The initial public offering (IPO) by digital signature certificate provider eMudhra opened for subscription on May 20 to raise around Rs 413 crore from the primary market. The company has fixed a price band of Rs 243-256 per share for the public issue which will close on May 24, Tuesday. The ongoing public offer got subscribed 24 per cent on the first day of offering till 11.24 am (IST).
The IPO is a combination of a fresh issue and OFS (offer for sale) portion. eMudhra will not receive any proceeds from the OFS portion. Of the fresh issue net proceeds, Rs 46.4 crore to be used for setting up data centres, Rs 40.2 crore will be utilised to fund the working capital, Rs 35 crore will be used for the repayment or prepayment of the borrowings, Rs 15.3 crore to be used for augmenting business development in the US and another Rs 15 crore to be used for product development.
The company is the largest licensed certifying authority in India with a market share of 37.9 per cent in the digital signature certificate market space. It is the only Indian company to be admitted as a member of the European Cloud Signature Consortium as well as Certifying Authority/Browser Forum, a global forum that governs the use of SSL/TLS certificates.
eMudhra is the only Indian company to be directly recognised by renowned browsers and document processing software companies such as Microsoft, Mozilla, Apple and Adobe, allowing the company to sell digital identities to individuals or organisation and issue SSL/TLS certificates for website authentication, globally.
Also read: eMudhra IPO to open for public subscription on May 20
Select brokerages have given a ‘Subscribe’ rating to the issue. Here’s what they have to say:
Hem Securities: Subscribe
Despite being just 12 years in the market, eMudhra has better brand recognition and a stronger channel partner relationship. Looking after the decent financial performance of the company and unique business model, Hem Securities recommends a “Subscribe” rating to the issue.
Also read: eMudhra collects Rs 124 crore from anchor investors ahead of IPO
Choice Broking: Subscribe with caution
The Covid-19 pandemic has forced organisations to the faster adoption of digital solutions like digital identity, security, and paperless transformation solutions. Choice Broking feels that this trend will continue and players like eMudhra, which is a “one-stop-shop” player in secure digital transformation is expected to benefit from the growth in the addressable market.
There are no listed peers having businesses similar to the company. At a higher price band of Rs 256, the company is demanding a P/E multiple of 114.5 times (to its FY21 earnings of Rs 2.2 per share), which seems to be high. Annualising the 9M FY22 performance, the demanded P/E multiple comes out to be 49 times. Also considering the current turbulence in the global equity market, Choice Broking assigns a “Subscribe with Caution” rating for the issue.”
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