ESDS Software Solution Ltd (ESDS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the ESDS Software Solution Limited Q2 and FY '27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Jagtap from E&Y Investor Relations. Thank you, and over to you, sir.
Pratik Jagtap (E&Y): Thank you, Rio. Good evening to all the participants, and welcome to Q2 FY '27 earnings call of ESDS Software Solution Limited. The results and presentation have already been mailed to you and they are also available on the website of ESDS. In case anyone has not received a copy of press release and presentation, please do write to us, and we will be happy to send it to you all. To take us through the results today and to answer your questions, we have with us the top management of the company, represented by: Piyush Somani, Chairman and Managing Director; Nadukuru Seetharamayya, Chief Financial Officer, to whom we will be referring as Ram; Saurabh Daga, Account and Finance Team; and Prasad Deore, Company Secretary and Compliance Officer. Piyush will start the call with brief overview of the quarter on business, which will be then
Pratik Jagtap (E&Y): by Ram, who will take us through the financials. Then we will open the floor for Q&A session. As usual, I would like to remind you that anything that is said on this call which gives any outlook for the future or which can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports, which you can find on our website. With that said, I now hand over the call to Piyush. Over to you, sir.
Piyush Somani (ESDS Software Solution Ltd): Hey, Pratik. Thanks a lot. Good evening, everyone. A warm welcome and thank you for joining our Q2 FY '27 earnings call. So we also have our H1 numbers to disclose today. Before I talk about the quarter, I would like to take a moment to reflect on an important milestone for all of us. We became a listed company on 4th September this year, and I would like to once again thank all our shareholders for trust and confidence you have placed in us. Our first earnings interaction as a listed company happened very soon thereafter on 25th of September. As we are still relatively new to the public markets, we thought it would be useful to spend a few minutes today explaining ESDS, our business model, and how we look at the business, particularly for shareholders and investors who have joined us after the IPO. If you look at ESDS' journey over the past two decades, we have witnessed significant shifts in the technology landscape, and we have proactively evolved alongside them. Alongside this, our approach to innovation and solving customer problems has remained consistent. Back then we began with web hosting, supporting businesses as they establish their digital presence. As the requirements became more complex, we expanded into data center and mission-critical IT infrastructure. We have been early adopters of emerging technologies. We recognized the potential of cloud computing early and developed our own cloud platform with patented vertical auto-scaling technology. As customers increasingly sought integrated services, greater control and digital sovereignty, we developed an artificial intelligence-based autonomous sovereign platform with Swaraj Cloud and AI-enabled sovereign products, bringing multiple capabilities together within one ecosystem. Today, as artificial intelligence transforms the technology landscape, we are building on this strength through AI factory, large scale GPU clusters, and end-to-end AI-enabled solutions. At every stage our approach has been to look beyond individual products, understand the larger customer challenge and bring together the right technologies to deliver a complete end-to-end solution. This philosophy has remained the foundation of our evolution and continues to guide the future direction of ESDS. Today, our business can broadly be understood across three offerings: infrastructure as a service, managed services, and software as a service. Instead of looking at this as independent businesses, we look at them as an integrated technology platform through which we support customers across infrastructure, cloud, software, security, and the ongoing management of their technology environment. Let me briefly explain how our three core business segments work together. Infrastructure as a service forms the foundation of our business. This is where we provide customers with the AI infrastructure or cloud infrastructure or data center infrastructure they need to run their applications and critical workload, including, be it their data center, cloud, co-location, AI compute, AI factories. So, whatever compute capacities or whatever hardware capabilities are required, that we provide to our customers. Managed services takes this a step further. Beyond providing infrastructure, we help customers manage, monitor, secure and optimize their IT environment. This allows them to focus on their core business, while we take care of their ongoing technology operations. And software as a service represents our proprietary software and platform capabilities, including our growing Swaraj product portfolio across cyber security, observability, automation, and enterprise technology. What is important to understand is that these are not three isolated businesses. They are interconnected capabilities that allow us to address a customer's complete technology requirements. A customer may begin with infrastructure, expand into managed services and subsequently adopt our software platforms. This integrated approach enables us to build deeper customer relationships, address evolving requirements, and deliver end-to-end technology solutions. Our customer
Piyush Somani (ESDS Software Solution Ltd): expands enterprises, government organizations, and BFSI clients. ESDS is also not only an infrastructure company. We have built our own technology and software capabilities over many years. Swaraj Cloud is our patented vertical auto-scaling cloud technology and we continue to build our capabilities across AI, cloud, cyber security, and GPU infrastructure. What differentiate ESDS is that we don't look at technology requirements in isolation. We focus on understanding the larger business challenge and bringing together the right technology, services, and expertise to deliver tailored end-to-end solutions. The integrated approach allows us to serve as an accountable technology partner, simplifying complex IT environments, while enabling digital sovereignty, and giving organizations greater control over their data infrastructure and technology choices. Looking ahead, over the next 3 to 5 years, we believe this model will become increasingly relevant. AI is fundamentally reshaping businesses, and enterprises need an integrated technology foundation to build, deploy, and scale AI. Through our AI Factory ecosystem, we bring them capabilities together under one umbrella. ESDS represents more than a traditional cloud or data center company. We are an end-to-end AI ecosystem and IT service provider focused on strengthening our competitive position and delivering sustainable long-term growth. As we start our journey in the public markets, I would also like to provide some context on how we believe our performance should be evaluated. Given the nature of our business, quarterly performance can be very based on project execution and revenue recognition. We therefore believe year-on-year trends provide a more meaningful view of our underlying progress and encourage investors to evaluate ESDS over a longer period, rather than focusing only on any single quarter. Coming to Q2 FY '27, we are pleased with the progress made during the quarter. During the quarter, we continue strengthening our core business while accelerating our transition towards an integrated AI-enabled sovereign technology ecosystem. Our priority centered on expanding the Swaraj product portfolio, advancing AI factory business model, and GPU infrastructure initiatives, and bringing together cloud, managed services, and AI capabilities to address increasingly complex enterprise requirements. Going forward, our focus remains on strengthening the core ESDS business while building our AI and GPU infrastructure opportunity in a measured manner. We are excited about the opportunity ahead, but equally, our focus remains on execution, capability, capital discipline, and creating sustainable long-term value for our customers and shareholders. With that, I will hand over to our CFO Nadupuru Seetharamayya. You can call him Ram as well, to take you through our Q2 financial performance. Thank you.
Nadukuru Seetharamayya (ESDS Software Solution Ltd): Thank you, Piyush. And good evening, everyone on this call, and thank you for joining this call. Really appreciate. As Piyush mentioned, I'll take you through the key financial highlights for Q2 fiscal year '27. I'll start with the year-on-year performance, which we believe gives a better view of our business trends while also explaining that important sequential movements whatever relevant. So, revenue from operations in Q2 is INR 1,383.4 million, whereas for Q1, it was INR 1,336.6 million resulting in a growth of 3.5%. Whereas H1, when I compare H1 fiscal year '27 with H1 fiscal year '26, the revenue in H1 fiscal year '27 was INR 2,719 million, whereas revenue in H1 fiscal year '26 is INR 2,183.7 million, which is a growth of 24.6% that we achieved. And the total revenue in H1 fiscal year '27 is INR 2,788, which includes INR 68 million of other income against total income in H1 fiscal year '26 of INR 2,219 million. So, thereby, we see a growth of 25.6%. EBITDA margin for H1 is INR 1,137.5 million, whereas for H1 fiscal year '26, is INR 1,012.7 million. So, we again see a growth of 12.3% there. Similarly, PAT has also increased to INR 603.7 million in H1 fiscal year '27 against INR 477.9 million in H1 fiscal year '26. Thereby, we see a growth of 26.3%.
Nadukuru Seetharamayya (ESDS Software Solution Ltd): the total amount raised through IPO issue is INR 7,200 million. Utilized out of the same is 469.13 million. The unutilized amount stands at 6,730.87 million as of date, which is most of them, we have close to 6,500 million we have put that in fixed deposit and remaining amount has been there in the monitoring account. We had we had a cash and cash equivalent amounting to INR 16,368.31 million and other bank balances equal to 341 3,419.80 million as on September 30th, 2026, which includes FDR due to IPO proceeds close to 6,500 million. The total assets as on September 30th, 2026, is INR 41,095 million and reserve stands at INR 12,6822.76 million. With this, I hand it back to moderator to open the floor for Q&A session.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions, may press * and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press * and 1. The first question is from Deepak Poddar from Sapphire Capital. Please go ahead.
Deepak Poddar (Sapphire Capital): Yeah. Hi. Am I audible, sir? Yes, you are audible. Yeah, thank you very much, sir, for this opportunity. Sir, just wanted to understand on the Sharon part. I mean we were expecting to get commissioned the Sharon GPUs this month, right, November. So, just wanted to know the status of it. And and how much revenue it can contribute in FY27 and '28? And corresponding EBITDA margin we can expect in FY, yeah. That that would be from my side, yeah.
Piyush Somani (ESDS Software Solution Ltd): Yeah. So, we are in the final stages of testing now. So, NVIDIA testing is happening simultaneous as we speak NVIDIA is doing the cluster testing. So, this is expected to complete within next two to three weeks time, maximum three weeks time. So, on the up higher side, they have mentioned that by 27th of November, they will give hand over to us for testing. And after that, we have to handover to our customer for 20 days of testing. So, on the higher side, the go-live would happen RFS, ready for service, would happen on 17th of December. This is on the higher side. Lower side, it can happen somewhere in the first week of December also, ready for service. We are hopeful we should be able to in this quarter we should be able to book one month of our revenue and 1 month of our profits, and next quarter would be full all three months for the next quarter. So, somewhere around like INR 50 crores to INR 60 crores in that range is going to be our monthly PAT once the cluster goes live.
Deepak Poddar (Sapphire Capital): So, INR 50 crores to INR 60 crores per month I mean after the entire 8,200?
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