Introduction

ESDS Software Solution Ltd is a leading player in the Cloud and Data Centre industry. The company has been offering versatile and robust solutions to a broad range of industries including but not limited to, banking, healthcare, and government sectors. As the company is poised to go public soon, it is crucial for investors to understand the dynamics of its performance in FY 2023, as well as the prospects it holds for the future.

A) Financial Performance in FY 2023

1. Revenue and Operational Costs

While the revenue saw a moderate increase from INR 195 crores in FY 2022 to INR 205 crores in FY 2023, the operational costs have surged significantly. Employee benefit expenses alone rose by INR 7 crores, and other operational expenses increased by INR 18 crores. This increment in operational costs has resulted in a 7% dip in EBITDA margins, a significant pressure point for the company.

2. Debt and Interest Costs

The company's total debt has escalated to approximately INR 136 crores in FY 2023, from INR 110 crores in the previous fiscal year. Subsequently, the interest cost has also surged from INR 17 crores to INR 25 crores, raising concerns about the company's debt management.

3. Silver Lining

Despite the operational challenges, the company managed to generate cash from operations of approximately INR 54 crores, an increase from INR 31 crores in FY 2022. This uptick is primarily due to high Depreciation and Amortization (D&A) which is a non-cash item, suggesting underlying operational strength.

B) Business Updates in FY 2023

1. New Launches and Customer Relationships

ESDS has expanded its footprint by launching new Data Centres in Mohali and has plans for one in Navi Mumbai in H1FY24. The company has also strengthened its relationship with existing customers like L&T, EDF, and Tech Mahindra, who have scaled up their businesses significantly with ESDS.

2. Revenue Recognition and New Orders

Several new projects and contracts have been bagged, projecting a promising revenue stream for the upcoming fiscal years. The Mohali Data Centre alone has secured an order worth INR 25.40 crores, indicating robust revenue recognition in the near future.

C) Upcoming IPO and Valuation

ESDS issued 1,322,500 shares at INR 220 per share. With a total of approximately 9.28 crore outstanding shares, the company is currently valued at around INR 2041 crores. With its IPO on the horizon, ESDS presents an intriguing option for investors. To invest in ESDS's unlisted shares, you can contact UnlistedZone, India's leading Pre-IPO Shares Provider.