Broker’s call: ESDS Software (Buy)

ESDS Software has been given a 'Buy' rating by brokers, with a target price of ₹1,550, valuing the company at 18x FY28E EV/EBITDA. Analysts view ESDS as one of the most compelling listed opportunities to gain exposure to India's growing cloud, data-center and AI infrastructure build-out. The company's full-stack capabilities across cloud, managed infrastructure and data-center services are key to its success.

ESDS expects revenue, EBITDA and PAT growth rates of 120.9/72.6/81.3% CAGR over FY26–29E, fueled by capacity expansion, deeper customer monetisation and operating leverage. The recent $1.25 billion AI contract adds a significant new leg to ESDS's earnings trajectory. The 18x FY28E EV/EBITDA valuation implies a forward P/E of about 31x, which the analysts believe accurately reflects ESDS's robust growth profile.

Successful execution and a faster ramp-up of the AI contract could provide further upside. Potential risks include AI deal execution, customer concentration, capex intensity and competition, which could delay earnings ramp-up, pressure utilization, margins and returns.