eMudhra Ltd.: Avoid

eMudhra Ltd.: Avoid
  • Date

    20 May 2022 - 24 May 2022

  • Price Range

    ₹243 - ₹256

  • Minimum Order Quantity


  • (D) RHP


eMudhra Limited was incorporated on June 2006. It is India’s largest licenced Certifying Authority (“CA”). The company’s business is divided into two verticles Digital Trust Services and Enterprise Solutions. eMudhra Limited is engaged in the business of providing services like individual/ organizational certificates, digital signature certificates, SSL/TLS certificates and device certificates, a portfolio of digital security and paperless transformation solutions, multi-factor authentication, mobile application security, website security testing, IT policy assessment, etc. The company has strong digital signature certificate expertise and 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 it to sell digital identities to individuals and organisations worldwide and issue SSL/TLS certificates for website authentication. The company has issued over 50 million digital signature certificates through the network of 88,457 channel partners spread across India. As of September 30, 2021, the company is serving 36,233 retail customers and 563 enterprises.
Objects of the issue:
The net proceeds from the Fresh Issue are proposed to be utilized by the company for the following objects:
  • Repayment or pre-payment, in full or in part of all or certain borrowings.
  • Funding working capital requirements.
  • Purchase of equipments and funding of other related costs for data centers proposed to be set-up in India and overseas locations
  • Funding of expenditure relating to product development
  • Investment in eMudhra INC for augmenting its business development, sales, marketing and other related costs for future growth
  • General corporate purposes.
Investment Rationale:

Largest licensed Certifying Authority in India

Extensive experience of the promoter in the information technology industry and Emudhra Limited’s (Emudhra) established track record of operations and strong market position as a leading licensed certifying authority for issuing digital signature certificate (DSC) in India, supported by its wide sales and distribution network across the country. Its diversified customer base in the DSC segment given it is largely retail in nature and established relationship with reputed customer base and strong order book in the enterprise solutions segment. Further, the company has invested a total amount of ~INR 303mn in its overseas subsidiaries to increase its market share in the foreign market. At the upper end of the price band, the issue is valued at a P/E of 96x based on FY22 annualized sales, which we believe is fully priced. Therefore, we suggest investors to “Avoid” this issue.