E2E is down from 5500 to now 2200. And last 11 sessions giving lower circuits, every day there are 2-3 lakh sell orders pending.
What is wrong that is causing this, can it be trusted?
its overvalued as per many people. current PE is 117 and 3 year median PE is 57 (as per screener.in). which means more 50% fall to get to that PE.
from technical POV, it looks like itâll keep falling more and next support is between 1500-1800 range.
i dont mind holding it but due to LC canât get out even temporarily for the purpose of tax loss harvesting.
Apart from the higher valuation that E2E still commands, Iâm also concerned about L&T as a partner. We all know how L&T acquired Mindtree. Question is will they pull a similar stunt given that they had invested at an elevated level and are feeling negative about this whole partnership/investment.
We wish to inform that the Company has been empaneled by IndiaAI (Independent Business Division) within Digital India Corporation under Ministry of Electronics & Information Technology, Government of India as per their Letter of Intent dated February 07,2025.
The same is for providing AI Services on cloud under various services such as AI Compute units , Networks Services and Storage services.
Furthermore, the company is the lowest bidder (L1) in certain categories of AI compute and Network services and can match the L1 Rates in other categories offered in which the Company is not the lowest bidder.
The objective of this empanelment is to make Al compute, network, storage, platform and other cloud services available at an affordable rate to the Indian users comprising academia, researchers, startups, MSMEs, PhD scholars, students both UG and PG, industry and government departments and agencies.
This AI compute platform will facilitate development of AI tools, products, solutions, Indiaâs foundational models, SLM, LLM, LMM, benchmarking of AI applications in varied domain sectors and Al related innovations. This will accelerate AI computational activities in the country benefitting the masses and digital economy.
is it positive or negative for E2E?
Its good PR to showcase companyâs capabilities but margins with the lower than the usual business.
Let us assume you are doing 50crs ebitda on existing businesses at 50% margins.
Now for new incremental business you do 150crs EBITDA at 10% margin. Is that a negative?
Of course not.
Because your EBITDA is going from 50crs to 50cr +150crs which is a 4x jump.
Now just because you are making only 10% margin on bulk buyer (Government of India) business can the small volume business guy demand lower price. No they cant because you are already the cheapest.
If you understand the above, you will understand why this tender is a big deal.
Can you please give the source where you got the 150 cr number?
Part 2 on my first hand experience with E2E Networks product.
A few weeks after not deciding to move our web server for a new product weâre building to E2E, I decided to revisit their Database offering as the Database on DigitalOcean, although convenient, did not offer an integrated backup solution making us resort to another spinoff (i think from the same company) called SnapShooter, while E2E did.
There were 2 major issues:
- We spun a 16GB RAM 4 vcpus DB server, and connected it to our development server. Even with just internal traffic (no public access), the DB shot to 100% RAM. On looking into it, we found E2E out of the box just assigned 256 MB RAM out of 16 GB to be used on the DB server even when this is a managed Database service and we wouldnât be running anything on it except the DB. This is undocumented and not the default behaviour across ALL such providers.
- After looking into the server stats, we found that stats being reported were of a basic server and not DB server stats even though the documentation showed a completely different set of stats that would be relevant to a DB server. I personally raised a ticket, but E2E failed to have it fixed for over 30 hours after which i spun down the server making note of the speed of issue resolution. For those not technically inclined, itâs like I wanted to know whatâs the temperature was for today and E2E only kept providing me the rainfall stats and claimed itâll give me temperature but couldnât fix it.
To clarify, this stats issue was an issue out of the box with E2E. We didnât install anything, or change any configuration. On other services, things just work.
Finally the stats that were present would suddenly disappear with âno data availableâ and would only get updated once per hour when they were available. For comparison, on DigitalOcean, theyâre updated every 15 seconds. I got several calls from the support team to restart the server (which they could have done themselves). After the restart didnât fix it, they said, âthis restart was not to fix it, it was a part of the process of fixing itâ. Happened twice.
My knee-jerk thought as a consumer was, âNow I know why theyâre one of the cheapest in the marketâ. At that moment, I was embarrassed with myself as a small owner of the company.
Last nail in the coffin was when I was spinning up new server and found Hetzner (German company) was providing an insanely cheaper servers for us to use. We donât handle sensitive info and request speed is not a priority as our product has most load on the backend doing number crunching, so the location of the server is not the biggest consideration. Now we have our prod server in Germany at half the price of DigitalOcean AND E2E.
To be brutally honest, from my experience, E2E does not stand anywhere in quality and reliability of their product next to global competitors. Yes, even when compared to small scale providers like Linode and DO. That is the harsh truth.
Due to personal time constraints, Iâm unable to give time reconsider my position in this company but I sure am not as committed as I was before I signed up. For a litmus test, if I were to recommend a hosting service to a friendâs startup, E2E would not be on that list.
Gotchas:
- I only tried out their hosting/webserver/DB services, nothing to do with AI workloads which is the focus currently
- My case could be one in a million. Computers are machines, they breakdown and misbehave.
- Not everyone is equally adept, my ticket could have gotten assigned to bottom 10% engineer in the company.
To anyone with the experience do share or if you have the know-how and resources, please do sign-up on E2E and let me know your experience.
Disc: Still invested.
E2E has Rs 1334crs of cash. Market cap is Rs 4146 cr. EV is Rs 4146 crs + 100cr - 1334 crs = Rs 2912 crs. (Formula for EV = Market Cap + Gross Debt - Cash)
If I extrapolate 3Q EBITDA in 4Q, company will do 108 crs EBITDA in FY25. Company is trading 26.9x FY25 EBITDA.
The only listed profitable and cash generating Indian hyperscaler in India which has a decade plus growth runway.
Clearly small and microcap investors are assuming the world is ending.
- The problem is not related to valuation but with the growth. Since past 3 quarters revenue is around 42 cr . So where is the growth.
- A Significant percentage of startups are using E2E cloud . Given competetion is increasing , overtime ROCE will tend to decrease.
- Also Deepseek emergence and sam latest comment (10x dec in tokens in every 2 year) , GPU usage may decrease as previously envisaged.
Given same revenue for 3 quarters it seams to be the case of PEAD
E2E Networks : Statuary Auditors - M/s. GSA & Associates LLP
Below article published on Jan 19, 2025 related to above auditor sort of aligns with recent slide in stock price
During the 1960s, there were large room size computers to perform operations a million times slower than your smartphone. Even something like DeepSeek cannot and will not be able to stop the development of AI. You need to understand that we have not reached true AI yet. There will need massive RnD for better chips, more better algorithms to advance AI. So AI and chips are here to stay. Will valuations remain they way they are? Thatâs a good question, but with E2E being such a large player in getting AI to the masses, it would not make sense to think itâs game over for them.
I think they need to work on their technical skills and customer relations as how the @Randoinvestor gave constructive criticism of their offerings. Though I have also heard positive reviews of E2E from others. As they say, price drives story and now the 60% fall brings doomsday outlooks
I donât think Deepseek is necessarily bad news for E2E. As long as the technology powering AI is Transformer, the need for cheaper and cheaper hardware to run the inference will be required. Few companies would want to inhouse the infra for it. Itâs bad news for openai. Bad news for nvidia. But not for E2E. They are not beholden to Nvidia. Theyâll sell whatâs in demand. If itâs H100, then thatâs whatâll sell. If tomorrow transformer tech is deprecated with another methodology emerging then thatâs what E2E will sell.
They sell the shovel. Others can look for gold.
Correct but it is still a risk to E2E as in a lot of capex would suddenly become useless or in less harsh words, suboptimal. But even then, it would be hard to go against NVIDIA and there are many tailwinds like Indian data within India along with AI and Indiaâs AI mission which will hopefully expand. India cannot risk missing out on the AI revolution! Inspite of India being a â3rd world countryâ we have undertake great strides in Space, so I do not think that India will miss AI too. Again, E2E should focus on offering the best service and hopefully what you faced does not happen to customers in the future.
This is what I call as shoot a conspiracy theory and run. Now some random stuff on statutory auditors.
E2E is no longer a tiny SME stock with less credentials. A Nifty 50 large cap giant L&T invested in it. You think they have done no due diligence before investing?
Interestingly E2E also had venture capital investments from Blume Ventures in the beginning. You think they did not clean up stuff in the company when they were invested.
HP [ current mcap $ 30 Billion ] wrote off about $ 8.8 Billion after taking over Autonomy - HP Alleges Fraud In Autonomy Deal; Takes $8.8B Charge; Shrs At 10-Year Low (Updated)
Byjus - with top investors like General Atlantic, Prosus, Peak XV and valued at about $ 22 Billion at peak is now valued at zero by promoters
One can search for many more such examples.