India's cloud infrastructure story is no longer just about hyperscalers. Quietly, from a data centre in Nashik, ESDS Software Solution has been building what it claims is one of the most complete cloud stacks in the country; and now it's come to the public markets with a ₹720 crore fresh issue. Here's everything you need to know before forming a view.
The IPO opened on August 28 and closes on September 1, 2026. The total issue size is up to ₹720 crore, comprising fresh issue only with no OFS component. The price band is set between ₹408 to ₹429 per share.
Founded in 2005 by Piyush Somani, ESDS started as a modest IT services firm before pivoting decisively into data centres and cloud. Its first data centre came up in Nashik in 2010, cloud services followed in 2011, and today the company operates five data centres across India.
What makes ESDS unusual is the breadth of what it offers. It is one of only two players in India providing the complete spectrum of GPU-as-a-Service (GPUaaS), cloud, managed services, data centre infrastructure, and software solutions, and it is the largest among the two by revenue. In FY26, the company clocked ₹472.2 crore in revenue from operations, growing at a CAGR of ~28% over the past two years.
The business is organised into three segments. Infrastructure as a Service (IaaS), colocation, cloud computing, and GPU infrastructure, which contributes 43.88% of revenue. Managed Services, running and maintaining IT infrastructure for clients, adds another 41.21%. The remaining 14.91% comes from Software as a Service (SaaS), which includes ESDS's proprietary SWARAJ platform.
If there is one thing that separates ESDS from a generic data centre operator, it is the SWARAJ platform; a suite of indigenously built cloud and AI products. The flagship product, SWARAJ Cloud, features patented vertical auto-scaling technology, with patents granted in both the United States and India. This means the platform can dynamically scale computing resources up or down based on real-time demand; a capability that is genuinely differentiated in the Indian market.
Beyond cloud, the SWARAJ stack includes a web application firewall (WAF), an internet of things (IoT) platform, a video conferencing tool, an eGovernance platform (IPeG), and two AI-native products launched more recently: SWARAJ Bodhi (an AIOps platform for production-grade AI workloads) and SWARAJ Garuda (an application performance monitoring tool).
In November 2025, ESDS launched a fully managed GPUaaS offering, allowing enterprises and startups to build, train, and deploy AI models without owning the underlying hardware. This positions the company squarely in the middle of India's AI infrastructure boom, at a time when GPU compute is among the most sought-after resources in the technology sector.
The company also has a structural moat that global hyperscalers like AWS or Azure cannot easily replicate: 100% compliance with Indian data sovereignty regulations: MeitY, RBI guidelines, and the Digital Personal Data Protection (DPDP) Act, with INR-denominated billing, local-language support, and faster regional provisioning. For regulated sectors like banking and government, this is not a minor convenience. It is often a hard requirement.
ESDS's financials over the past three years are, frankly, impressive.
| Metric | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue from Operations (₹ Cr) | 286.5 | 361.3 | 472.2 |
| EBITDA Margin | 35.56% | 42.86% | 49.60% |
| PAT Margin | 4.75% | 15.39% | 25.59% |
| Return on Capital Employed | 14.53% | 24.73% | 32.78% |
| Debt-Equity Ratio | 0.66 | 0.15 | 0.08 |
Revenue has grown at a ~28% CAGR. But what is more striking is the margin expansion. PAT margin has gone from a thin 4.75% in FY24 to a very healthy 25.59% in FY26 in just two years. EBITDA margins are approaching 50%, which is exceptional for a company that still has significant infrastructure costs.
The balance sheet is equally reassuring. The company has aggressively deleveraged; the debt-to-equity ratio has collapsed from 0.66 to 0.08. The debt service coverage ratio stands at 16.15x, meaning the company generates over 16x the cash needed to service its debt. This is a near-debt-free business by a practical measure.
Customer metrics reinforce the quality of the business. ESDS had 2,501 customers in FY26, up from 1,465 in FY24. More importantly, 65.6% of revenue comes from customers with a relationship of over three years, and 47.75% from those with over five years. In FY24, the company reported a revenue retention rate of 128%; meaning existing customers were spending significantly more year-on-year, a hallmark of a high-quality SaaS and cloud business. However, it reduced to 94.92% in FY26.
At its IPO cap price of ₹429, ESDS is priced at approximately 36x its trailing FY26 earnings (EPS: ₹11.81); making it one of the more reasonably valued cloud infrastructure players at listing. For context, peer Netweb Technologies trades at 120x, Tata Communications at 51x, and E2E Networks' PE is around 407x. ESDS's superior profitability, with 25.59% PAT margins, makes its valuation arguably the most compelling in the listed peer set.
The promoter group, led by Piyush Somani, the Managing Director and Chairman, holds a combined 45.86% stake pre-issue. Piyush Somani personally holds 24.54%, with the remainder split between his wife Komal Somani (10.13%) and the P.O. Somani Family Trust (11.19%).
Among public shareholders, the most notable name is Mukul Mahavir Agrawal, a well-known ace investor in Indian small and mid-cap stocks, who holds a 7% stake. His presence on the cap table is typically read as a signal of conviction in the company's long-term growth potential.
The IPO is a pure fresh issue of ₹720 crore; there is no offer for sale component, which means the proceeds flow entirely into the company. Approximately ₹576 crore (80% of gross proceeds) is earmarked for purchasing and installing cloud computing equipment and infrastructure across relevant data centres. The remaining portion is for general corporate purposes, capped at 25% per SEBI norms.
No IPO analysis is complete without an honest look at the risks, and ESDS has a few that deserve serious attention.
Customer concentration is the most immediate concern. A single customer accounts for 15.93% of FY26 revenue. If that relationship were to weaken, due to competitive pressure, pricing disputes, or the customer building in-house capabilities, the revenue impact would be material. In FY26, the top 10 clients contributed 45.36% of revenue.
The Russia story is a live case study of this risk. In FY25, Russia contributed ₹72.8 crore or 20.15% of total revenue. By FY26, that had fallen to ₹13.2 crore or 2.80%; an ~82% collapse in a single year due to a decrease in the need for the services because of the economic sanctions. The company has partially offset this with a dramatic ramp in UAE revenues (from 1.15% to 18.50% of total), but the Russia episode is a reminder of how quickly a large revenue stream can evaporate.
Contingent liabilities stand at ₹55.16 crore as of March 2026, primarily driven by performance bank guarantees (₹52.6 crore) and GST/tax disputes (₹2.3 crore). While this has improved significantly as a percentage of net worth, from 30.5% in FY24 to 10.43% in FY26, it is still a number worth tracking. There are also six ongoing indirect tax proceedings against the company, involving ₹6.57 crore, along with one civil suit in which a former employee has claimed ₹18.48 crore, taking the aggregate amount involved to approximately ₹25.05 crore.
A more subtle concern is the decline in average revenue per customer; from ₹0.21 crore in FY25 to ₹0.18 crore in FY26. Customer count is growing fast, but the newer additions appear to be smaller accounts. If this trend continues, it could put pressure on margins over time.
Finally, the internal promoter shareholding restructuring deserves a mention. Piyush Somani's direct holding fell from 28.91% to 24.54% between FY24 and FY26, while the family trust's holding halved from 24.19% to 11.19%. Komal Somani's holding, meanwhile, rose from negligible to 10.13%. This appears to be an internal reorganisation rather than a sell-down, but the lack of detailed disclosure around the rationale is worth noting.
ESDS is entering the market at a moment when India's AI infrastructure buildout is accelerating. The government's push for sovereign cloud, the RBI's data localisation mandates for banks, and the explosion of GPU demand from startups and enterprises all play directly into ESDS's positioning. The company's BFSI relationships, 115 banks and financial institutions, give it a defensible base in the most compliance-sensitive segment of the economy.
The competitive landscape is real. AWS, Azure, and Google Cloud have virtually unlimited capital. Domestic rivals like CtrlS, Yotta, and Nxtra by Airtel are well-funded and growing. But ESDS's combination of patented technology, sovereign cloud compliance, full-stack capabilities, and a near-debt-free balance sheet gives it a credible story to tell.
ESDS Software Solution is not a speculative bet on a loss-making startup. It is a profitable, fast-growing, asset-heavy cloud infrastructure business with proprietary technology, strong customer retention, and a balance sheet that has been cleaned up considerably ahead of the IPO. The margin trajectory, with PAT margins tripling in two years, is genuinely impressive.
The risks are real too. Customer concentration, the Russia revenue collapse, ongoing tax litigation, and the absence of an independent appraisal of IPO proceeds are all factors that demand scrutiny. The declining average revenue per customer is a trend worth watching closely in the quarters post-listing.
For investors evaluating this IPO, the core question is simple: Do you believe India's sovereign cloud and AI infrastructure market will grow fast enough to sustain ESDS's current trajectory, and can the company hold its niche against both global hyperscalers and well-capitalised domestic rivals? The RHP suggests the foundation is solid. The execution, as always, will be the proof.
This AI-generated analysis, based on RHP/DRHP information, is for informational purposes only. Investors should conduct due diligence and consult financial advisors before making investment decisions. Past performance does not guarantee future results, and all investments carry inherent risks including potential loss of principal.
