ESDS Software shares snap 4-day winning streak; here’s why the stock hit lower circuit despite 14% profit growth

ESDS Software Solution shares declined to hit a lower circuit, snapping its four-day winning streak at the opening bell on Friday, September 25, as the IT-enabled services company’s Q1 FY27 earnings growth failed to impress equity investors due to shrinking margins.

The company's shares began their four-day winning streak at the start of this week, after ending lower last week on Friday.

With no buy orders in sight as of the morning market hours on Sept. 25, the market indicated strong selling pressure on the company’s stock, which has delivered over 145% returns to investors since its stock market debut earlier this month.

While the company registered overall growth across its consolidated revenues and net profits, margin growth concerns and subdued sequential performance added to the weakness in investor sentiment amid a broader market downtrend.

How did ESDS perform in Q1 earnings?

NSE filings showed that ESDS Software recorded a 14% year-on-year (YoY) growth in its consolidated net profit after tax (PAT) to ₹29 crore in the April to June quarter of the financial year 2026-27, in comparison to ₹26 crore in the same period a year earlier.

ESDS’s net profits declined 57% on a quarter-on-quarter basis to its Q1 levels, from ₹67.67 crore in the Q4 FY26 results.

The company’s revenue from core operations advanced 7.2% to ₹134 crore in the June quarter, from ₹125 crore in the same quarter of the previous financial year, as per the exchange data.

On a sequential basis, the revenues declined 20% to its June quarter levels, from ₹167.50 crore in the previous quarter.

With ESDS’s total expenses rising 8.4%, this pressured down the company’s margin growth in the period under review.

The exchange filings showed that the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) improved 6.7% YoY to ₹56 crore, from ₹52 crore in the same period a year earlier.

However, the EBITDA margins contracted by 21 basis points to 41.89% in the first quarter of FY27, in contrast to 42.10% in the same period of the previous fiscal year.

The company management expects to focus on capex spending, using around ₹576 crore of funds raised from stock market investors to purchase and install cloud computing equipment and infrastructure at data centres in the country.

Stock performance vs listing price

Before Friday’s decline, ESDS Software shares had delivered investors more than 145% returns on their investments, with the stock surging to ₹1,859.20 on Thursday’s market, compared to the NSE listing price of ₹757 apiece.

The company shares were listed on NSE and BSE on September 4.

Factoring in Friday’s decline, ESDS Software’s stock has delivered 132% returns to investors since the company was listed on the benchmark stock exchanges.

NSE data further showed that the company’s stock has risen more than 5% over the last five market sessions. ESDS Software’s market capitalisation (m-cap) was at ₹20,634 crore as of the trading session on Friday, September 25, 2026.