India’s digital public infrastructure (DPI) has grown rapidly and has played a key role in the formalisation of the economy. The Union Budget 2024-25 has emphasised the development of an open digital ecosystem.
The finance minister has proposed the building of population scale DPI in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, services delivery, and urban governance.
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The government wants to leverage the DPI in agriculture too. The Union Budget has proposed digital crop survey for Kharif using the DPI in 400 districts this year. Moreover, the details of 6 crore farmers and their lands are envisaged to be included in the farmer and land registries.
The government’s initiative will be beneficial for Protean eGov Technologies (CMP: Rs 1,611; Mcap: Rs 6,518 crore; Rating: Overweight), which is a pioneer and market leader in building the DPI in collaboration with the government.
Protean has already put in place the core agri stack for a universal farmer identity (ID), land records, crop registries, soil health record, and more.
Market leader in NPS
In addition to the digital push, Protean will benefit from the broadening of the National Pension Scheme (NPS). The Union Budget has proposed NPS Vatsalya for minors that can be converted into a normal NPS account after 18 years of age. It also talked about setting up of a committee to review the NPS.
As a Central Record-keeping Agency (CRA) for the NPS, Protean has 97 percent market share in a three-player market. CAMS and KFin Technologies are the other two CRAs for NPS. However, their cumulative market share is less than 4 percent in terms of pension AUM.
There is a huge headroom for growth as pension penetration in India is just around 6 percent for private sector employees, while in the US almost 70 percent private sector employees are covered under pension, indicating a long roadway for growth.
View and Valuation
Protean’s stock has rallied more than 35 percent in the past one month and is trading at 48 times FY26 estimated earnings. Though the valuation is rich, it is justified because of the dominant market position in e-governance space, unique business moats, and tailwinds from the growing digital penetration.
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Disclaimer: Moneycontrol Research analysts hold positions in the companies discussed here
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