ESDS share price has more than tripled from its IPO price since making its stock market debut on 4 September. The stock climbed from ₹429 to ₹1,434.10, giving investors a 234.3% return. Gaurav Garg said, "The data-centre and cloud story is real, but the price has run ahead of the proof."
ESDS share price has more than tripled from its IPO price since making its stock market debut on 4 September, delivering a return of 234.3% to investors who subscribed to the issue.
The stock has climbed from its IPO price of ₹429 to the current market price of ₹1,434.10, marking a gain of ₹1,005.10 per share, or around 234.3%.
ESDS shares have also surged more than 89% from their listing price of ₹757. The stock debuted at a premium of 76.46% on the NSE and 74% on the BSE, where it listed at ₹746.30.
The strong performance comes amid robust investor interest in ESDS's business, which operates across cloud computing, managed services, data-centre infrastructure and software solutions.
"ESDS shows that a stock can quadruple faster than its earnings can. It went from a ₹429 issue price to ₹1,859 in three weeks. Then a quarter in which profit fell 57% sequentially turned the circuit filter against it. Even at ~ ₹1,434, it trades near 140x trailing earnings. The data-centre and cloud story is real, but the price has run ahead of the proof," said Gaurav Garg, Head - Research, Lemonn.
On Thursday, ESDS share price hit 5% lower circuit to ₹1,434.10 per share on NSE.
Darekar recommended investors closely track the execution of the planned capex, ramp-up of new capacity, client concentration and valuations, particularly after the sharp post-listing rally.
"The sustainability of earnings growth will be crucial in determining whether the current valuation can be justified," the expert said.
Meanwhile, Garg said that IPO allottees sitting on 3x gains should protect them: book part and trail the rest and fresh buyers shouldn't try to catch a stock pinned at its lower band. Let it build a proper IPO base first, meaning a correction that holds within roughly a third of the peak (above ~ ₹1,250), followed by a few weeks of two-way trade.
"The low-risk entry is ₹1,300-1,320 once the selling exhausts, with a stop below ₹1,240. Momentum buyers should wait for a reclaim of ₹1,560," he added.
ESDS Software Solutions plans to allocate approximately ₹576 crore from the IPO proceeds towards the procurement and installation of cloud computing equipment and other infrastructure for its data centres. The balance will be used for general corporate purposes.
DAM Capital Advisors and Systematix Corporate Services have been appointed as the book-running lead managers for the ESDS Software Solutions IPO, while MUFG Intime India will act as the registrar to the issue.
Established in 2005, ESDS offers cloud services, managed services, data centre infrastructure and software solutions. The company is among the two players in India providing an integrated portfolio spanning GPU-as-a-Service (GPUaaS), cloud, managed services, data centre infrastructure and software solutions.