ESDS Software Solutions IPO: Cloud Challenger Prepares for IPO, SDS Software Solutions Limited is a Nashik-based leading player in the cloud services and data center industry in India. They offer managed cloud services, multi-cloud hybrid cloud solutions, and data center services to a diverse clientele across various sectors, including banking, government, and healthcare.
Industry: Indian Cloud and Data Center market, projected to grow at a CAGR of 23.3% between 2022-2027, exceeding US$10 billion by 2027, offering significant growth potential for players like ESDS.
ESDS Software Solutions IPO Details:
- Dates: While no confirmed dates have been announced yet.
- Offer Size: The expected size is around ₹322 crores through a fresh issue and an offer for sale of up to 21,525,000 equity shares (of ₹1 each).
- Price Band: The price band is also currently undisclosed.
Recent News Updates:
- SEBI Approval: ESDS received SEBI approval for ESDS Software Solutions IPO in June 2023, paving the way for its public offering.
- Strong Financials: The company reported a healthy CAGR of 33% in net profit over the past 3 years, showcasing promising growth potential.
Offer Details:
Securities Offered:
- Equity Shares: The ESDS Software Solutions IPO will only offer equity shares of ₹1 each to the public. No bonds or other types of securities will be involved.
Reservation Percentages:
- Retail: 35% of the issue size will be reserved for retail investors. This signifies a sizeable allocation for individual investors like you and me.
- Qualified Institutional Buyers (QIBs): 50% of the issue size will be reserved for QIBs, comprising institutional investors like mutual funds, insurance companies, and foreign institutional investors.
- Non-Institutional Investors (NIIs): The remaining 15% of the issue size will be available for NIIs, primarily consisting of high net worth individuals (HNIs).
Minimum Lot Size and Investment Amount:
- Minimum Lot Size: While the final lot size will be determined later, based on the price band, initial reports suggest it could be around 100 shares.
- Minimum Investment Amount: Assuming a share price of ₹50 (just for illustration), the minimum investment amount needed for 1 lot would be around ₹5,000 (100 shares * ₹50 per share).
ESDS Software Solutions Company Profile:
Founded in 1999 in Nashik, India, ESDS Software Solutions started as a web hosting provider. Early recognition as a Microsoft Solutions Partner propelled them forward, and they soon expanded into managed services and cloud solutions. Over the years, ESDS has steadily climbed the ladder, becoming a leading player in the Indian cloud and data center market.
Operations and Market Position:
- Diverse service portfolio: ESDS offers a comprehensive range of cloud services, including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS), and managed services. They cater to various sectors like banking, government, healthcare, and manufacturing.
- Market share: While exact figures for ESDS’ market share vary, analysts estimate it to be around 3-5% of the Indian cloud market, placing them among the top contenders.
- Community Cloud focus: ESDS distinguishes itself by focusing on “community clouds,” a multi-tenant model catering to specific industry needs. They have established successful community clouds for banking, government, and SAP HANA users.
Key Facts:
- Founded in 1999 by Mr. Piyush Somani, a visionary leader in the Indian IT landscape.
- Over 750 employees
- 600+ enterprise clients on their community cloud platform
- 200+ government institutions across India on their Government Community Cloud
- Revenue of ₹330 crore in FY23
Prominent Brands and Partnerships:
- Microsoft Gold Partner
- Amazon Web Services (AWS) Advanced Consulting Partner
- SAP Silver Partner
- Collaborations with leading Indian banks and government agencies
Key Milestones and Achievements:
- Received SEBI approval for ESDS Software Solutions IPO in June 2023
- Awarded “Best Cloud Service Provider – Banking” at the IDC Digital Transformation Awards 2023
- Featured in Gartner’s “Cool Vendors in Cloud Infrastructure Services, 2022” report
Competitive Advantages and Unique Selling Proposition (USP):
- Focus on community clouds: This niche approach allows ESDS to cater to specific industry needs and build deeper relationships with clients.
- Strong customer focus: ESDS prides itself on its commitment to customer satisfaction, evident in its high client retention rate.
- Experienced management team: Led by Mr. Piyush Somani, the team has extensive expertise in the IT and cloud industries.
- Focus on innovation: ESDS invests heavily in research and development, constantly expanding its service offerings and staying ahead of the curve.
ESDS Software Solutions FY 2023 Financials:
1. Revenue and Operational Costs:
- Positive: Increased revenue from INR 195 crores to INR 205 crores shows positive growth.
- Negative: Significantly rising operational costs, especially employee benefits and other expenses, are concerning.
- Impact: The 7% drop in EBITDA margin highlights the pressure on profitability.
2. Debt and Interest Costs:
- Negative: Rising debt from INR 110 crores to INR 136 crores and higher interest costs raise concerns about debt management.
- Potential impact: Increased debt burden may limit the company’s flexibility for future investments and growth.
3. Silver Lining:
- Positive: Improved cash flow from operations (INR 54 crores vs. INR 31 crores) signifies progress.
- Caveat: High D&A, a non-cash item, contributes significantly to this improvement. It’s crucial to analyze underlying cash flow generation through operating activities.
Also Read: How to Apply for an IPO?
