debut on the BSE and NSE on September 4. The stock opened at ₹757 on the NSE, a premium of 76.46% over its issue price of ₹429. On the BSE, it debuted at ₹746.30, a premium of 73.96%.
The ₹720-crore IPO opened for subscription on August 28 and closed on September 1, with a price band of ₹408-429 per share.
Ahead of the IPO, ESDS raised ₹216 crore from anchor investors.
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, the company served more than 2,500 customers across banking, financial services and insurance, public sector entities, businesses and enterprises.
ESDS' total income rose 28% year-on-year to ₹480.65 crore in FY26 from ₹376.64 crore in FY25. PAT more than doubled to ₹120.82 crore, up 117% from ₹55.61 crore a year earlier.
The recently listed stock has delivered a blockbuster run since its market debut. Shares had surged 112% on the listing day on September 4, followed by 20% upper circuits on Monday and Tuesday, and 10% upper circuits on each of the next three sessions.
Amid the sharp post-listing rally, brokerage firm Choice Broking has initiated coverage on ESDS Software with a 'Buy' rating and a target price of ₹1,550.
Choice Broking expects ESDS Software's revenue to scale up sharply over the next three years. The brokerage estimates revenue at ₹472 crore in FY26, ₹2,263 crore in FY27, ₹4,581 crore in FY28 and ₹5,092 crore in FY29.
Profit After Tax (PAT) is estimated at ₹120.8 crore in FY26, rising to ₹251.6 crore in FY27, ₹577 crore in FY28 and ₹719 crore in FY29.
Choice Broking has arrived at its target price based on a valuation of 31 times FY28E forward price-to-earnings (P/E).
What is driving Choice Broking's bullish view?
The brokerage highlighted the growth potential of India's cloud services and cloud GPU markets as key drivers for ESDS Software.
India's cloud services market is expected to grow at a CAGR of 24.1% between FY26 and FY30, while the country's cloud GPU market is projected to expand at around 50% CAGR through FY30, according to Choice Broking.
Another key trigger is ESDS Software's $1.25 billion AI infrastructure contract with Sharon AI, which the brokerage sees as a potential inflection point for the company.
Under the agreement, ESDS plans to lease around 8,208 NVIDIA B300 GPUs, which will be deployed for Sharon AI and used to provide services to its clients.
Choice Broking believes a key source of potential earnings upside will be ESDS Software's ability to replicate its GPU leasing model beyond the anchor contract.
ESDS Software IPO and business
ESDS Software Solutions made a blockbuster debut on the BSE and NSE on September 4. The stock opened at ₹757 on the NSE, a premium of 76.46% over its issue price of ₹429. On the BSE, it debuted at ₹746.30, a premium of 73.96%.
The ₹720-crore IPO opened for subscription on August 28 and closed on September 1, with a price band of ₹408-429 per share.
Ahead of the IPO, ESDS raised ₹216 crore from anchor investors.
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, the company served more than 2,500 customers across banking, financial services and insurance, public sector entities, businesses and enterprises.
ESDS' total income rose 28% year-on-year to ₹480.65 crore in FY26 from ₹376.64 crore in FY25. PAT more than doubled to ₹120.82 crore, up 117% from ₹55.61 crore a year earlier.
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