Please refer to important disclosures at the end of this report
1
Incorporated in 2008, eMudhra is largest licensed Certifying Authority in
India with a market share of 37.9% in the digital signature certificates market
space in FY2021 having grown from 36.5% in FY2020. It is engaged in the
business of providing Digital Trust Services and Enterprise Solutions to
individuals and organizations functioning in various industries. It has strong
digital signature certificate expertise and is the only Indian company to be
directly recognized by renowned browsers and document processing
software companies such as Microsoft, Mozilla, Apple, and Adobe, allowing
it to sell digital identities to individuals and organizations worldwide and issue
SSL/TLS certificates for website authentication.
Positives: (a) Largest licensed Certifying Authority in India (b) One stop shop
solution provider in secure digital transformation (c) Diverse, longstanding,
and growing customer base (d) Partnerships with leading Indian and global
channel partners and enterprise solution partners. (d) Experienced
promoter, board of directors and senior management team
Investment concerns: (a) Success largely dependent on company’s ability
to anticipate, adapt and respond effectively to the technological changes,
evolving industry standards and changing regulations as well as on success
of its R&D. (b) High Dependence on technology for carrying out its business
activities. (c) Highly competitive industry
Outlook & Valuation: eMudhra has an established position as licensed CA
with a strong network of channel partners, a diverse customer base and it
will be using part of the IPO proceeds to grow in overseas markets as well
improve its data center infrastructure. However, 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.
Key Financials
FY2019
FY2020
FY2021
9MFY22
102
116
132
137
--
14.6
13.0
--
17
17
17
31
--
(4.5)
4.9
--
31.7
27.4
30.3
35.9
2.2
2.1
2.2
3.9
114.6
120.1
114.5
--
26.4
21.7
18.6
--
23.1
18.1
16.3
--
15.0
11.5
13.1
--
62.8
63.6
51.1
--
19.9
17.4
15.5
--
Angel Research; Note: Valuation ratios based on post-issue shares and at
`
256per share.
NEUTRAL
Issue Open: May 20, 2022
Issue Close: May 24, 2022
Fresh Issue: `161cr
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 61.0%
Public 39.0%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `23.05cr
Issue size (amount): `413cr
Price Band: `243-256
Lot Size: 58 shares
Post-issue mkt.cap: `1,905* 1,999cr**
Promoter holding Pre-Issue: 71.19%
Promoter holding Post-Issue: 61.03%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Offer for sale:`252cr
Issue Details
Face Value: `5
Present Eq. Paid up Capital: `36cr
Yash Gupta
yash.gu[email protected]elbroking.com
eMudhra Limited IPO
f
IPO Note |IT
May 18, 2022
eMudhra Limited | IPO Note
May 18, 2022
2
Company background
eMudhra is a licensed certifying authority under the Information Technology
Act,2000, founded in 2008 from the seed of digital signatures. eMudhra has
since grown to establish strong roots in solutions providing security to
enterprises and end consumer for online transactions and in paperless
transformation. eMudhra’s products include digital signature certificates,
authentication solutions, paperless office solutions and Certifying Authority
solutions. It also offers solutions around PKI technology and digital
transformation.
eMudhra is the largest licensed Certifying Authority in India with a market
share of 37.9% in the digital signature certificates market space in Financial
Year 2021 having grown from 36.5% in Financial Year 2020.
Its two business verticals are Digital Trust Services and Enterprise Solutions. As
part its Digital Trust Services, it issues a range of certificates including
individual/organizational certificates, SSL/TLS certificates and device
certificates (used in IoT use cases) to build a digital trust backbone. Under
its Enterprise Solutions vertical, company offers a diverse portfolio of Digital
Security and Paperless Transformation Solutions, complementing its Digital
Trust Services business, to customers engaged in different industries, thereby
making the Company a ‘one stop shop’ player in secure digital
transformation.
Issue details
eMudhra is raising 239-`252cr through OFS and 161cr through Fresh
Issue in the price band of 243-256per share.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
5,68,43,956
79.19
4,76,45,946
61.03
Public
1,49,39,353
20.81
3,04,26,426
38.97
Total
7,17,83,309
100.00
7,80,72,372
100.00
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
Repayment or pre-payment, in full or in part, of all or certain
borrowings availed by the Company
Funding working capital requirements
Purchase of equipment’s 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 purpose
eMudhra Limited | IPO Note
May 18, 2022
3
Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
9MFY22
Total operating income
102
116
132
137
% chg
--
14.6
13.0
--
Total Expenditure
69
85
92
88
Operating expenses
32
38
32
34
Employee benefits expense
26
29
42
35
Other expenses
12
18
18
19
EBITDA
32
32
40
49
% chg
--
(0.9)
25.0
--
(% of Net Sales)
31.7
27.4
30.3
35.9
Depreciation& Amortization
9
9
9
10
EBIT
24
23
31
39
% chg
--
(1.6)
33.5
--
(% of Net Sales)
23.3
20.0
23.7
28.5
Finance costs
0
1
1
3
Other income
0
0
1
1
(% of Sales)
0.1
0.3
0.7
0.8
Recurring PBT
23
23
30
36
% chg
--
(3.3)
33.7
--
Exceptional item
2
-
-
-
Tax
4
5
6
6
Non-Controlling Interest
-
2
8
(0)
PAT (reported)
17
17
17
31
% chg
-
(4.5)
4.9
-
(% of Net Sales)
17.2
14.3
13.3
22.3
Basic & Fully Diluted EPS (Rs)
2.2
2.4
3.2
3.9
Source: Company, Angel Research
eMudhra Limited | IPO Note
May 18, 2022
4
Consolidated Balance Sheet
Y/E March (` cr)
FY2019
FY2020
FY2021
9MFY22
SOURCES OF FUNDS
Equity Share Capital
35
35
35
35
Other equity
41
57
72
105
Shareholders’ Funds
76
92
107
140
Total Loans
28
41
51
58
Other liabilities
4
6
15
5
Total Liabilities
107
139
174
204
APPLICATION OF FUNDS
Property, Plant and Equipment
15
15
66
66
Right-of-use assets
-
-
13
11
Capital work-in-progress
22
40
4
22
Intangible assets
47
47
46
51
Non-Current Investments
0
0
14
-
Other Non-Current Asset
1
2
4
8
Current Assets
35
53
45
95
Inventories
0
1
1
2
Investments
-
0
0
-
Trade receivables
21
23
15
53
Cash and Cash equivalents
2
9
8
14
Loans & Other Financial Asssets
3
3
3
3
Other current assets
8
16
19
23
Current Liability
12
20
18
50
Net Current Assets
23
34
27
45
Total Assets
107
139
174
204
Source: Company, Angel Research
eMudhra Limited | IPO Note
May 18, 2022
5
Consolidated Cash Flow Statement
Y/E March (`cr)
FY2019
FY2020
FY2021
9MFY22
Operating profit
22
23
31
37
Net changes in working capital
(10)
(4)
5
(26)
Cash generated from operations
9
8
8
11
Direct taxes paid (net of refunds)
(3)
(4)
(4)
1
Net cash flow from operating activities
17
23
41
23
Purchase of Assets
(38)
(23)
(21)
(34)
Interest received
0
0
1
0
Others
6
(6)
(27)
4
Cash Flow from Investing
(32)
(29)
(47)
(30)
Repayment (long term borrowings)
8
7
(4)
0
Repayment (short term borrowings)
3
5
(4)
14
Share issue expenses
-
-
-
-
Interest paid
-
-
(0)
(1)
Interest on Lease liabilities
-
-
15
(2)
Dividend Paid
(0)
0
(3)
3
Cash Flow from Financing
10
12
5
13
Inc./(Dec.) in Cash
(5)
7
(1)
6
Acquisition
-
-
-
-
Opening Cash balances
7
2
9
8
Closing Cash balances
2
9
8
14
Source: Company, Angel Research
eMudhra Limited | IPO Note
May 18, 2022
6
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
114.6
108.5
78.8
P/CEPS
77.1
74.0
58.6
P/BV
26.4
21.7
18.6
EV/Sales
19.9
17.4
15.5
EV/EBITDA
62.8
63.6
51.1
Per Share Data (Rs)
EPS (Basic)
2.2
2.4
3.2
EPS (fully diluted)
2.2
2.4
3.2
Cash EPS
3.3
3.5
4.4
Book Value
9.7
11.8
13.8
Returns (%)
ROE
23.1
18.1
16.3
ROCE
15.0
11.5
13.1
Turnover ratios (x)
Receivables (days)
77
73
41
Inventory (days)
1
6
3
Payables (days)
24
34
14
Working capital cycle (days)
54
46
30
Source: Company, Angel Research
eMudhra Limited | IPO Note
May 18, 2022
7
Research Team Tel: 022 - 40003600 E-mail: researc[email protected]lbroking.com Website: www.angelone.in
DISCLAIMER
Angel One Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with
CDSL and Portfolio Manager and investment advisor with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel
One Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide
registration number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory
authority for accessing /dealing in securities Market.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of
the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to
determine the merits and risks of such an investment.
Angel or its associates or research analyst or his relative may have actual/beneficial ownership of 1% or more in the securities of
the subject company at the end of the month immediately preceding the date of publication of the research report. Neither
Angel or its associates nor Research Analysts or his relative has any material conflict of interest at the time of publication of
research report.
Angel or its associates might have received any compensation from the companies mentioned in the report during the period
preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings,
corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific
transaction in the normal course of business. Angel or its associates did not receive any compensation or other benefits from the
companies mentioned in the report or third party in connection with the research report. Neither Angel nor its research analyst
entity has been engaged in market making activity for the subject company.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions
and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a
company's fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our
website to evaluate the contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as
this document is for general guidance only. Angel One Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this
report. Angel One Limited has not independently verified all the information contained within this document. Accordingly, we
cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within
this document. While Angel One Limited endeavors to update on a reasonable basis the information discussed in this material,
there may be regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel One Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or
in connection with the use of this information. Angel or its associates or Research Analyst or his relative might have financial
interest in the subject company. Research analyst has not served as an officer, director or employee of the subject company.