eMudra IPO Review and Analysis – Should you buy or not?

eMudra IPO Analysis and Review. Find IPO Date, Price, Allotment Date and Listing Date. Should you Invest or avoideMudra IPO (eMudra Limited IPO) Details

India’s largest licensed Certifying Authority, eMudra Limited is coming up with an IPO. This IPO would open for subscription on 20th May, 2022. Company generated good revenue growth in the last 3 years and 9 months. Its margins also improving during the similar period. Should you invest in eMudra IPO? What are the risk factors in this IPO? Is eMudra IPO price is highly priced? Let me do IPO review and provide complete analysis.

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About eMudra Limited

Company is the largest licensed Certifying Authority in India. It has market share of 37.9% in the digital signature certificates market space in financial year 2021 (36.5% in FY2020).

Company is engaged in the business of providing digital Trust Services and Enterprise Solutions to individuals and organizations functioning in various industries. As part of Digital Trust Services, they issue a range of certificates including individual / organizational certificates, SSL/TLS certificates and device certificates to build a digital trust backbone.

Under enterprise solutions vertical, they offer a diverse portfolio of Digital Security and Paperless Transformation Solutions, complementing its Digital Trust Services business to customers engaged in different industries there by making company a one stop shop player in secure digital transformation to provide a wide spectrum of services and solutions from issuance of certificates as a certifying authority to offering identify, authentication and signing solutions.

eMudra IPO dates, issue details, Size and Price Band

IPO Opening Date 20-May-22
IPO Closing Date 24-May-22
Issue Type Book Built Issue IPO
Face Value Rs 5 per equity share
IPO Price band Rs 243 to Rs 256 per equity share
Lot Size 58 Shares
Listing at BSE and NSE
Total Issue Size Rs. 412.79 Crores
    Fresh issue     Rs. 161 Crores
    OFS     Rs. 251.79 Crores

What are the competitive strengths of eMudra Limited?

1) Company is the largest licensed Certifying Authority in India

2) Company is one stop shop solution provider in secure digital transformation and are well-positioned to capture the favorable industry dynamics in India and globally

3) Company has strength in technology certifications, accreditations and membership in international bodies

4) It has technology backed infrastructure to support quality and security of services and solutions

5) It has diverse, longstanding and growing customer base

6) Partnerships with leading Indian and global channel partners and enterprise solution partners

7) Experienced promoter, board of directors and senior management team

What are the Objects of the IPO Offer?

eMudra IPO Size is Rs 412.79 Crores which has both OFS and fresh issue.

1) Offer for Sale (OFS) for Rs 251.79 Crores: Under OFS, selling shareholders would get entire money and the company would not get any funds.

2) Fresh issue of Rs 161 Crores: Fresh issue would be used for the following:

  • Repayment or pre-payment, in full or in part, of all or certain borrowings.
  • 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 purposes.

Who are the promoters of eMudra Limited?

Venkatraman Srinivasan and Taarav Pte. Limited are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 9 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 Dec-21
Total Assets 1,195 1,587 1,919 2,541
Revenues 1,016.8 1,168.0 1,324.5 1,383.0
Profit After Tax 174.4 184.2 253.6 303.4
Profit % 17.15% 15.77% 19.15% 21.94%

Positive Factors in eMudra IPO

Here are the key reasons to invest in this IPO.

1) Company is largest licensed Certifying Authority in India.

2) Company has generated strong revenue growth in the last 3 years and 9 months.

3) Company had good margin growth during similar period.

Risk Factors of investing in eMudra IPO

1) Company commercial success largely dependent upon its ability to successfully anticipate market needs and utilize and manage its research and development.

2) One of the objects of the offer is to invest in eMudra Inc, one of the subsidiaries, incorporated in USA to augment its business development, sales, marketing and other related costs for future growth. The expenditure proposed to be incurred is subject to external factors and uncertainty of the outcome of such expenditure.

3) Company is highly dependent on technology in carrying out its business activities and it forms an integral form of its business. If they face failure of its technology platform, they may not be able to complete effectively which may result in lower revenue, higher costs and adversely affect its business.

4) Company security measures may in the future be, compromised. Consequently, its services and solutions may be perceived as not being secure. It may result in customers curtailing or ceasing their use of its solutions, its reputation being harmed and incurring of significant liabilities and lead to an adverse effect on its results and growth prospectus.

5) They are dependent on one channel partner for a significant portion of its revenues and loss of such partner can affect business.

6) Investors should read complete risk factors indicated in the RHP before investing in this IPO.

eMudra IPO valuation

eMudra IPO price band is Rs 243 to 256 per share.

1) If we consider last 3 years weighted average EPS of Rs 2.49 and the upper price band of Rs 256, P/E works out to 103x.

3) Similarly, if we consider FY2021 EPS of Rs 2.45 and the upper price band of Rs 246, P/E works out to be 104x.

4) If we take 9 months ended Dec-21 EPS and annualize it, the P/E works out to be 44x.

5) Means company is asking the upper price band of IPO price of Rs 256 in the P/E ratio of 44x to 104x.

As per the RHP, there are no listed peers to compare the P/E Ratio. However, share price at a P/E ratio of up to 104x in general is considered as overpriced (Its last year + 3 years average P/E is between 103x to 104x).

eMudra IPO Dates – Subscription, Allotment and Listing Dates

Offer Open 20-May-22
Offer close 24-May-22
Finalization of Allotment 27-May-22
Initiation of Refunds 30-May-22
Credit to Demat Account 31-May-22
IPO Shares Listing Date 01-Jun-22

How to buy eMudra IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘eMudra Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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eMudra IPO – Should you Invest or not?

IPO - WaiteMudra Limited is largest licensed certifying company in India.

Company generates strong revenue growth in the last 3 years and 9 months.

Company posted good margin growth during similar period.

However, eMudra IPO Price is highly priced.

Currently stock markets are taking corrections; hence one should think whether they need to pay high IPO price during such bearish sentiment. Considering all these positive factors and negative factors indicated above, investors can stay away from this IPO as of now. If eMudra Share Price is available at discounted price post listing, one can think of investing.

Source: eMudra IPO Prospectus (RHP)

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