ESDS Software share price soars nearly 4X in 6 sessions post-listing: What’s driving the explosive rally | Buy or beware

ESDS Software Solution has gone from a fresh IPO listing to one of the market’s biggest breakout stories in just a handful of sessions. The AI and cloud infrastructure player has seen its shares skyrocket from the ₹429 IPO price to ₹1,675.15, delivering a jaw-dropping nearly 290% return to investors who secured an allotment.

The frenzy showed no signs of cooling on Friday, September 11, when the stock surged as much as 7.3% to hit ₹1,675.15 on the BSE, after opening at ₹1,565.25. That came after the counter had already slammed into its 10% upper circuit in each of the previous two sessions. Before that, the stock had spent two straight sessions locked in a 20% upper circuit, underscoring the extraordinary buying momentum surrounding the newly listed stock.

And the fireworks began almost immediately after its market debut. ESDS Software Solution was listed on the NSE at ₹757 on September 4, giving IPO investors an instant 76.46% listing premium over the ₹429 issue price. On the BSE, the stock opened at ₹746.30, representing a 73.96% premium to the IPO price.

Since then, the rally has accelerated at a remarkable pace. Investors who received shares in the IPO have seen their money more than triple in just five trading sessions. Even the listing-day performance was extraordinary: on Friday, September 4, ESDS shares had soared around 112%.

From an IPO priced at ₹429 to a market price of ₹1,675.15 within days, ESDS has delivered the kind of post-listing move that has put the stock firmly under the spotlight.

Should you buy the stock?

India's cloud computing, data-centre and artificial intelligence infrastructure sectors are gaining increasing investor attention as digital adoption accelerates and businesses seek greater computing capacity. Against this backdrop, newly listed ESDS Software Solutions has emerged as a closely watched stock, with analysts focusing on its exposure to these structural growth themes.

Brokerage firm Choice Equity Broking has initiated coverage on ESDS Software Solutions with a ‘Buy’ recommendation and a target price of ₹1,550. However, the stock has already moved above the brokerage's target.

Choice Equity Broking sees ESDS as one of the most compelling listed opportunities for investors looking to gain exposure to India's long-term expansion in cloud computing, data centres and AI infrastructure. The brokerage highlighted the company's full-stack capabilities across cloud, managed infrastructure and data-centre services as a key differentiator.

The brokerage expects ESDS to register strong growth over the forecast period. Revenue, EBITDA and PAT are estimated to grow at 120.9%, 72.6% and 81.3% CAGR, respectively, over FY26–29E. According to Choice, the expansion is expected to be supported by continued momentum in the company's core business, alongside the gradual ramp-up of revenue from its AI infrastructure operations.

“Our 18 times FY28E EV/EBITDA valuation implies nearly 31 times FY28E forward P/E, which we believe appropriately reflects ESDS’s strong growth profile. Successful execution and faster ramp-up of the AI contract could provide further upside to earnings and valuation,” Choice Equity Broking said.

The brokerage's valuation framework therefore factors in the company's strong expected growth profile, while execution of its AI contract remains an important potential catalyst for both earnings and valuation.

Shivani Nyati, Head of Wealth at Swastika Investmart, also highlighted the longer-term opportunity for ESDS. She said rising demand in India for cloud computing, data-centre infrastructure, cybersecurity and digitalisation creates a favourable structural growth environment for the company.

Nyati maintained a constructive medium-to-long-term view on ESDS even after the sharp post-listing rally, pointing to the broader growth opportunity presented by India's increasing adoption of digital infrastructure.

“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 this listing pop,” said Shivani Nyati, Head of Wealth at Swastika Investmart.

ESDS IPO Details

ESDS Software Solution’s IPO drew an overwhelming response from investors, with the public issue receiving 135.88 times subscription by the time bidding closed on Tuesday, September 1. The issue had opened for subscription on Friday, August 28.

The offering consisted solely of a fresh issue of equity shares worth up to ₹720 crore, with no offer-for-sale (OFS) component. The company had fixed the IPO price band at ₹408–429 per share.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.