ESDS Software Annual Reports, Balance Sheet and Financials

ESDS Software Solution Limited Consolidated Balance Sheet (Rs in Millions)

ESDS Software Solution Limited Consolidated Statement of Profit and Loss (Rs in Millions)

ESDS Software Solution Limited Consolidated Statement of Cash Flows (Rs in Millions)

Summary of the Cash Flow Statement for the years 2025 and 2024:

Operating Activities

In FY 2025, ESDS generated ₹1,212.03 million from operating activities, compared to ₹572.05 million in FY 2024. This sharp improvement highlights the strong momentum in the company’s core operations. The profit before tax nearly quadrupled to ₹825.94 million, and while working capital movements still created some drag (especially from receivables and borrowings), they were offset by positive adjustments like an increase in financial liabilities and steady employee obligations. Overall, the company is now consistently converting profits into cash, a very healthy sign for its business fundamentals.

Investing Activities

The company recorded a net outflow of ₹1,093.44 million from investing activities in FY 2025, a massive jump compared to just ₹14.46 million in FY 2024. The surge in outflows was primarily due to large payments for property, plant, equipment, and intangible assets amounting to over ₹1,100 million. This indicates that ESDS is in an expansion phase, likely investing in new infrastructure, data centers, or technological upgrades to support future growth. While this creates pressure on short-term cash, it can be viewed positively if the investments translate into higher revenues and scalability in the coming years.

Financing Activities

Financing cash flows turned positive in FY 2025 with an inflow of ₹488.69 million, compared to a large outflow of ₹705.69 million in FY 2024. The key driver was the fresh issue of equity shares worth ₹1,370.87 million, which more than offset repayments of borrowings, lease liabilities, and interest costs. This reflects management’s decision to fund expansion through equity rather than debt, strengthening the balance sheet and reducing financial risk. However, reliance on fresh equity also means dilution of shareholder stakes, so the company will need to ensure that the funds are deployed efficiently to generate returns.

Net Cash Position

The overall cash position improved dramatically in FY 2025, with net cash increasing by ₹607.28 million, whereas FY 2024 saw a net cash decline of ₹148.10 million. Despite heavy capital expenditure, the surge in operating cash flow and equity funding more than compensated for the investment outflows. This indicates that the company successfully balanced its expansion needs with liquidity management.

Consolidated Financial Ratios of ESDS Software Solution Limited

Summary of the financial ratios of ESDS Software Solution Limited for the year 2025 and 2024:

Current Ratio

The current ratio improved to 2.32 in FY 2025 from 1.70 in FY 2024, reflecting a much stronger liquidity position. This means the company now holds more than twice the current assets against its current liabilities, ensuring it can comfortably meet short-term obligations. The jump indicates better working capital management and a healthier balance sheet.

Debt-Equity Ratio

The debt-equity ratio declined significantly to 0.15 in FY 2025 from 0.66 in FY 2024. This sharp fall highlights a major reduction in debt levels relative to equity. The company has deleveraged, either by repaying borrowings or through infusion of equity capital, which makes the balance sheet more resilient and lowers financial risk.

Debt Service Coverage Ratio (DSCR)

The DSCR surged to 7.00 in FY 2025 compared to just 1.59 in FY 2024. This means the company now generates seven times the cash required to service its debt obligations, versus barely covering them last year. Such a strong improvement shows that ESDS is now in a very comfortable position to meet interest and principal repayments.

Return on Equity (ROE)

Return on equity rose to 17.27% in FY 2025 from 6.23% in FY 2024. This indicates that shareholders are now earning nearly three times the return they did in the previous year. The jump in ROE reflects higher profitability and more efficient use of equity capital, signalling strong value creation for investors.

Trade Receivables Turnover Ratio

The trade receivables turnover ratio slightly declined to 4.28 in FY 2025 from 4.54 in FY 2024. This suggests that collections from customers have become a bit slower, meaning the company is taking slightly longer to realize cash from credit sales. While not a major concern, it will need close monitoring to avoid liquidity issues.

Trade Payables Turnover Ratio

The trade payables turnover ratio improved to 4.29 in FY 2025 from 3.90 in FY 2024. This means the company is paying off its suppliers more frequently than last year. While this reflects stronger liquidity, it may also suggest that the company has less credit support from suppliers and is relying more on its own cash flows.

Net Capital Turnover Ratio

The net capital turnover ratio dropped to 2.24 in FY 2025 from 3.28 in FY 2024. This decline shows that the company is generating lower sales per unit of capital employed. It could be due to higher investments in capital or working capital that have not yet translated into proportional revenue growth.

Net Profit Ratio

The net profit margin jumped to 15% in FY 2025 from just 4.75% in FY 2024. This indicates a substantial improvement in overall profitability, as the company is now retaining a larger share of revenue as profit. The margin expansion shows better cost management and stronger operational efficiency.

Return on Capital Employed (ROCE)

ROCE improved to 24.73% in FY 2025 from 14.53% in FY 2024. This indicates that the company is now generating higher returns from the total capital employed in the business. The improvement shows efficient use of both debt and equity capital, highlighting overall operational and financial strength.