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
Y/E March (` cr)
FY2019
FY2020
FY2021
9MFY22
Net Sales
102
116
132
137
% chg
--
14.6
13.0
--
Net Profit
17
17
17
31
% chg
--
(4.5)
4.9
--
EBITDA (%)
31.7
27.4
30.3
35.9
EPS (`)
2.2
2.1
2.2
3.9
P/E (x)
114.6
120.1
114.5
--
P/BV (x)
26.4
21.7
18.6
--
ROE (%)
23.1
18.1
16.3
--
ROCE (%)
15.0
11.5
13.1
--
EV/EBITDA
62.8
63.6
51.1
--
EV/Sales
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.gupta@angelbroking.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: research@angelbroking.com Website: www.angelone.in
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