ESDS Software plans to submit DRHP for an IPO ₹600 Crores

ESDS Software Solution, a Nashik-based and a fully-managed cloud service provider company, is set to record a new big move by filing its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an IPO of ₹600 Crores. The company make efficient utilization of the funds that are  raised through the ESDS  IPO to facilitate data center expansion and growth, invest into AI-enabled GPU cloud infrastructure, and address long-term working capital needs.

The company had previously filed draft papers for an IPO in December 2021 but withdrew due to unfavorable market conditions. For this renewed IPO effort, ESDS Software Solution IPO has appointed DAM Capital as the book-running lead manager.

Overview of ESDS Software Solution

Founded in 2005 by Piyush Somani, ESDS Software Solution has well established and evolved into an outstanding participant in the cloud services and data center landscape. The organisation offers a comprehensive suite of AI-enabled cloud solutions, managed services & various offerings, data center infrastructure, and software solutions. ESDS's provider portfolio consists of Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS), designed to offer businesses with secure, scalable, and generally cost-effective cloud solutions.

ESDS caters to numerous and diverse clientele, including Banking, Financial Services, and Insurance (BFSI) companies, government establishments by way of utilizing the Government Community Cloud, and diverse firms. The company's prominent key clients and partners encompass SIDBI, PFC, STPI, Infrasoft Technologies, Tech Mahindra, and NTT Data Business Solutions. With a team of workers exceeding 1,000 employees across five data facilities in India, ESDS additionally continues a global presence, extending its operations to European, Middle Eastern, American, and African nations.

The company is known for its patented cloud platform, eNlight, which gives auto-scalable cloud solutions for businesses across diverse sectors, which includes banking, government, healthcare, and e-commerce.

With its Tier III data centers in Nashik and Mumbai, ESDS is a key participant in India's digital transformation, providing cloud website hosting and data safety services to customers throughout the country. The company has a strong recognition of Artificial Intelligence (AI), Machine Learning (ML), and Big Data analytics, which are increasingly driving strong demand for cloud-based overall solutions.

In terms of financial performance, For FY24, ESDS reported a revenue of ₹286 crore and an income and PAT of ₹15 crore, demonstrating its financial overall performance. The organization's commitment to innovation is underscored through its research and improvement with a  team of over 1000 customers, who're targeted on handing over sustainable and green solutions to customers.

ESDS Software Solution IPO Details and  Objectives 

ESDS Software Solution's proposed IPO aims to raise as much as ₹700 crore through a fresh issue of shares. The organization intends to allocate the IPO proceeds in the direction of several key objectives, consisting of:

Data Center Expansion: ESDS plans to increase its present information middle infrastructure to satisfy the growing demand for cloud offerings. Having strong technology along with heavy cloud computing solutions, The company majorly currently operates within 4 data facilities in India, located in Nasik, Mumbai, Bengaluru, and Mohali, with plans to double its capacity to 14-20 MW  within the subsequent 1-2 years.

Investment in AI-Enabled GPU Cloud: Recognizing the growing importance of artificial intelligence, ESDS intends to put money into GPU cloud infrastructure to assist AI-associated workloads. This investment aligns with the increasing demand for AI-geared up infrastructure and displays ESDS's dedication to technological development.

Long-Term Working Capital Needs: A portion of the ESDS IPO proceeds may be allotted to meet the organisation's long-term working capital requirements, ensuring clean operations and sustainable growth.

General Corporate Purposes: The ultimate remaining funds  will be utilized for preferred corporate purposes, supplying ESDS with the flexibility to pursue strategic initiatives and capitalize on emerging opportunities.

Competitive Landscape and Market Position

ESDS operates in a surprisingly aggressive industry, competing with home and international cloud service vendors consisting of Amazon Web Services (AWS), Microsoft Azure, Google Cloud, Netmagic, and NxtGen Datacenter and Cloud Technologies.

What differentiates ESDS Software Solutions is its recognition of vertical-unique cloud solutions, especially for authorities institutions, banking (BFSI), and healthcare. The corporation's proprietary cloud technology, together with its eNlight cloud platform, gives it an aggressive side in delivering cost-efficient and auto-scalable cloud computing solutions.

ESDS Unlisted Share Price Performance 

Prior to the ESDS IPO, the ESDS Unlisted Shares were trading in the Unlisted Marketplace. As of presently, the ESDS Unlisted Share Price is ₹410 per share. The ESDS Software Solutions Share Price within the unlisted marketplace is inspired by means of elements inclusive of the organization's financial performance, market sentiment, and IPO potential opportunities.

Anticipated Implications from the DRHP

1. Strong Growth Potential in the Cloud Computing Industry

India’s cloud computing marketplace is projected to develop at a CAGR of 22-25% over the next five years, fueled by digital transformation projects and the fast adoption of cloud services by businesses. ESDS Software Solutions is well-located to take advantage of this trend.

2. Proprietary Technology and Innovation

The organisation's eNlight cloud platform is a key differentiator, providing auto-scalability, more enhanced security protection, and electricity performance. This specific patented technology strengthens ESDS’s market position in India's cloud computing sector.

3. Government and Enterprise Contracts

ESDS has long-time period contracts with government bodies, PSU banks, and corporate clients, ensuring solid revenue streams. The organization's involvement in government-led Digital India initiatives further solidifies its increased capability and growth.

Conclusion

The ESDS IPO represents a significant milestone for the company, offering it an opportunity to raise capital for expansion, innovation, and long-term growth. The funds raised through the IPO will enable ESDS to strengthen its data center infrastructure, invest in AI-enabled GPU cloud, and meet its working capital needs.

The performance of ESDS Software Solutions Share Price post-listing will depend on market conditions, investor demand, and the company’s ability to execute its growth strategy effectively. ESDS Unlisted Share Price trends indicate a positive outlook, but investors must remain mindful of the risks associated with investing in the cloud computing sector.

As ESDS Software Solutions prepares for its stock market debut, all eyes will be on SEBI’s approval of the DRHP and the IPO launch timeline. Given the strong demand for cloud services and data centers, ESDS Share Price is expected to attract attention from retail and institutional investors alike.

ESDS Software Solution operates in a growing market with increasing demand for cloud services and data center solutions. The company's comprehensive service portfolio, diverse client base, and focus on innovation position it favorably in the industry.