Shares of cloud services and data center company ESDS Software Solutions witnessed relentless selling pressure on Monday, September 28, 2026, locking into a 5 percent lower circuit for the second consecutive trading session. The steep plunge represents a sharp trend reversal for the newly listed counter, which had previously captured investor attention by rocketing more than fourfold from its initial public offering (IPO) issue price of ₹429 within days of its debut on domestic exchanges. The ongoing sell-off, which locked the counter at ₹1,672.50 per share, was sparked by a disappointing set of first-quarter earnings for the June period alongside critical corporate disclosures regarding delayed revenue streams and unguided growth forecasts.

Q1 Earnings Miss: Net Profit Collapses 57% as Australia Contract Pushed to Q3

The sharp decline intensified after the company published its June quarter financial scorecard, revealing a 20 percent sequential drop in top-line revenue alongside a severe 56.7 percent contraction in net profit compared to the preceding quarter. ESDS Software reported a quarterly net profit of ₹29 crore, significantly underperforming institutional projections such as Choice Broking's estimate of ₹250 crore. During the post-earnings investor conference, company management revealed that one-off design service revenue logged by a subsidiary in Q4 FY2026 was not replicable, while the widely anticipated revenue contribution from an Australian client contract has faced operational pushbacks. ESDS Chairman and Managing Director confirmed that the overseas transaction, previously slated for formalization in September, has been delayed by roughly six weeks, pushing revenue recognition into the third quarter of FY2027 with commercial inflows now expected from the first week of November.

Institutional Reversal: Choice Broking Slashes Projections and Downgrades Stock to 'Sell'

The operational hiccups and lack of forward guidance triggered immediate institutional downgrades, eroding market confidence in the tech counter. Choice Broking slashed its FY2027 revenue projection for ESDS Software from an initial ₹2,263 crore down to ₹1,876 crore, noting that company leadership provided no concrete forward guidance for the ongoing or upcoming fiscal years. The brokerage also highlighted governance concerns, noting that one-time revenue and profit components—which accounted for nearly 20 percent of FY2026 numbers—had not been transparently detailed during the initial public offering. Consequently, Choice Broking downgraded ESDS Software directly from an initial 'Buy' rating to a 'Sell' recommendation, maintaining an objective target price of ₹1,550 per share, indicating further downside risk from current trading levels.