Though we must note that the infra industry that Sanghvi movers is in is not expected to jump the way AI as a space can deliver in the years to come. If you believe that AI will take over the world, then E2E networks is in an interesting space. The 40 crore numbers also ignores Sovereign AI and the LnT expansion.
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I am not sure whether GPU obsolescence is a big deal. At least it isn’t anything particularly new to cloud services - almost all computer hardware has a shelf life of around 3-5 years (if you check the depreciation schedules in the financials for major cloud service providers, average will be be between this range).
Think about your laptops, phones - a 4 year phone or laptop feels antiqued. Most of us churn our personal gadgets within 3-5 years - hardware is no different, GPU or not. In fact, a lot of this stuff happens without the customer even being aware of it in case of IaaS/PaaS.
To me, the major risks are
- Demand is transient, not sticky - Essentially, you have 2-3 years of very intense training demand and then all models kinda reach their max capability and so training demand ramps down significantly. So you’d have E2E’s revenues spike for 2-3 years and then drop back down to baseline.
- Competition - It is, at the end of the day, an extremely competitive space with no moats and everything comes down to who can execute the best. So even if demand is sticky, they need to get sticky customers who continue to use E2E over years rather than switching to another cloud service provider. For example, OpenAI just recently choose Oracle over MSFT data centers for a large part of their upcoming training and inference.
Disc: Not invested
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Demand is transient and competition is high, along with that life of GPU is only 3 to 4 yrs.. that makes it even worse since one does not have enough time to recover in case business goes through rough patch for a year or so.. not enough room for safety at such high PE.
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Hi Hitesh,
Any insights on why the promoter pledge is so high at almost 55%? Haven’t heard this discussed on any of the recent calls. Since you plan to meet with him on the sidelines of the Sovereign Tech conference, could you please check with him on this point?
Thanks in advance
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It’s not a pledge. It’s encumbrance which restricts E2E to further transfer the stake without obtaining permission from LnT.
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Aware of a friend who has secured a seat. Will post an update here soon. If anyone has specific questions, feel free to let me know and I will convey them ahead.
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e2e networks shared their analyst and investor presentation yesterday. it covers ai cloud platform growth, gpu capacity expansion, and updates on their strategic partnership with l&t.
if you enjoy reading in a visual format, this is for you.
e2e.pdf (4.5 MB)
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Some questions on cloud platform
- Can we get a difference between E2E SCP vs VMWARE. Because any multi national company would prefer big company because of mission critical Data stored in their cloud.
- Can SAP or any other enterprise software be easily integrated with cloud platform ? Because Migration is still a large market globally
- Any corporation/enterprise/startup using their platform ? And how is the feedback?
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