ESDS Software shares plunge 8% after skyrocketing 235% from IPO price in 4 days. What lies ahead?
The shares dropped to Rs 1,330 apiece on the NSE on Thursday, after hitting the upper circuit in each of the previous four sessions. The stock had listed at Rs 1,334 apiece on Friday, a premium of over 76% to its IPO price of Rs 757.
The sharp surge in ESDS Software’s share price came amid expectations that India’s cloud and AI infrastructure spending is entering a structural growth phase.
“We believe India can realistically bring 30-40 GW of new data centre power online within the next ten years, backed by a rapidly expanding generation base, renewable capacity additions and a policy environment that treats digital infrastructure as strategic,” Piyush Somani, chairman and managing director, ESDS Software Solutions Limited told ET. “Against today’s installed base of roughly 1,545 MW, this is a structural shift,” he added.
Also read | ESDS Software surges 235% in 4 sessions as AI infra fever grips markets
What lies ahead for ESDS Software shares?
ESDS Software Solution’s bumper listing had surpassed already bullish expectations. Rising demand for cloud computing, data-centre infrastructure, cybersecurity and digitalisation in India provides a favourable structural growth opportunity for ESDS over the long term, supporting a constructive medium-to-long-term view even after Friday’s listing gains, said Shivani Nyati, Head of Wealth at Swastika Investmart.
However, given the scale of the listing-day gain, some near-term profit-taking is likely as valuations have run ahead of fundamentals, the analyst said. “Existing allottees may consider booking partial profits at current levels and maintaining a stop loss around Rs 650–680 on the remaining holding. Investors without allotment would be better served awaiting a pullback toward Rs 600–650 before evaluating a fresh entry,” she had said on debut day.Choice Institutional Equities initiated coverage on ESDS Software Solutions with a ‘Buy’ rating and a target price of Rs 1,550, implying further upside potential.
The domestic brokerage highlighted the company’s integrated presence across cloud, colocation, GPU-as-a-Service, managed services and SaaS. It expects the company’s $1.25-billion AI infrastructure contract with Sharon AI to be a major growth driver, projecting revenue to rise from Rs 472 crore in FY26 to Rs 4,581 crore in FY28. Choice valued the company at 18 times its estimated FY28 EV-to-EBITDA.
However, the brokerage flagged execution of the AI contract, customer concentration, capital-intensive expansion, and rising competition as key risks.
Also read | ESDS Software shares skyrocket 235% from IPO price in 4 days. Should you buy or sell?
“A sensible next step would be to wait for the company’s first post listing results and an official investor presentation before acting on the AI numbers and to be clear eyed that a stock up 235% against the IPO price of Rs.429 in a week is being driven by momentum and sentiment as much as fundamentals,” said Balaji Rao Mudili, Research Analyst at Bonanza.
Disclosure: “This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.”
