ESDS Software: 2026’s top IPO stock hits 7th straight lower circuit; ₹6,600 crore value wiped out

ESDS Software Solution, one of 2026’s standout IPO performers, is now facing a sharp reversal after a stellar post-listing rally. The newly listed tech stock has hit the 5% lower circuit for seven consecutive trading sessions, giving up a significant part of its gains amid concerns over quarterly performance, elevated valuations and increased supply following the expiry of the shareholder lock-in period.

The cloud and data-centre services company’s shares were locked at ₹1,292.15 on the BSE today, down 5% for the day. The stock has lost 30.2%, from its September 24 closing price of ₹1,850.15, when it hit an all-time high of ₹1,864.35 during the session.

The sustained sell-off has eroded more than ₹6,600 crore in ESDS Software’s market capitalisation in seven trading sessions. Its market value stood at around ₹15,145 crore on Tuesday, compared with nearly ₹21,800 crore at the stock’s peak.

Despite the recent correction, ESDS Software shares are still up around 200% from their IPO price of ₹429.

Q1 results trigger sell-off

ESDS Software has been under pressure since September 25, after the Maharashtra-based company reported its first-quarter results post market hours on September 24.

The company’s operating revenue grew 7.3% year-on-year (YoY) to ₹133.7 crore in Q1 FY27, but declined 20.2% sequentially from ₹167.5 crore in the previous quarter.

Profit after tax rose 14% YoY to ₹29.3 crore, while falling sharply by around 57% from ₹67.7 crore in the preceding quarter.

The weak sequential performance has added to concerns over the stock’s sharp post-listing rally and stretched valuations.

From record IPO debut to seven-day sell-off

ESDS Software made a strong debut on September 4, with the shares listing at ₹757, a 76.5% premium over the IPO price of ₹429 apiece. Shares gained 108.8% on the listing day, closing at ₹895.55 after touching an intraday low of ₹746.30.

The listing surpassed Street expectations, with ESDS Software Solution’s ₹720-crore IPO drawing overwhelming investor demand and getting subscribed 135.88 times. Ahead of the issue, the company raised ₹215.99 crore from anchor investors, allotting 50,34,964 equity shares at ₹429 apiece.

The stock continued its upward momentum in the initial days of trading and hit multiple upper circuits. ESDS Software shares then rose 20% each on September 7 and 8, followed by another 10% gain on September 10 and September 11.

The rally took the stock to ₹1,850.15 by September 24, marking a gain of more than 145% from its listing-day close.

The trend reversed sharply from September 25, with the stock hitting the 5% lower circuit in every trading session through October 6.

Lock-in expiry adds to supply concerns

The one-month shareholder lock-in period expired on October 2, making additional shares eligible for trading and raising supply concerns. According to Nuvama Institutional Equities, around 3 million shares, or 2% of the total outstanding shares, became eligible for trading following the lock-in expiry.

The stock has also been placed under the long-term additional surveillance measure (ASM) framework by the exchanges amid heightened volatility.

In a separate development, India Ratings and Research (Ind-Ra) on September 29 upgraded ESDS Software’s long-term rating on bank loan facilities to ‘IND A’ with a stable outlook from ‘IND BBB+’, while raising its short-term rating to ‘IND A1’ from ‘IND A2+’. The upgrade reflects improved business scale and diversification, healthy growth in recurring cloud and managed services, stronger revenue visibility and credit metrics, supported by a robust order book, the agency said.

Ind-Ra expects ESDS to maintain healthy growth in FY27, aided by its order book, upcoming data centres in Kolkata and Sahibabad, a 10 MW IT load expansion in Bengaluru and revenue from its GPUaaS contract. However, execution risks related to capex and high customer concentration remain key constraints.

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