ESDS Software shares rally 10%, skyrocket 235% from IPO price in 4 days. Should you buy or sell?

Shares of ESDS Software Solution continued their sharp rally on Wednesday, with the recently listed stock soaring 235% above its IPO price in just four sessions since its market debut.

The stock jumped 10% to hit the upper circuit at Rs 1,438.85 apiece on the NSE on Wednesday. It has hit the upper circuit in every session since listing at Rs 757 on Friday, September 4, marking a premium of over 76% over the IPO price of Rs 429.

The stock’s rapid ascent added around Rs 7,992 crore to ESDS Software Solution’s market capitalisation since listing, taking it to Rs 16,865 crore from around Rs 8,873 crore at the time of market debut.


Also read | ESDS rally sparks 5.19% NAV jump in Motilal Oswal Digital India Fund

Should you buy, sell or hold ESDS Software shares?

ESDS Software Solution’s bumper listing had surpassed already bullish expectations. Rising demand for cloud computing, data-centre infrastructure, cybersecurity and digitalisation in India provides a favourable structural growth opportunity for ESDS over the long term, supporting a constructive medium-to-long-term view even after Friday’s listing gains, said Shivani Nyati, Head of Wealth at Swastika Investmart.

However, given the scale of the listing-day gain, some near-term profit-taking is likely as valuations have run ahead of fundamentals, the analyst said. “Existing allottees may consider booking partial profits at current levels and maintaining a stop loss around Rs 650–680 on the remaining holding. Investors without allotment would be better served awaiting a pullback toward Rs 600–650 before evaluating a fresh entry,” she had said on debut day.

Choice Institutional Equities initiated coverage on ESDS Software Solutions with a ‘Buy’ rating and a target price of Rs 1,550, implying further upside potential. The domestic brokerage highlighted the company’s integrated presence across cloud, colocation, GPU-as-a-Service, managed services and SaaS. It expects the company’s $1.25-billion AI infrastructure contract with Sharon AI to be a major growth driver, projecting revenue to rise from Rs 472 crore in FY26 to Rs 4,581 crore in FY28. Choice valued the company at 18 times its estimated FY28 EV-to-EBITDA.

However, the brokerage flagged execution of the AI contract, customer concentration, capital-intensive expansion, and rising competition as key risks.

“A sensible next step would be to wait for the company's first post listing results and an official investor presentation before acting on the AI numbers and to be clear eyed that a stock up 235% against the IPO price of Rs.429 in a week is being driven by momentum and sentiment as much as fundamentals,” said Balaji Rao Mudili, Research Analyst at Bonanza.

Also read |ESDS Software extends post-IPO rally, Choice Equities sees more upside

ESDS Software Solution IPO

The bumper market debut and the sharp post-listing run up came after the company's initial public offering saw an overwhelming response during its three days of public bidding, being subscribed around 136 times its offer size between August 28 and September 1. Qualified Institutional Buyers (QIBs) showed the most interest in the issue, subscribing their reserved portion over 261 times. The portions kept for Non-Institutional Investors (NIIs) and retail investors, meanwhile, were booked around 193 times and 40 times, respectively.

ESDS Software Solution had moved to India’s primary market to raise Rs 720 crore entirely through a fresh issue of shares at a price band of Rs 408–Rs 429 per share. The Company offers infrastructure-as-a-service (IaaS), managed services and software-as-a-service (SaaS), to domestic and overseas customers across BFSI, government and enterprise segments. The company has reported strong revenue and net profit traction over the past three years.

Ahead of the IPO, ESDS Software Solution raised Rs 216 crore from anchor investors. The company allotted 50.34 lakh shares to anchor investors at Rs 429 per share.

Disclosure: "This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment."