Unlisted Shares

​ESDS Software Solution Limited (ESDS) offers Cloud Computing Infrastructure as a Service, Software as a Service, and Managed Services. It has its data centres in 3 cities namely Bengaluru, Mumbai and Nashik.

​Financials-In FY23, the company experienced a 6% year-on-year (y-o-y) increase in revenue, with a 16% average increase over the past five years. However, there was an 742% decline in net profit for FY23, whereas it has declined by 219% over the past five years.​

​Investment Thesis-The company's revenue surged by 6% in FY23, maintaining a growth rate of 16% over the past 5 years, which is below the industry average. However, its profitability (Net Profit) witnessed a massive 92% decline, with EBIT margins dropping from 9% in FY22 to 1% in FY23 due to higher operating expenses, as its a capital intensive business.

​After conducting a thorough analysis and calculations, it became apparent that the company is over-valued compared to peers like Wipro and HCL Tech. The relative valuation showed a EV/EBITDA multiple of 15.2x, compared with its multiple of of 43.9x. Also, Its EV/Sales multiple stands at 10.7x, compared with industry median of 3.4x.​