Buoyed by blockbuster IPO, ESDS bets on AI chip rentals for $5 billion revenue in 5 years

On 4 September, ESDS Software Solution went public with one of the steepest share price premiums in recent history driven by strong investor interest in AI and data centres. The company runs data centres, cloud platforms and rents out graphic processing units (GPUs)—expensive, high-power processing chips that run modern-day AI—to businesses and the Indian government.

ESDS listed at ₹908.40 per share, more than double its initial public offering (IPO) price of ₹429 per share. ESDS shares are currently trading at ₹1,434, up 3.4x over their IPO price and more than 60% since listing. The company’s current market cap is ₹16,800 crore.

ESDS ended FY26 with ₹472.21 crore in revenue, up 31%. To reach its targeted scale, the company needs to increase its revenue by 2.5x every year for the next five years. Such rapid growth is rare—barring the US tech giants and foundational AI firms such as Anthropic, which have grown even faster in the past three years.

To achieve such growth, Somani is eyeing deals such as its $1.25-billion, five-year GPU rental deal with Australian firm Sharon AI, signed in March. While the agreement could generate around $250 million annually for ESDS, it leaves the company exposed to the risk of upfront GPU investments if the client cancels.

When asked about that risk, Somani said the GPU capacity is currently fully contracted to clients, with more deals in the pipeline. If a client backs out, he believes ESDS can re-lease the unused capacity to new customers at higher rates, taking advantage of rising GPU prices to earn even better margins. Somani said the company receives substantial advance payments from customers, which it uses as its own equity contribution to fund projects, with only a small portion coming from debt and additional investor equity.

Betting big on AI infrastructure

Optimism around infrastructure providers like ESDS is being driven by rapid AI adoption, corporate cloud migration, and the rollout of 5G networks, all of which are sparking high demand for computing power in India. Running advanced AI models requires high-performance server capacity, while digital transformation demands reliable storage and processing.

ESDS is betting heavily on this demand. Despite rising GPU costs and global supply constraints, Somani expects ‘GPU-as-a-service’—where clients rent high-performance computing power—to generate nearly 75% of the company’s revenue in the near term, with data centres and other IT services contributing the remaining quarter.

Renting processors, which ESDS reports as infrastructure-as-a-service (IaaS), generated 44% of its FY26 revenue. This included cloud compute (33%) and data centres (11%). Managed cloud services generated 41%, and the remaining 15% came from selling software. The company operates five data centres across India, but did not disclose its operational capacity.

Somani, however, conceded that amid the euphoria around AI, adequate power supply is a key constraint. “Nowhere in the world are our customers getting enough power, and it has become the biggest limiting factor. We are focusing heavily on securing power allocations, and bringing more land with power access and powered buildings under our control.”

Competition in India's GPU-as-a-service market is growing, with domestic players such as Yotta, E2E Networks and Neysa expanding their businesses. They also face competition from global tech firms Amazon, Microsoft and Google, which offer computing services backed by much larger financial resources.

Somani said ESDS is not looking to compete for every customer. Instead, it wants to focus on areas where it believes it has an edge. “So our aspiration is to make sure that we are there in the competition for specific opportunities, select opportunities where the customer only believes that ESDS is the right player for me and ESDS can take care of my business,” he said.

Executive turnover & risk factors

Amid its ambitious growth plans, ESDS has already seen senior-level exits, with three C-suite executives departing over the past 18 months. Chief operating officer Jitendra Pathak resigned on 15 July, following the departure of chief technology officer Rushikesh Jadhav on 2 January. Rajeev Barnwal, chief autonomous cloud officer, stepped down on 16 June 2025, less than eight months into his tenure.

“We try to bring CXOs from the market, from other companies, from other cultures, assuming they will be able to manage our existing people. But then, you may not be 100% right while doing lateral hiring,” said Somani.

At least one brokerage said it sees growth potential for ESDS, but struck a note of caution. “We remain constructive on the long-term opportunity from sovereign cloud, AI infrastructure and rising GPU demand, supported by ₹3,000 crore order book,” analysts Kunal Bajaj and Rushil Katiyar of brokerage firm Choice Institutional Equities wrote in a 25 September note.

Jas Bardia

Jas Bardia is a Bengaluru-based business journalist covering India’s information technology (IT) services sector and Global Capability Centres (GCCs). Known for his investigative depth and attention to detail, Jas has a knack for breaking stories on leadership shifts, high-stakes deals, and evolving industry trends long before they hit the mainstream. If the news is anything IT-related, chances are this author has broken it. Before joining Mint in November 2023, Jas honed his financial reporting skills at Bloomberg News in Mumbai, where he covered bonds and currencies following his graduation from the Asian College of Journalism. When he isn’t chasing his next exclusive, Jas is likely scouting the city’s newest culinary spots, cool events, or is immersed in the electric atmosphere of a Bengaluru FC match at the Sree Kanteerava Stadium. Jas has an eye for detail, an ear for history, and a weakness for a great cologne, and values a good conversation as much as a good lead. If you want to talk about your favourite war movie, funny drunk stories, or a supposed “scam”/wrongdoing in a company, get in touch with him at jas.bardia@livemint.com.