1. At a Glance
AI ka baap or just another cloud vendor? E2E Networks is India’s most undervalued hyped-up AI/ML Cloud Infra company that just posted a quarterly loss—while expanding capacity like Elon on steroids. Let’s dive in.
2. Introduction with Hook
Imagine giving a Formula 1 car to a rickshaw driver. That’s what Q1 FY26 felt like for E2E Networks—a blazing AI infra beast but ran into a speed bump called “Profit nahi aaya.”
- Q1 FY26 Revenue: ₹41.1 Cr
- Q1 FY26 Net Profit: -₹2.84 Cr
- YoY Growth (Revenue): +86%
- Cloud GPU Infra: H100, A100, V100 deployed for AI bros and GenAI broskis alike
Still no dividend, but the vibe is venture capitalist meets make-in-India AI infra.
3. Business Model (WTF Do They Even Do?)
- Full-stack AI/ML cloud platform
- Key offerings:
- GPU-as-a-service (H100, H200, A100… all the bling)
- Sovereign cloud platforms
- AI-Labs-as-a-Service (your AI startup’s wet dream)
- TIR (Train-Inference-Retrain) architecture
Target customer: Anyone who’s yelling “GenAI” louder than their own conscience.
4. Financials Overview
| Particulars | FY23 | FY24 | FY25 | TTM |
|---|---|---|---|---|
| Sales (₹ Cr) | 66 | 94 | 164 | 159 |
| EBITDA Margin | 50% | 51% | 59% | 50% |
| Net Profit (₹ Cr) | 10 | 22 | 47 | 35 |
| EPS (₹) | 6.85 | 15.11 | 23.78 | 18.43 |
Note: ₹54 Cr of “other income” helped FY25 feel rich. But operating profit alone is thin.
5. Valuation
With a PE of 144, valuation is officially sitting in the “priced for perfection” club.
- Market Cap: ₹4,984 Cr
- Book Value: ₹798 → P/B = 3.13
- Fair Value Range:
- P/E 60 (optimistic): ₹1,000–1,200
- EV/EBITDA 25 (AI bubble adjusted): ₹1,100–1,300
- DCF (with growth slowdown baked in): ₹900–₹1,100
Fair Value Range: ₹900 to ₹1,300
Current Price = ₹2,495 → Overcooked with investor masala.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 loss of ₹2.84 Cr triggered panic
- Preferential issue of ₹1,485 Cr done (monitoring agency says: “All funds utilized properly. No scam.”)
- AI GPU infra expanded big time.
- Promoter pledge still at 56.2%, and decreasing stake—investors ki neend gayi.
- Concall 22 July update: Expansion continues, but cost controls needed.
7. Balance Sheet
| Particulars (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | 14 | 14 | 20 |
| Reserves | 35 | 56 | 1,573 |
| Borrowings | 6 | 144 | 73 |
| Fixed Assets + CWIP | 42 | 210 | 1,025 |
| Total Assets | 68 | 255 | 2,581 |
Key Takeaways:
- Asset-heavy after GPU capex
- Debt levels fluctuating but manageable
- Massive reserves post fundraise
- CWIP of ₹636 Cr = infra is WIP, returns will lag
8. Cash Flow – Sab Number Game Hai
| Cash Flow Item (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating Cash Flow | 36 | 43 | 88 |
| Investing Cash Flow | -21 | -144 | -983 |
| Financing Cash Flow | -2 | 92 | 1,350 |
| Net Cash Flow | 12 | -9 | 456 |
TL;DR:
- Operating cash is healthy
- But investment in infra is guzzling cash
- Preferential issue in FY25 saved the day
- Will need to sweat that infra soon
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE (%) | 6% | 15% | 6% |
| ROCE (%) | 29% | 25% | 8% |
| Debtor Days | 3 | 10 | 22 |
| Working Capital Days | -39 | -6 | -1,556 |
Verdict:
- ROE drop is concerning
- ROCE crashed due to huge capex
- Working capital chaos (yes, that -1,556 is real)
- Still debt-light… but must convert assets into income fast
10. P&L Breakdown – Show Me the Money
| Quarter | Sales (₹ Cr) | OPM (%) | Net Profit (₹ Cr) | EPS (₹) |
|---|---|---|---|---|
| Q1 FY25 | 41.3 | 66% | 10.1 | 7.00 |
| Q4 FY25 | 33.5 | 40% | 13.6 | 6.82 |
| Q1 FY26 | 36.1 | 29% | -2.84 | -1.42 |
Narrative:
- Margins got body-slammed
- EPS turned negative
- Revenue held up, but profit dipped = cost spiral in effect
11. Peer Comparison
| Company | P/E | ROE (%) | Market Cap (₹ Cr) | Qtr Profit (₹ Cr) |
|---|---|---|---|---|
| LTTS | 36 | 22.1 | 45,824 | 316 |
| Tata Tech | 42 | 19.9 | 29,032 | 170 |
| Netweb Tech | 94 | 24.0 | 10,743 | 42.9 |
| E2E Networks | 144 | 5.7 | 4,984 | -2.84 |
Translation:
E2E = “Most expensive” and “least profitable”
Still a niche AI player—but needs to justify its PE party pass.
12. Miscellaneous – Shareholding, Promoters
| Category | Mar ’24 | Jun ’25 |
|---|---|---|
| Promoters | 43.6% | 40.6% |
| FIIs | 3.82% | 2.97% |
| DIIs | 3.8% | 3.48% |
| Public | 48.6% | 52.8% |
Buzz:
- Promoter stake down 19% in one year.
- Pledge: 56.2% — chinta ka vishay.
- Public holding crossed 50% = retail enthusiasm on steroids
- 50K+ shareholders now (from 1,300 in Sep 2022)
13. EduInvesting Verdict™
E2E Networks has become that startup which raised cash, bought all the cool toys (H100s and sovereign cloud servers), and forgot that profitability is still a KPI.
Yes, the AI infra is cool. Yes, growth is real. But profit needs to catch up before the valuation party gets crashed by the bouncers (aka markets). For now—it’s all about execution.
Metadata
– Written by EduInvesting Team | 23 July 2025
– Tags: E2E Networks, AI Stocks, Cloud Computing, GPU Infra, Q1FY26 Results
