emudhra ipo

eMudhra IPO Begins Today: eMudhra Limited, India’s largest registered certified authority (CA) in the digital signature certificates industry, launches its initial public offering (IPO) today and will end on May 22. The shareholders and founders of eMudhra seek to raise approximately Rs 413 crore through a fresh issue of equity shares worth up to Rs 161 crore and an offer for sale of 9,835,394 equity shares worth up to Rs 252 crore. The company provides digital trust services and enterprise solutions such as individual/organizational certificates, digital signature certificates, and so on.

The company announced on Thursday that it has secured Rs 124 crore from anchor investors in advance of its first public offering. Investors in the anchor book included Aditya Birla Sun Life Mutual Fund (MF), Motilal Oswal MF, Nippon India MF, SBI MF, Baring Private Equity India, Hornbill Orchid India Fund, Pinebridge India Equity Fund, and Abakkus Growth Fund.

Objectives of eMudhra IPO

The IPO proceeds will be utilised to repay debt, fund working capital, purchase data centre equipment, and invest in eMudhra INC to supplement its business development, sales, marketing, and other growth-related activities. The company intends to use the fresh proceeds of the issue to purchase equipment and set up data centres across India and overseas; Rs 15 crore will be used to fund product development, Rs 15.3 crore will be used to augment its business development, sales, marketing, and other related costs for future growth, and other general corporate purposes.

Lot Size and Price Band for the eMudhra IPO

In its DRHP, eMudhra Ltd stated that the eMudhra IPO is expected to raise Rs 412.79 crore at the upper end of the pricing band. This includes a Rs 161 crore new issue and a 98.35 lakh share offer for sale by promoters and current shareholders. Bidders will be able to place bids for a minimum of 58 shares per lot and in multiples of 15 shares. This indicates that at the upper end of the pricing band, investors must spend a minimum of Rs 14,848 for one lot.

In addition, for its Rs 413-crore Initial Public Offering, the company has set a price range of Rs 243 to Rs 256 per equity share (IPO).

GMP Today for eMudhra IPO

According to market experts, eMudhra shares are fetching a grey market premium (GMP) of Rs 8-10. However, stock market analysts advised investors that GMP is unofficial and unregulated data. Those that adhere to GMP are urged to review the company’s financials as well, because the balance sheet will provide a more accurate picture of the company’s fundamentals.

On June 1, 2022, the company’s shares are planned to be listed on the stock markets BSE and NSE.

Financials for the eMudhra IPO

eMudhra Ltd has a market share of 37.9% in the digital signature certificates market in fiscal year 2021, up from 36.5 percent in fiscal year 2020. Infosys, Tata Consultancy Services, Mashreq Bank, Baud Telecom Company, Cholamandalam MS General Insurance Company, and Bharti AXA Life Insurance Company are among its clients.

Should You Invest in eMudhra?

“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,” said brokerage Angel One.

eMudhra is India’s largest licenced certifying authority, offering digital trust services and enterprise solutions to individuals and businesses.

Choice Equity Broking, in its IPO note, said: “There are no listed peers having business similar to EML. At a higher price band of Rs. 256, the company is demanding a P/E multiple of 114.5x (to its FY21 earnings of Rs. 2.2 per share), which seems to be high. Annualizing the 9M FY22 performance, the demanded P/E multiple comes out to be 49x. Also considering the current turbulence in the global equity market, we assign a “Subscribe with Caution” rating for the issue.”

Read More: Ethos IPO Launches Today: Get Price, GMP, Financials, and a Review; Should You Invest?

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