This AI stock has given a whopping 2,900% returns; here’s what driving the rally in stock

Business Model Overview: Cloud Services and AI/ML Specialisation

E2E Networks operates a business model centred around providing cloud computing services, particularly focused on AI and machine learning.

Recent Developments: Acquisition by L&T and Collaboration with NVIDIA

Larsen & Toubro (L&T) is set to acquire a 21% stake in cloud service provider E2E Networks Ltd for ₹1,407.02 crore, with the deal likely finalising by December 31. This investment will strengthen L&T’s foothold in the growing cloud and AI sectors, making it a minority shareholder in E2E Networks without gaining controlling interest.

In a milestone for the company, E2E Networks has become the first in India to acquire 256 Nvidia H200 GPUs. Its flagship product, TIR, an AI development studio, will also be the first in India to offer access to these advanced H200 GPUs, providing developers with state-of-the-art infrastructure.

Strong Financial Performance in Q2FY25

E2E Networks reported strong Q2FY25 results, with revenue of ₹48.4 crore, up 119.6% YoY. EBITDA reached ₹31.4 crore, growing 181.3% YoY, with an EBITDA margin of 66.1%. PAT grew 108.0% YoY to ₹12.1 crore, with a PAT margin of 25.4%. In 2024, the company made a capital expenditure (Capex) of ₹185.3 crore, and in H1FY25, it has already invested ₹107.4 crore in Capex.

Company’s EBITDA margin increased from 44% in FY22 to 66% in H1FY25, and its PAT margin rose from 12% in FY22 to 25% in H1FY25. It currently boasts a Return on Equity (ROE) of 36.4%, along with a healthy Debt-to-Equity (D/E) ratio of 0.3.

Stock Performance and Returns

E2E Networks has delivered strong stock performance, with a return of 658% on a YTD basis, 880% over the past year and a whopping 2900% in the last one and a half years. In the last month, the stock gained 77%, driven by strong Q2FY25 results and its collaboration with NVIDIA.

The company’s success is also reflected in its ARPU for the top 500 customers, which grew 133% YoY, from ₹3,69,185 to ₹8,60,927 in Q2FY25. Additionally, the Monthly Revenue Run Rate more than doubled over the past year, increasing from ₹7.2 crore to ₹16.5 crore in Q2FY25.

When comparing stock returns, E2E Networks has notably outperformed NVIDIA over the past year. NVIDIA delivered strong returns of 184% on a YTD basis and 209% over the year; however, E2E Networks exceeded these figures significantly.