eMudhra IPO Opens Today: eMudhra Limited, the largest licensed certified authority (CA) in the digital signature certificates market in India, opens for subscription on Friday, May 20 and will close on May 22. eMudhra intends to garner about Rs 413 crore through fresh issue of equity shares aggregating up to Rs 161 crore and an offer for sale of 9,835,394 equity shares aggregating up to Rs 252 crore by the shareholders and promoters. The company is engaged in the business of providing digital trust services and enterprise solutions like individual/organizational certificates, digital signature certificates etc.
The firm on Thursday said it has raised Rs 124 crore from anchor investors ahead of its initial public offering. Aditya Birla Sun Life Mutual Fund (MF), Motilal Oswal MF, Nippon India MF, SBI MF, Baring Private Equity India, Hornbill Orchid India Fund, Pinebridge India Equity Fund and Abakkus Growth Fund are among the investors that participated in the anchor book.
eMudhra IPO: Objective
The proceeds from the IPO will be used to repay debt, funding working capital, buy equipment for data centers, investment in eMudhra INC for augmenting its business development, sales, marketing and other related costs to growth. The company intends to purchase equipment and set up data centers across India and overseas, for which it will be using Rs 46.36 crore from the fresh proceeds of the issue; Rs 15 crore will be utilized for funding product development, Rs 15.3 crore will be used for augmenting its business development, sales, marketing and other related costs for future growth and other general corporate purposes.
eMudhra IPO: Lot Size and Price Band
eMudhra Ltd in its DRHP has mentioned that at the upper end of the price band, the eMudhra IPO is likely to fetch Rs 412.79 crore. This is including a fresh issue of Rs 161 crore, and an Offer for Sale of 98.35 lakh shares by promoters and existing shareholders. Bidders will be able to bid for a minimum 58 shares for one lot, and in multiples of 15 thereof. This means that investors have to pay a minimum of Rs 14,848 for one lot at the upper end of the price band.
Also, the firm has fixed a price band of Rs 243 to Rs 256 per equity share for its Rs 413-crore Initial Public Offering (IPO).
eMudhra IPO: GMP Today
As per market observers, eMudhra shares are commanding a premium (GMP) of Rs 8-10 in the grey market. However, stock market experts suggested to investors that GMP is unofficial data, which is non-regulated. So, those who follow GMP are advised to go through the financials of the company as well because the balance sheet of the company will give a better picture of the company’s fundamentals.
Shares of the company are expected to list on the stock exchanges BSE and NSE on June 1, 2022.
eMudhra IPO: Financials
eMudhra Ltd has a market share of 37.9 per cent in the digital signature certificates market space in financial year 2021 having grown from 36.5 per cent in Financial Year 2020. Some of its customers include Infosys, Tata Consultancy Services, Mashreq Bank, Baud Telecom Company, Cholamandalam MS General Insurance Company and Bharti AXA Life Insurance Company.
eMudhra IPO: Should You Subscribe?
“The scale of operation is relatively modest and digital security and paperless transformation market is highly competitive. At the upper end of the price band, the post issue FY22 annualized P/E works out to 49.0x which we believe is factoring the positives. Hence, we recommend a Neutral rating on the issue,” said brokerage Angel One.
eMudhra is the largest licensed certifying authority in India, engaged in the business of providing digital trust services and enterprise solutions to individuals and organisations.
Choice Equity Broking, in its IPO note, said: “There are no listed peers having business similar to EML. At a higher price band of Rs. 256, the company is demanding a P/E multiple of 114.5x (to its FY21 earnings of Rs. 2.2 per share), which seems to be high. Annualizing the 9M FY22 performance, the demanded P/E multiple comes out to be 49x. Also considering the current turbulence in the global equity market, we assign a “Subscribe with Caution” rating for the issue.”
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