ESDS SOFTWARE SOLUTION L

Technology — Information Technology Services · NSE

₹1,512.10−₹79.50 (−4.99%)

DalalBaazaar Score

69 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with modest growth. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of ESDS SOFTWARE SOLUTION L — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

ESDS Software Solution Limited operates as a provider of cloud and data center services, offering integrated solutions across cloud infrastructure, managed services, and software platforms.

IndustryInformation Technology Services

SectorTechnology

Employees995

Annual revenue₹472 Cr

How does it make money?

Turns over ₹472 Cr a year. Of every ₹100 of sales, about ₹25 reaches shareholders as profit, with ₹51 left at the operating level before interest, tax and depreciation. Each of its 995 employees supports ₹47.5 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹47.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 28.1% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE32.0%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 144.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+144.2%

Analysts1

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 2 years revenue moved +65% while net margin moved +481% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+65%

Margin effect+481%

DalalBaazaar Score

69/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 147.4x is demanding — it needs sustained high growth to justify
✗ P/B of 27.93x is a steep premium to book

Quality vs. Valuation

Company Quality

84/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

37/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

147.4x

Sector Median

16.5x

median of 4 sector peers

⚠️Against its sector it trades 791% above the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

16.5x median of 4 peers · +791%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

68.8x

PEG

0.70

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 37.2% to 51.0% over 2 years.
Debt is being paid down
Total debt is down 63% over 2 years.
Cash generation is improving
Free cash flow is up 4039% over 2 years.
Return on equity is rising
ROE has improved from 5.6% to 22.1%.
Return on capital is rising
ROCE has improved from 12.7% to 28.1%.
High return on capital employed
ROCE of 28.1% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.18x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 28.1% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 37.2% to 51.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 63% over 2 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹1,242 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 791% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 21% a year✓ 28.4% CAGR
Latest reported year was 7.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 49%✓ 51.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹1,242 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 25%✓ 28.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 11 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Analyst consensus isn't majority-sell

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹17,723 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

147.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

27.93x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹10.26

Profitable

Profitable on a per-share basis

ROE

22.1%

Strong

Strong capital efficiency

ROCE

28.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.18x

Low

Conservative leverage

Revenue Growth (YoY)

7.3%

Modest

Modest growth

Profit Growth (YoY)

13.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹1,242 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

30.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

28.1%

Good

Healthy core-business profitability

Net Margin

25.7%

Good

Strong bottom-line conversion

Current Ratio

1.16

Adequate

Adequate, but no real cushion

52W Range Position

69%

Mid-range

Financial Trend (3-Year)

Metric	FY24	FY25	FY26	2Y CAGR
Revenue	₹287 Cr	₹361 Cr	₹472 Cr	+28.4%
EBITDA	₹107 Cr	₹159 Cr	₹241 Cr	+50.3%
EBITDA Margin	37.2%	44.0%	51.0%	—
PAT (Net Profit)	₹13 Cr	₹56 Cr	₹120 Cr	+209.3%
ROE	5.6%	13.3%	22.1%	—
ROCE	12.7%	20.2%	28.1%	—
Total Debt	₹259 Cr	₹127 Cr	₹96 Cr	-38.9%
Free Cash Flow	₹30 Cr	₹49 Cr	₹1,242 Cr	+543.3%

🟢 Revenue has grown at 28.4% a year over 2 years.

🟢 EBITDA has grown at 50.3% a year over 2 years.

🟢 EBITDA Margin has risen from 37.2% to 51.0% over 2 years (+13.8 pts).

🟢 PAT (Net Profit) has grown at 209.3% a year over 2 years.

🟢 ROE has risen from 5.6% to 22.1% over 2 years (+16.6 pts).

🟢 ROCE has risen from 12.7% to 28.1% over 2 years (+15.4 pts).

🟢 Total Debt has shrunk at 38.9% a year over 2 years.

🟢 Free Cash Flow has grown at 543.3% a year over 2 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,938 Cr

Total Liabilities

₹1,394 Cr

Cash & Equivalents

₹1,253 Cr

Operating Cash Flow

₹1,368 Cr

Capex

-₹126 Cr

Shareholding (proxy)

Institutional Holding

6.2%

Insider Holding

58.1%

Analyst Consensus

Recommendations

0 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹1,550

+2.5% vs CMP

Target Range

₹1,550 – ₹1,550

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

3 mixed3 general

ESDS Software Solution Ltd. Share Price Live Today

CNBC TV18, 16 Oct

ESDS Software Solution shares hit 5% lower circuit for sixth straight session

Moneycontrol.com, 05 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

ESDS Software Solution Share Price Update After Decline

Univest, 25 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

ESDS SOFTWARE SOLUTION L (ESDS.NS) stock price, news, quote and history

Yahoo Finance Singapore, 12 Sept

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

The Economic Times, 09 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

ESDS Software Solution surges 20% for third straight day; stock up 205% from IPO price

Moneycontrol.com, 08 Sept

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

WeakValuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you.

All 5 tripwires holding · see Key things to watch ↑