Thank you for sharing your summary of the meeting with E2E management and the company update.
They mention that they are targeting “foreign cloud providers” on the aspect of “compliance with national and industry regulations.”
Do you have any information on
What exactly are these national and industry regulations? Are they referring to any specific notifications or laws?
What exactly prevents foreign cloud providers such as AWS, Azure etc from complying with these regulations (they have data centers in India so data location can’t be it).
Foreign players do not permit banks or the RBI to conduct physical audits of their data centers, making it impossible to verify whether the data is genuinely stored in India. However, the RBI has mandated that banks must perform physical audits to ensure compliance.
Disclaimer: This information has been provided by a leading cloud provider in India.
This is really good news and positive for e2e networks. From current 30 MW to 150MW in:2 years more than 100% cagr growth and it would indirectly benefit e2e
"While Chennai has a huge potential for expansion, L&T’s data centre arm plans to set up 30 MW data centre in Panvel, where it has a 7-acres land parcel.
In Bengaluru and Mahape in Navi Mumbai, capacities of 30 MW each are coming up, she said.
At Chennai, around 8 MW capacity was already leased out, while the remaining capacity is under discussion for leases."
If I assume 4Q revenues and PAT would be same as 3Q in FY25, then FY25 revenue and PAT would be Rs 173 crs and PAT would be = 46crs
The above 3 adds Rs65crs to revenues of FY25 of Rs 173crs. This has no numbers from the AI GPU mission tender win and the business L&T plans to move to this company.
L&T is not a fool to pay Rs 3622/ share. They had obviously decided the valuation after factoring in the business they will move to E2E which will benefits their investment in E2E and provide the L&T group cost savings from moving business from AWS to E2E gradually.
Please note L&T started as a engineering firm, but created value in everything they invested over the years: cement, finance and most importantly in L&T Infotech, L&T Tech Services and Mindtree.
FOMO and Surplus cash can make even smart managements of large firms do foolish things. Stock market history is littered with not so clever deals in hindsight. Given the strategic nature of the deal, this might turn out to be good for them over the long run even if they overpaid.
If L&T had to develop the AI and cloud infrastructure then it could have taken some time and there could be chances that some other companies might get first mover advantage.L&T had the money and E2E had the infra so it was a win win situation for both the companies. In my opinion AI is still at a nascent stages in India and might have huge impact in the coming years. I am not a technical guy but people in IT sector are already feeling the pain and are on their toes to adopt AI in their BAU activities. We can’t predict anything but i think E2E can show good growth going forward if everything goes as planned. No one had predicted the growth of Bajaj finance including me and sold it off after getting meagre returns . Hope we as a nation grow in the field of innovation and become a global leader in the adoptation of AI.
L&T’s investment in E2E is insignificant as a percentage of the group’s networth. The purpose of the investment is probably to have a say in the running of a promising business, and get synergy benefits for their other businesses. It’s very unlikely they are going to be looking at capital gains on the share price over the next 3 to 5 years, which I assume is what most retail investors are looking for. I believe small investors like us need to weigh other opportunities before we decide to invest in a company that, while promising in the long term, looks expensive for the medium term. It may still end up justifying the valuations with perfect execution, but I can’t see any margin of safety in case there are hiccups along the way.
Launch of Cloud Services by Tata Comm…Can Cloud experts answer what are differentiators between the new service offered and what E2E offers.
Tata Communications Vayu Cloud offers a unified ecosystem that seamlessly connects cloud to edge, data to AI, and security to connectivity, eliminating complexity across the enterprise. It is optimised for performance, delivering efficiency, cost savings, and adaptability—evolving in real time to meet dynamic business needs. In this purpose-built solution, data moves without friction, insights drive decisions, and technology integrates effortlessly.
Since the growth driver is perceived to be AI, I looked at the GPU provisioning offering across both and E2E has a much wider variety. Vayu currently only has H100 and L40S while E2E has H200 (latest gen), H100, A100, A40, A30, L40S, L4 etc.
However, it is trivial for Tata to provision these GPUs and are probably already in the process.
In general there are no differentiators among cloud service providers in service offering - all of them offer the main services and only a few minor services may differ from provider to provider.
The main differentiators are developer familiarity and cost.
If this is the case and with Tata Comm having much larger enterprise sales bandwidth and ability to cross pollinate with their networking and other services, competition will certainly increase.
If we look at top enterprises using Big 3-4 cloud services and people like Tata comm and others targeting the next layer…where does that leave E2E. I am certain Tata comm will also provide all developer tools etc.
E2E can certainly compete with help from L&T and LTI, but is it enough or it becomes dog eat dog with nothing left for shareholders.
So a good way to think about it is that every company that needs to use the cloud defaults to AWS, Azure and GC in that order because these are the platforms that developers are most familiar with.
Now why would a company not want to use one of these?
Cost - Nevertheless, server, database etc costs are very minimal part of almost all companies overall expenses except for stuff requiring lots of compute (which is basically AI). However, even here E2E and all other Indian clould service providers have to compute against hyperscalers all over the world who can innovate and pick locations close to cheap electricity/generate their own from cheap natural gas/small nuclear so its very hard for E2E to compete on costs.
Regulation - This is pretty much what E2E is going for, as evidenced by the launch of their “Sovereign Cloud”. I haven’t dived very deeply but once again, it is not clear to me why AWS, Azure, GC can’t just comply with this (another commentator mentioned that AWS/Azure/GC don’t allow on-site audits but they can just change it and allow). This doesn’t seem a very strong moat. Also, doesn’t protect them from other domestic competitors of which they are many (we are hearing only about public ones such as Tata and Jio Platforms but there are dozens of private ones as well in India).
To me, the play here is that L&T TS (Artificial Intelligence | L&T Technology Services) gets a lot of business in their AI segment from India itself and they use E2E’s cloud platform. (For international business, it looks like they already have a tie up with GC).
Disc: This is all prelim research based off my knowledege of the industry. I haven’t yet done a deep dive into the company’s financials etc and synergies with LTIM and LTTS. Will update thread with my thoughts when I do Disc: Not invested
and it would indirectly benefit e2e
