Shares of ESDS Software Solutions, which made their stock market debut on Friday, September 4, have rallied around 150% from their IPO issue price in just two sessions. The stock is locked in an upper circuit of 20% today. The stock has emerged as one of only two IPOs in 2026 to have more than doubled from its issue price on the day of listing.
ESDS Software made a strong debut on Friday, opening at ₹755 on the NSE, a 76% premium to its issue price of ₹429 per share. The stock has since extended its gains and is currently trading at around ₹1,090, marking a nearly 154% premium over the issue price.
Amid the sharp post-listing rally, brokerage firm Choice Broking has initiated coverage on ESDS Software with a ‘Buy’ rating and a target price of ₹1,550. The target implies around 42% upside from the current market price of ₹1,090 and is more than 3.6 times the company's IPO issue price.
Choice Broking expects ESDS Software's revenue to scale up sharply over the next three years. The brokerage estimates revenue at ₹472 crore in FY26, ₹2,263 crore in FY27, ₹4,581 crore in FY28 and ₹5,092 crore in FY29. Profit after tax is estimated at ₹120.8 crore in FY26, rising to ₹251.6 crore in FY27, ₹577 crore in FY28 and ₹719 crore in FY29.
The brokerage has set its target based on a valuation of 31x FY28E forward P/E. What is driving the bullish view? Choice Broking highlighted the growth potential of India's cloud services and cloud GPU markets as key triggers for ESDS Software. India's cloud services market is expected to grow at a CAGR of 24.1% between FY26 and FY30, while the country's cloud GPU market is projected to expand at around 50% CAGR through FY30.
Another key trigger is ESDS Software's $1.25 billion AI infrastructure contract with Sharon AI, which the brokerage sees as a potential inflection point for the company. Under the agreement, ESDS plans to lease around 8,208 NVIDIA B300 GPUs, which will be deployed for Sharon AI and used to provide services to its clients.
Choice Broking believes a key source of potential earnings upside will be ESDS' ability to replicate its GPU leasing model beyond the anchor contract. ESDS Software IPO detailsThe three-day IPO of ESDS Software was subscribed 143 times overall, with demand particularly strong among institutional and non-institutional investors.
The QIB portion was subscribed 275 times, while the NII category saw 203 times subscription. The retail portion was subscribed 39 times. ESDS Software's ₹720-crore IPO comprised entirely a fresh issue of shares. The company says it is one of only two Indian players offering the full spectrum of GPU-as-a-Service , cloud, managed services, data centre infrastructure and software solutions.
Infrastructure-as-a-Service contributed 44% of the company's overall revenue, while managed services accounted for 41%. Software-as-a-Service contributed the remaining 15%.