eMudhra, the largest licensed certified authority (CA) in the digital signature certificates market in India, will be launching its initial public offering (IPO) on May 20.
Here are 10 key things to know before subscribing to the public issue:
1. IPO Dates
The offer will open for subscription on May 20 (Friday) and close on May 24 (Tuesday).
2. Price Band
The price band for the offer has been fixed at Rs 243 - 256 per share of face value Rs 5 each.
3. Offer Details
The IPO, sized at Rs 413 crore, comprises fresh shares of Rs 161 crore and an offer for sale worth Rs 252 crore by shareholders and promoters.
After the issue, the promoter shareholding will decline 18.16 percent to 61.03 percent.
Of the total offer size, 50 percent will be reserved for qualified institutional buyers, 35 percent for retail investors, and the remaining 15 percent for non-institutional investors.
4. Objectives of the Issue
The company intends to utilise the net proceeds from the fresh issue to pre-pay or repay in part or full the existing loans availed by the company to an extent of Rs 35 crore. A sum of Rs 40.2 crore will be used for funding working capital requirements. The company intends to purchase equipment and set up data centres across India and overseas for which it will be using Rs 46.36 crore from the fresh proceeds; Rs 15 crore will be utilised for funding product development, Rs 15.3 crore for augmenting business development, sales, and marketing among others.
5. Lot Sizes
Investors can bid for a minimum lot size of 58 shares and in multiples thereof. The minimum investment for a retail investor works out to Rs 14,848 at the upper end of the price band for 58 shares. A retail investor can apply for up to 13 lots or 754 shares for an amount of Rs 1,93,024.
6. Company Profile & Industry
eMudhra was incorporated on June 16, 2008 as a wholly owned subsidiary of 3i Infotech and had a share of 37.9 percent in the digital signature certificates market in FY21 compared to 36.5 percent in FY20.
The company provides its services across two verticals of digital trust services and enterprise solutions. It provides services like individual/organisational 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. and has issued more than 50 million digital signature certificates since its inception.
The company works closely with large government and banking customers including more than 20 public and private sector banks and state governments. It is the only Indian company to be admitted as a member of European Cloud Signature Consortium as well as Certifying Authority / Browser Forum, a global forum that governs the use of SSL/TLS certificates. It is also the only Indian company that is accredited to WebTrust that makes its digital signature certificates directly recognised by browsers across the world.
eMudhra reported revenue from operations of Rs 131.59 crore for FY21, growing by 13 percent over Rs 116.45 crore revenues reported in FY20. For the nine months ended December 2021, the company had achieved revenues of Rs 137.24 crore.
The company has consistently achieved a double digit growth in its profit after tax (PAT) since FY19. It recorded a PAT of Rs 18.4 crore in FY20 which jumped 38 percent to Rs 25.36 crore in FY21. Profit for the nine months ended December 2021 was at Rs 303.34 crore.
The EBITDA (earnings before interest, tax, depreciation and amortization) margins for FY20 stood at 27.73 percent which improved by 327 bps to 31 percent in FY21. For the first nine months of current fiscal, the EBITDA margins is prevailing at 36.4 percent.
Net margins for FY20 came in at 15.8 percent whereas for FY21 it was 19.27 percent and 22.11 percent for the nine months ended December 2021.
8. Strengths and business strategy
eMudhra gains its strength from being the largest licensed certifying authority in India. It is a one-stop shop solution provider in secure digital transformation and is well-positioned to capture the favourable industry dynamics in India and overseas. It possesses technology certifications, accreditations and membership in international bodies which puts in the league of very few international players that have these certifications. It has the advantage of diverse, longstanding and growing customer base and partnerships with leading Indian and global channel partners and enterprise solution partners.
9. Pre-IPO Placement
The company has done a Pre-IPO placement of 1,603,617 equity shares for a cash price of Rs 243.20 per equity share for an aggregate amount of Rs 39 crore to Baring Private Equity India AIF 2, Acacia Banyan Partners, Motilal Oswal Equity Opportunities Fund Series III, Negen Capital Services Private Limited, Value Wise Consultancy Private Limited, Jagadeesan Kumar, and Krishna Kumar.
10. Grey Market, Allotment & Listing DatesThe company’s shares are not commanding any premium in the grey market currently, according to IPO Watch and IPO Central, both of which track the grey market movements. Shares will be allotted to successful bidders on May 27, and the refund to unsuccessful bidders will be credited their accounts on May 30. Shares will be credited to the demat account of the successful bidders by May 31 and the stock will debut on the bourses on June 1.