Multibagger return in just 2 sessions! Choice sees 42% upside potential in this recent debutant

ESDS Software share price: Recently listed company ESDS Software Solution has delivered jaw dropping returns to investors within two sessions of listing. The stock was turned into a multibagger on its maiden trading session and extended its gains for the second session as well, hitting upper circuit. Brokerage firm Choice Institutional Equities sees more upside in the counter.

The stock was listed on Friday at Rs 757 on NSE, a premium of 76.46 per cent over its issue price of Rs 429. However, the stock saw some post-listing buying interest and settled at Rs 908.40 on Friday, its first trading session, up 111.75 per cent. On Monday, which is its second trading session, the stock hit another 20 per cent upper circuit of Rs 1,090.05, taking gains to 155 per cent over IPO price.

Choice Institutional Equities has initiated coverage on ESDS Software Solution saying that it is placed to benefit from India’s cloud and AI infrastructure expansion. Choice said India’s cloud market is expected to grow at a 23.6 per cent CAGR from Rs 65,100 crore to Rs 1.9 lakh crore by FY30, led by enterprise digitisation, BFSI demand and higher government workloads.

Choice said rising data residency and compliance requirements could support domestic infrastructure providers such as ESDS, which has exposure across enterprise, government and BFSI clients. It added that India’s cloud GPU market is projected to grow at around 50 per cent CAGR through FY30, widening ESDS’s opportunity in GPUaaS, GPU colocation and AI-led managed infrastructure.

According to Choice, ESDS’s integrated presence across cloud, colocation, GPUaaS, managed services and SaaS is helping deepen customer relationships. The brokerage said the share of customers using all three core services rose from 62 per cent in FY24 to 89 per cent in FY26, while revenue retention stood at 94.9 per cent.

The brokerage cited gains in EBITDA margin from 35.6 per cent to 49.6 per cent and return on capital employed from 14.5 per cent to 32.8 per cent over FY 24-26, supported by the company’s SWARAJ technology. Choice added that ESDS serves 115 BFSI institutions and 104 government clients. Choice said ESDS’s $1.25 billion AI infrastructure contract with Sharon AI could mark a key trigger.

It expects revenue to rise from Rs 470 crore in FY26 to Rs 2,260 crore in FY27E and Rs 4,580 crore in FY28E, with about 8,208 NVIDIA B300 GPUs to be deployed. The brokerage said ESDS plans Rs 570 crore in capex, with around 70 per cent front-loaded in FY27E. It expects revenue, EBITDA and PAT to grow at 120.9 per cent, 72.6 per cent and 81.3 per cent CAGR over FY26-29E.

The domestic brokerage firm has a 'buy' rating on the stock with a target price of Rs 1,550 on it, which implies a 42 per cent upside in the stock from Monday's levels. However, it said additional AI wins and broader workload migration could support growth, while execution, customer concentration, capex intensity and competition remain key risks.