ESDS Software Solution Cloud · managed services · data centres · GPU-as-a-Service · Nashik
A five-data-centre Indian cloud provider with ₹472 crore of revenue and a 50% EBITDA margin listed this week at more than double its issue price. The reason is a single contract: a five-year, roughly USD 1.25 billion agreement over ~8,200 NVIDIA B300 GPUs in Australia, with ₹1,177 crore of advance already in the bank. The prospectus does not name the other side. The other side has: Sharon AI, a Nasdaq-listed neocloud, filed the contract with the SEC on 1 April — and its filing says ESDS is the customer. The USD 1.25 billion is what ESDS has committed to pay, a point the managing director confirmed on air. Who pays ESDS, and how much, is the part still not disclosed.
The shape of the company
ESDS runs five Tier-3 data centres — Nashik, Navi Mumbai, Bengaluru, Mohali and Noida (live since October 2025) — over roughly 75,266 square feet, and sells three things on top of them: infrastructure (colocation and cloud, including GPU-as-a-Service), managed services, and its own SaaS. The prospectus, citing Nexdigm, calls it one of only two Indian players offering the full GPUaaS-to-software stack, and the larger of the two by FY26 revenue. It served 2,501 customers in FY26, up from 1,714, at an average of ₹1.89 million each.
| Revenue by | FY24 | FY25 | FY26 |
|---|---|---|---|
| IaaS (colocation + cloud + GPUaaS) | 49.6% | 56.4% | 43.9% |
| Managed services | 27.1% | 20.9% | 41.2% |
| SaaS | 23.4% | 22.7% | 14.9% |
| Government and PSU customers | 34.0% | 29.5% | 27.4% |
| BFSI customers | 18.3% | 30.9% | 17.5% |
| Enterprise customers | 47.7% | 39.6% | 55.1% |
Concentration is already material before the Australian cluster lands: the top client was 15.9% of FY26 revenue and the top ten 45.4%. Revenue from technology and business collaboration partners was a further 16.9%.
The accounts: a margin that doubled in two years
The restated numbers show a business that grew revenue 65% over two years while EBITDA margin went from 35.6% to 49.6% and profit margin from 4.8% to 25.6%. Finance costs fell from ₹31.6 crore to ₹11.8 crore as borrowings were cut from ₹149 crore to ₹43 crore; depreciation barely moved. That operating leverage is what a data-centre business is supposed to show once capacity fills.
| ₹ crore, restated consolidated | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue from operations | 286.5 | 361.3 | 472.2 |
| EBITDA | 101.9 | 154.9 | 234.2 |
| EBITDA margin | 35.6% | 42.9% | 49.6% |
| Profit after tax | 13.6 | 55.6 | 120.8 |
| Return on equity | 6.2% | 17.3% | 25.1% |
| Return on capital employed | 14.5% | 24.7% | 32.8% |
| Total borrowings | 149.0 | 62.7 | 42.9 |
| Cash and equivalents | 2.2 | 60.7 | 1,253.4 |
| Data-centre capex | 19.7 | 110.8 | 79.0 |
Read the FY26 balance sheet with one fact in mind. Cash of ₹1,253 crore, operating cash flow of ₹1,368 crore, net working capital of minus ₹1,028 crore and a reported net cash position of ₹1,210 crore all trace to the same line: an advance of ₹1,176.6 crore received by subsidiary SPOCHUB from "an enterprise customer incorporated outside India for a new GPU-as-a-Service project". None of it has been earned. The prospectus says it "shall be amortised after the go-live date under the contract."
The Australian contract, exactly as the prospectus discloses it
On 31 March 2026 the company signed what it calls a "strategic AI cloud infrastructure agreement" with "an Australia-based neocloud AI compute service provider". The counterparty is not named anywhere in the prospectus. Everything below is the filing's own language; the section after it is what the other side has filed.
- Counterparty. "Australia-based neocloud AI compute service provider" — name not disclosed.
- Signed. 31 March 2026. Initial term five years, with an option to extend two more.
- Contract value. "Approximately USD 1,250 million" (₹11,831 crore at ₹94.65).
- Scope. "The AI company is required to deploy and operate" a dedicated cluster of about 8,208 NVIDIA B300 GPUs plus storage, inside an existing Australian data centre.
- Purpose. "Strengthening our Company's access to dedicated, high-performance AI compute capacity."
- Delivery and revenue. Targeted for completion by September 2026; "revenue generation under the agreement is expected to commence in the third quarter of Fiscal 2027"; service fees payable monthly.
- Advance received. ₹1,176.6 crore, by SPOCHUB, from "an Enterprise customer incorporated outside India" for a GPUaaS project in which SPOCHUB "will provide exclusive access to a cloud infrastructure" — a separate paragraph; the filing never says this is the same party.
- Not disclosed. Who pays whom, who owns the GPUs, the contract margin, the end customer.
Read alone, the filing lets a reader assume ESDS won a USD 1.25 billion order and took a tenth of it upfront. That is how the CNBC Awaaz anchor introduced it during the IPO — as an "₹11,831 crore order win" — and management did not correct the framing there. The counterparty's own filings, below, do.
What has been said outside the prospectus — Sharon AI
The counterparty is Sharon AI — SAI AU No.2 Pty Ltd, a subsidiary of Nasdaq-listed SharonAI Holdings Inc. Sharon AI announced the agreement on 1 April 2026 and filed the master services agreement with the SEC. None of what follows is in the RHP.
- Sharon AI, press release, 1 April 2026. "Signing of an initial five-year, US$1.25BN TCV AI infrastructure agreement with ESDS Software Solutions Ltd" — Sharon AI "will deploy an 8K B300 cluster within one of the company's existing data center providers in Australia, with revenue expected to commence in the third quarter of 2026".
- Sharon AI, Form 8-K Item 1.01, event date 31 March 2026. Customer: "ESDS Software Solutions Limited and certain of its subsidiaries". TCV "approximately USD $1,250,000,000"; 60 months plus a 24-month option; about 8,200 B300 GPUs and 17.80 PB of storage; delivery "by September 16, 2026"; "service fees are payable monthly in advance"; the customer to provide "USD $140,000,000" in letters of credit or bank guarantees; "Customer may not terminate the Service Order for convenience during the first 36 months".
- Sharon AI, master services agreement, exhibit 10.17 to its Q1 2026 10-Q. Customers are SPOCHUB Solutions and ESDS Cloud FZ-LLC with ESDS as parent. Sharon AI "retain[s] all rights, title and interest in and to the Infrastructure". ESDS is appointed "non-exclusive reseller" and "may only use the Services … for the purposes of Customer reselling such Services to the End Customer". First advance due within 10 days; fees paid quarterly in advance; electricity cost increases may be passed through. Per-GPU-hour rates redacted.
- Sharon AI, prospectus (424B3), 21 August 2026. Capex to serve the ESDS contract "estimated at approximately US$733 million"; Sharon AI "intends to seek asset-level debt financing targeting a loan-to-value ratio of 70–80%"; "no binding financing arrangements have been finalized or confirmed".
- Sharon AI, 10-Q for the quarter to 30 June 2026. Cash of USD 1.86 billion and "customer deposits" of USD 143.9 million at 30 June 2026 (nil at December 2025) — the deposits are not attributed to a customer.
- Piyush Somani, CMD, on CNBC-TV18 in IPO week. Asked whether the USD 1.25 billion was revenue ESDS would earn: "No, this is what we have to pay to Sharon AI, so this is the cost." In the same interview: GPU service prices of "$5 to $6 per GPU-hour", rising "30% to 35% every three months"; GPUs behaving like appreciating assets. Asked about an FY28 profit of ₹550–600 crore: "Definitely, we will be working towards that."
- Inc42, 27 August 2026. Sharon AI "will own and operate an 8,000-GPU cluster, which ESDS will use for serving domestic and global customer needs".
What this changes. The direction of the money. On Sharon AI's filings ESDS is not the vendor of a USD 1.25 billion contract; it is the buyer of one — a take-or-pay commitment averaging about USD 250 million (₹2,366 crore) a year, five times FY26 revenue, with no exit for convenience for three years and USD 140 million (₹1,325 crore) of bank guarantees to post. Sharon AI owns the GPUs and carries the build: it has sized the capex at USD 733 million, on its own balance sheet, funded by debt it had not yet secured on 21 August. That answers two of the four questions the prospectus left open — who owns the hardware and who funds it — and neither answer is the one a "USD 1.25 billion order" implied.
What the business now looks like. ESDS is reselling Australian GPU capacity. The all-in cost implied by the contract is about USD 3.5 per GPU-hour (USD 1.25 billion over 8,208 GPUs for 60 months, storage included — an estimate); management quotes market prices of USD 5–6. If ESDS sold every hour at that rate the gross billing would be USD 1.8–2.2 billion over the same five years — but that is a spread on a market price that management itself says moves 30% a quarter, on a fixed cost it cannot walk away from. The ₹1,176.6 crore advance is the only evidence so far that a buyer exists: it came from an unnamed "enterprise customer incorporated outside India", and it is close to the USD 140 million of security ESDS must give Sharon AI. Whether it is one buyer or many, at what price, for how long, and whether the advance is theirs to keep if the cluster is late, is not disclosed by either side. Sharon AI's MSA requires ESDS to hand over redacted copies of its end-customer agreements; the SEC exhibit does not include them.
What still is not disclosed, by either party. The end customer's name and balance sheet. ESDS's resale price and contract margin. Whether the ₹1,177 crore advance matches ESDS's own advance obligations to Sharon AI, and whether Sharon AI's USD 143.9 million of customer deposits is that money one step downstream. What happens if delivery slips past 16 September 2026 — the RHP's "third quarter of Fiscal 2027" is Sharon AI's "third quarter of 2026", the same quarter. A short-seller report on Sharon AI dated 30 April 2026 argued ESDS could not support the payments.
Why it could still be a game changer
Scale against the base. Spread evenly over five years the commitment is about ₹2,366 crore a year — five times FY26 revenue. From the December 2026 quarter, if the cluster is live and sold, this one arrangement would be larger than everything else the company does combined, on both the revenue and the cost line.
Contracted capacity, not contracted utilisation. The domestic business earns its 49.6% margin filling five data centres across 2,501 customers. The Australian cluster is the reverse problem: ESDS has contracted to pay for 8,208 GPUs from day one, and must now fill them. The advance says at least one buyer has paid to be first. What margin sits between Sharon AI's price and that buyer's is not disclosed.
The asset-light reading is now the only reading. Sharon AI owns and funds the hardware; the IPO's ₹576 crore stays in India. ESDS earns a spread on a small asset base, which is the better of the two businesses the prospectus left ambiguous — provided the spread exists for 60 months. The IPO's ₹576 crore is ring-fenced for the Indian data centres and buys 160 B300 GPUs, not 8,208; none of it can be used to meet the Sharon AI payments.
What has to go right. A cluster of more than 8,000 B300 GPUs must be delivered by 16 September 2026 in a market the prospectus itself describes as supply-constrained, by a counterparty that as of 21 August had not secured the debt to build it. ESDS must post USD 140 million of guarantees and then pay monthly in advance for five years against end-customer revenue that has not started. And the accounting — a ₹1,177 crore advance amortising against quarterly prepayments to Sharon AI — will reshape reported margins and working capital in ways the FY26 numbers cannot show.
The honest summary
On the disclosed record ESDS is a profitable, lightly-geared Indian cloud operator that has committed to buy a block of AI compute of a size that dwarfs it, taken ₹1,177 crore upfront from a customer it has not named, and told shareholders when revenue starts. The prospectus describes the purchase in language that reads as a sale; the counterparty's SEC filings and the managing director's own words on television say it is the cost.
What neither side has disclosed is the demand: who buys the capacity from ESDS, at what price, for how long. That single fact decides whether USD 1.25 billion of payments becomes a five-year reselling spread or a five-year liability. The market cap of ₹10,647 crore is about 88 times FY26 profit, so much of that spread is being priced before a rupee of it is recognised. The first ESDS filing that names its end customer and states the resale terms will tell you which company you own.