New Delhi: The initial public offering (IPO) of eMudhra Limited, valued at Rs 412.79 crore, opened for subscription on Friday 20th May. The company sells its shares in the range of Rs 243-256 per share.
eMudhra is India’s largest licensed Certificate Authority. The company’s business is divided into two pillars – digital trust services and enterprise solutions.
The Company aims to raise Rs 161 crore crore through the issuance of new shares while existing shareholders and promoters will issue 9,835,394 shares for a total value of Rs 251.79 crore.
The issue can be subscribed until May 24th. Investors can subscribe to the issue by placing a bid for at least 58 shares and multiples thereof.
The net proceeds from the re-issuance will be used to prepay or repay part or all of the existing loans, working capital requirements, equipment purchases and establishment of data centers across India and overseas.
eMudhra has strong expertise in Digital Signature Certificates and is the only Indian company to be directly recognized by reputable browsers and document processing software companies such as Microsoft, Mozilla, Apple and Adobe.
The company has issued over 50 million digital signature certificates through its network of 88,457 channel partners across India. As of September 30, 2021, the company serves 36,233 private customers and 563 companies.
The company reported a profit of Rs. 25.36 crore in the 2020-21 financial year, up from a net loss of Rs. 18.41 crore in the previous year. Its revenue increased from Rs 116.8 crore to Rs. 132.45 crore during the period.
It posted a profit of Rs.30.34 crore for the nine-month period ended December 2021, with total revenue of Rs.138.30 crore for the same period.
eMudhra has allotted 48,37,336 shares to anchor investors at Rs 256 per share, bringing the transaction size to Rs 123.83 crore, according to a circular uploaded to the BSE website.
Aditya Birla Sun Life Mutual Fund (MF),
MF, Nippon India MF, MF, Baring Private Equity India, Hornbill Orchid India Fund, Pinebridge India Equity Fund and Abakkus Growth Fund are among the investors subscribing to the anchor book.
The quota for retail investors in the eMudhra IPO was set at 35 percent of the net offering. The QIB quota is fixed at 50 percent while the quota for NII is reserved at 15 percent.
IIFL Securities, Yes Securities and Indorient Financial Services are the underwriters of the offering, while Link Intime India is the registrar of the offering.
Brokers have mixed opinions on the subject. A majority believe the company is number one in the growing digital segment, while others say valuations are fully priced in and leave no room for further upside.
Let’s take a look at what brokers have to say about eMudhra’s IPO:
angel one
Rating: Neutral
eMudhra has an established position as a licensed certificate authority with a strong network of channel partners and a diverse customer base, and will use a portion of the proceeds from the IPO to grow in overseas markets and improve its data center infrastructure, Angel One said.
“However, the scale of operations is relatively modest and the market for digital security and paperless transformation is highly competitive,” it added, giving the topic a Neutral rating.
selection mediation
Rating: Subscribe with caution
There are no publicly traded competitors doing business similar to the company. At a higher price range, it’s asking for a PE multiple of 114.5x, which seems high, Choice Broking said in its pre-IPO announcement.
Extrapolating the 9-month performance of FY22 on an annual basis results in the required P/E multiple of 49x. Also in light of the current turmoil in the global stock market, she added a rating of “subscribe with caution” to the issue.
Marwadi Financial Services
Rating: Subscribe
The company is trading at a P/E of 78.81x and a market capitalization of Rs 1,998.7 billion, the brokerage firm said. “There are no listed companies in India that are comparable in all aspects of the business and the services that the company offers,” it added.
The brokerage firm has given the issue a “Subscribe” rating as the company is the largest licensed certificate authority in India with a 37.9 percent market share in the digital signature certificate market and considering the future growth potential of the company.
securities
Rating: Not rated
eMudhra has strong finances, a leadership position in digital signature certificates and digital trust services, a vast network of Indian and global channel partners, a growing client base and an experienced management team, the brokerage firm said.
“However, the aggressively priced IPO leaves little that makes sense for medium-term investors,” she added, without evaluating the issue.
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