🧠 At a Glance
E2E Networks Ltd is a hyperscale AI cloud infra provider, riding India’s GenAI boom. It sells GPU compute power (think: NVIDIA H100s) to startups, enterprises, and even governments. But behind the sleek server racks lies a volatile combo of low ROE, heavy capex, promoter dilution, and a P/E of 100+. Oh, and L&T now owns 21% of it.
🎬 1. Intro — GPUs, GenAI & 100-Bagger Dreams
What if I told you there’s an Indian company selling NVIDIA H200s to developers before most of us could even say “LLM”?
What if I also told you it’s debt-free, small-cap, and clocking 74% revenue growth?
And what if I then whispered:
“Promoter stake down from 60% to 43%, 56% of that pledged, P/E = 106, ROE = 6%”
Welcome to E2E Networks — India’s first listed AI cloud infra pure-play… and perhaps the first company where the cloud is genuinely overvalued 🌥️
🤖 2. WTF Do They Even Do? (Business Model)
E2E is an Infrastructure-as-a-Service (IaaS) player, offering:
- 🌩️ GPU Cloud Compute: Deploys NVIDIA A100, H100, H200 for AI/ML workloads
- 🧠 TIR Platform: A self-service console to train, deploy, and scale LLMs
- 🧪 AI Labs-as-a-Service: Sandbox environment for GenAI developers
- 🇮🇳 Sovereign Cloud Platform: For Gov/PSU clients wanting localized control
- 🏗️ Edge & Bare Metal Infra: For non-virtualized, high-throughput compute workloads
Its clients include startups, researchers, enterprises, and most recently… the Govt of India (IndiaAI empanelment).
💸 3. Financials – Profit, Margins, Growth
| Metric | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|
| Revenue (₹ Cr) | 52 | 66 | 94 | 164 |
| EBITDA Margin | 44% | 50% | 51% | 59% |
| PAT (₹ Cr) | 6 | 10 | 22 | 47 |
| EPS | ₹4.46 | ₹6.85 | ₹15.11 | ₹23.78 |
| ROE | 5% | 7% | 10% | 6% (declining) |
🟢 Pros:
- 74% YoY revenue growth (FY25)
- 59% EBITDA margins — even AWS might blush
- Near debt-free
- Scalable, capital-light ops (until now…)
🔴 Cons:
- ROE/ROCE still weak despite profits
- High “Other Income” ₹39 Cr in FY25 = 83% of PAT
🧮 4. Valuation — Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹2,534 |
| P/E (TTM) | 106.5x |
| Market Cap | ₹5,060 Cr |
| Book Value | ₹798 |
| P/B | 3.2x |
🔍 Fair Value Range
Assuming:
- Normalized PAT (excluding one-time Other Income): ₹25 Cr
- Growth PEG band: 2.5–3.0x on 50–60% profit CAGR
- Sustainable P/E range: 50–65x (high-end justified only by GPU scarcity + IndiaAI story)
FV Range = ₹1,250 – ₹1,625 (50–65x on ₹25 Cr adj PAT)
🎯 Verdict: Price > Growth > Valuation > Hope
🔥 5. What’s Cooking — Recent Buzz
- 🟢 L&T Acquires 21% Stake: Preferential allotment of ₹1,079 Cr in Dec 2024
- 🚀 6,000 kW GPU infra expansion: Funded by L&T; adds H200s in NCR & Chennai
- 🇮🇳 IndiaAI empanelment: Only 5 players selected — E2E got compute + network
- 🧠 Sovereign Cloud: Built for Gov/PSU clients, launched Mar 2025
- 📈 Targeting ₹35–40 Cr MRR by FY26: Current run rate ~₹13 Cr
💀 6. Balance Sheet — How Much Debt, How Many Dreams?
| FY25 Balance Sheet Highlights |
|---|
| Net Worth |
| Borrowings |
| Other Liabilities |
| CWIP |
| Cash Reserves |
| Total Assets |
😬 Comment:
- Leverage is still low, but CWIP + Other Liabilities = ticking capex bomb
- Capex funded via L&T dilution, not internal accruals
💵 7. Cash Flow – Sab Number Game Hai
| Metric | FY25 |
|---|---|
| CFO | ₹88 Cr |
| CFI (Capex) | -₹983 Cr |
| CFF (Funding inflow) | ₹1,350 Cr |
🟢 ✅ Strong operating cash
🔴 ❌ Negative investing cash due to GPU infra & Sovereign Cloud
📊 8. Ratios — Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 5.71% |
| ROCE | 8.08% |
| OPM | 59% |
| Debtor Days | 22 |
| Working Capital Days | -1,556 (unreliable due to accounting structure) |
⚠️ Low ROE/ROCE = underutilized capital despite tech premium
⚠️ Zero dividend, high valuation = purely growth play
📈 9. P&L Breakdown – Show Me the Money
- Revenue: ₹164 Cr (up 74% YoY)
- Op. Profit: ₹97 Cr (59% margin)
- Other Income: ₹39 Cr (mostly interest/gain from L&T fund inflow)
- Depreciation: ₹60 Cr (high due to infra assets)
- Net Profit: ₹47 Cr
➡️ Adjusted PAT (Core) = ~₹25–28 Cr
➡️ Implying actual P/E is 180–200x on core biz
⚔️ 10. Peer Comparison — GPU Wars India
| Company | Revenue | PAT | ROE | P/E | OPM | Valuation |
|---|---|---|---|---|---|---|
| Netweb Tech | ₹1,149 Cr | ₹114 Cr | 19.4% | 89x | 13.9% | ₹10,270 Cr |
| Inventurus | ₹2,664 Cr | ₹486 Cr | 33% | 55x | 28.9% | ₹27,115 Cr |
| Affle | ₹2,266 Cr | ₹382 Cr | 14% | 72x | 21.3% | ₹27,558 Cr |
| E2E | ₹164 Cr | ₹47 Cr* | 5.7% | 106x | 59% | ₹5,060 Cr |
*adjusted core PAT ~₹25 Cr
📌 TL;DR: E2E has the best margins, but worst profitability and highest P/E
📌 Netweb is closest peer, with more scale and better balance of growth & return
🧠 11. Misc — Promoters, Shareholding, Drama
- 🧑💼 Promoter: Tarun Dua, IIT-Delhi alum, now owns 43.6%
- ❌ Pledged Shares: 56.2% of promoter stake
- 🔽 Promoter stake down from 59.7% → 43.6% in 1 year (L&T deal)
- 🏦 Institutions:
- FIIs: 3.8%
- DIIs: 3.8%
- Public: 48.6%
- 🧑💼 CFO: Megha Raheja (Appointed Dec 2024)
- 📈 Total Shareholders: 44,598 (💥)
🧑⚖️ 12. EduInvesting Verdict™
E2E Networks is India’s closest thing to a mini-AWS — but with PSU accounting, family office funding, and a ₹1,000 Cr cloud dream stitched on a ₹164 Cr shirt.
It’s got:
- GPU narrative ✅
- L&T backing ✅
- Infra rollout ✅
- Profit growth ✅
- But also — dilution, pledge, low ROE, and 100x+ P/E 😬
🧠 “It’s a great tech product. But don’t confuse GPUs with guarantees.”
FV Range (Adj. PAT ₹25–30 Cr x P/E 50–65x) = ₹1,250 – ₹1,625
🎯 Current Price = ₹2,534
🚨 Margin of safety = Missing
📉 Market sentiment = Pricing in FY27 dreams
✍️ Written by Prashant | 📅 July 11, 2025
Tags: E2E Networks, GenAI stocks India, GPU cloud, Sovereign cloud India, hyperscale infra, L&T stake, AI infrastructure stocks, EduInvesting premium, AI compute startups
