Data-centre bet makes ESDS one of India’s best new listings
ESDS’s performance is putting companies across India’s data-centre ecosystem under greater investor scrutiny amid expectations of strong growth
India's burgeoning interest in data-center and AI-related investments has spotlighted ESDS Software Solution Ltd. as a standout performer, with shares soaring over 300% since its trading debut on September 4. This surge has positioned ESDS on a trajectory to rank among India's top new listings. The impressive performance of ESDS has fueled speculation about potential success for other data-center operators, such as Sify Infinit Spaces Ltd., Yotta Data Services Pvt., and STT Global Data Centres India Pvt.
Avinash Gorakshakar, founder of Avinash Mentor Research, highlights the significance of ESDS's success, stating that it underscores the need for additional companies to capitalize on the market. Despite a substantial $5 trillion equity market, investors have limited options to gain meaningful exposure to cloud computing, data centers, and AI infrastructure, which are sectors driving global investment growth.
As a result, ESDS and related companies have emerged as proxies for this theme, with Sterlite Technologies Ltd. and HFCL Ltd. experiencing surges of more than 700% and triple, respectively, this year.
Analyst Kunal Bajaj from Choice Institutional Equities forecasts that ESDS's revenue could more than quadruple in the fiscal year ending March 2027, reaching nearly 23 billion rupees from the current 4.7 billion rupees. Bajaj, who is the sole analyst tracking the stock, plans to adjust his price target of 1,550 rupees upon reviewing the company's quarterly earnings report.
A major factor in this growth projection is a $1.25 billion cloud-capacity agreement with SharonAI Holdings Inc. The deal entails deploying 8,000 GPUs at one of SharonAI's data-center providers in Australia.
ESDS's initial public offering (IPO) at a price of 429 rupees drew bids for 136 times the shares on offer, indicating strong investor enthusiasm. This IPO performance ranks among the strongest one-month performances for Indian IPOs with an initial market value of at least $20 million. Despite the IPO, E2E Networks Ltd., a peer to ESDS, has tripled in value this year, with its enterprise value at 11 times the estimated revenue for the fiscal year ending March 2028, compared to ESDS's current 2.1 times.
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