ESDS Software shares hit 20% upper circuit for second straight day

Shares of ESDS Software Solution hit the 20% upper circuit for the second straight day on September 7, continuing the strong performance seen after the company made its stock market debut on September 4. 

The stock had listed at ₹757 on the NSE, a 76.46% premium over its issue price of ₹429. It then moved higher to hit the upper circuit. 

At 10:10 am on September 7, ESDS Software shares were trading 20 percent higher at ₹1,090.05 apiece. The company's market valuation stood at ₹12,776.6 crore on the NSE. 

The company's initial public offering (IPO) had received strong demand and was subscribed 135.88 times on the final day of bidding. 

ESDS Software Solution is an AI-enabled cloud, managed services, data centre infrastructure and software solutions provider. The company had raised Rs 216 crore from anchor investors ahead of its listing. 

The IPO was entirely a fresh issue of equity shares aggregating up to ₹720 crore. The issue was offered in a price band of ₹408-429 per share. 

Of the IPO proceeds, the company plans to use ₹576 crore to purchase and install cloud computing equipment and other infrastructure for its data centres. The remaining amount will be used for general corporate purposes. 

Analyst view 

Shivani Nyati, Head of Wealth at Swastika Investmart told Moneycontrol that rising demand for cloud computing, data-centre infrastructure, cybersecurity and digitalisation in India provides a favourable long-term growth opportunity for ESDS. 

She also cautioned that, following the sharp listing-day gain, some near-term profit-taking could take place as valuations have moved ahead of fundamentals. 

Meanwhile, Anchorage Capital Fund's Anchorage Capital Scheme I sold 10.03 lakh shares, or a 0.85% stake, in ESDS Software Solution for ₹76.01 crore at ₹757.44 per share. 

Anchorage Capital had held a 1.13% stake in the company before its shares were listed on Friday. 

Choice Equity has initiated a 'buy' rating on ESDS Software Solution with a target price of ₹1,550.