ESDS revenue doubled, but costs edged ahead and margin slipped
Consolidated net profit rose 106.18% sequentially, with other income contributing 8.92% of pre-tax profit.
Filed 02 Nov 2026, 16:53 IST · after market close · ESDS Software Solution Ltd (ESDS)
Key takeaways
- Consolidated revenue rose 103.49% sequentially, but expenses grew slightly faster at 103.76%, trimming operating margin by 0.08 percentage points.
- Net profit increased 106.18% sequentially even as the tax rate rose 1.46 percentage points and interest costs climbed 129.57%.
- ESDS's 41.82% operating margin was 22.25 percentage points above the 19.57% median of 42 reported information-technology peers.
Price around the results
Revenue scale-up came with near-proportional cost growth
In consolidated results, revenue rose 103.49% sequentially and operating profit grew 103.12%, indicating that the sharp scale-up did not yet create operating leverage. Expenses grew 103.76%, slightly faster than revenue, which kept the operating margin broadly flat. The results were filed after market close.
Margin held, but financing and tax costs increased
Operating margin narrowed by 0.08 percentage points to 41.82% because expenses outpaced revenue growth. Interest expense rose 129.57%, while the tax rate increased 1.46 percentage points, limiting the conversion of operating gains into net profit. Other income accounted for 8.92% of pre-tax profit, so it provided a meaningful but secondary contribution to reported earnings.
ESDS remained well above the reported IT peer median
The company's 41.82% operating margin was 22.25 percentage points above the 19.57% median among 42 information-technology peers that had reported the same quarter. Sequentially, the margin moved down from 41.90%, but the available trend covers only the immediately preceding quarter rather than a longer decline or recovery pattern.
Presentation highlights AI infrastructure and operations products
Management said ESDS has developed an integrated AI Stack built around the SWARAJ Bodhi AIOps and SWARAJ Garuda APM platforms. The presentation also said the company launched its GPUaaS offering in November 2025 to provide customised, high-performance AI environments.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹272 cr | ₹134 cr | +103.49% |
| Other income | ₹7 cr | ₹2 cr | +352.32% |
| Expenses | ₹158 cr | ₹78 cr | +103.76% |
| Operating profit | ₹114 cr | ₹56 cr | +103.12% |
| Operating margin (%) | 41.82% | 41.90% | — |
| Interest | ₹6 cr | ₹3 cr | +129.57% |
| Depreciation | ₹38 cr | ₹18 cr | +106.11% |
| Profit before tax | ₹77 cr | ₹36 cr | +110.01% |
| Tax | ₹16 cr | ₹7 cr | +125.73% |
| Net profit | ₹60 cr | ₹29 cr | +106.18% |
| EPS (₹) | ₹5.49 | ₹2.92 | +88.01% |
Operating margin of 41.82% compares with a Information Technology sector median of 19.57% across 42 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
New products
- ESDS launched its GPUaaS offering in November 2025 for customised, high-performance AI environments.
New initiatives
- ESDS has developed an integrated AI Stack comprising SWARAJ Bodhi and SWARAJ Garuda platforms.
What to watch
- Whether operating margin holds above 41.82% after the 0.08-percentage-point sequential decline.
- Whether expense growth remains below or moves further above the 103.49% sequential revenue growth rate.
- Whether other income stays near its 8.92% share of pre-tax profit as interest expense rises.