eMudra Limited - IPO Note

Digital Services

eMudra Limited - IPO Note

Digital Services

Price range
Rs. 243 – 256
Issue Period:
May 20, 2022
May 24, 2022
May 20, 2022

Stock Info

CNX Nifty
Face value (Rs.)
Market lot
Issue size
Rs. 412.79 cr.
Public Issue
1.61 cr. shares
Market cap post IPO
1,905 – 1,999 cr.
Equity Pre - IPO
7.18 cr.
Equity Post - IPO
7.81 cr.
Issue type
Fresh Issue and Offer for Sale

Shareholding (Pre IPO)

Source: Ace equity, StockAxis Research

Shareholding (Post IPO)

Source: Ace equity, StockAxis Research

Key Strengths and Strategies

Largest Licensed Certifying Authority in India
With a market share of 37.9% in the digital signature certificate market in FY21, up from 36.5% in FY20, the firm is India's largest authorized Certifying Authority. It is the only Indian company to be recognised by well-known browsers and document processing software companies like Microsoft, Mozilla, Apple, and Adobe, allowing it to sell digital identities to individuals and organisations around the world and issue SSL/TLS certificates for website authentication. It is also the only Indian company to obtain Webtrust approved.

Its broad operations and dominant position enable it to service significant government and banking clients. Digital Trust Services has shown constant growth in commercial operations, with digital signature certificates issued increasing from 1.63 million in FY19 to 2.28 million in FY21.

Diverse, Longstanding, and Growing Customer Base
Infosys, Hindalco, Mashreq Bank, Baud Telecom, Cholamandalam MS General Insurance, Thales DIS CPL India, LTI, DB Schenker, JSW Steel, Bharti AXA Life Insurance, TCS, and others are among the company's notable clients. It collaborates closely with major government and banking clients. As of December 2021, 10 of the top 10 banks, 6 of the top 10 automotive businesses, and 19 of the top 20 companies among the top 500 ranked companies in India by Economic Times were using its Enterprise Solutions.

It has developed into a strategic leader in the digital signature certifications space, having long-standing ties with its top five clients. The top five clients contributed 23.7% of revenue in FY20, up from 12.1% in FY19. Customers in the retail sector increased from 58,872 in FY19 to 1,15,905 in FY21. In addition, the number of enterprise customers increased from 249 in FY19 to 518 in FY21. In FY21, the retention rate for its digital trust services was 96%, while the retention rate for Enterprise Solutions was 88%.

To Set Up New Data Centres in Overseas Locations
Customers of eMudhra access business systems and store data on their employees, contractors, partners, and customers through the company's data centres and digital solutions. The company has proposed investing in leveraging existing data centre infrastructure and establishing new data centres in response to the increased demand for digital signature services in both domestic and foreign markets.

The company plans to build additional data centres in India and other abroad locations to support technological infrastructure, as well as expand into other jurisdictions in the future. The net proceeds of ~Rs. 46 crores are expected to be used to purchase equipment and fund other related costs for the data centre to be set up in Bengaluru and Chennai, as well as in other locations around the world, including but not limited to the European Union in countries like the Netherlands and Germany, and Asia Pacific in countries like Indonesia.

Grow Presence in Overseas Markets
While the company continues to innovate and provide better products and services in India, there is significant room for worldwide expansion. North America continues to dominate the market for digital security and paperless transformation. North and South America currently account for 54.4% of worldwide market share. The existing revenue base for the region remains strong and near double digit revenue growth is considered healthy. In the last year, the market has grown at ~26%. US-based enterprises have been strongly focusing on automation and finding ways to introduce paperless workflows within their customer onboarding and internal processes.

To capitalise on this potential in the United States, the company plans to invest Rs. 15.3 crores in its subsidiary, eMudhra INC, to supplement its business development, sales, marketing, and other associated costs in preparation for future expansion. As a result of this investment, the firm plans to develop a local infrastructure of technical and professional personnel to assist in marketing and selling, as well as develop products and solutions in-house for the clients' specific data security concerns.

To Increase Revenue Share Among Existing Customers and To Expand the Network of Partners and Customers
In both the domestic and foreign markets, the company has a large and broad consumer base. It also has a strong channel and enterprise solution partner network. It currently serves customers in areas such as banking, eGovernment, automotive, IT, consumer durables, and others, and plans to expand into new ones such as manufacturing, logistics, and healthcare.

It also plans to serve new age industries that rely on a stronger cyber security framework and so need eMudhra's digital signature services. These include use cases in the electric vehicle space and Smart Cities, where internet-connected devices must be identified and validated securely.

It also intends to extend its channel and enterprise solution partner network while strengthening existing relationships. It will continue to innovate and grow its service offerings to provide a broader range of Enterprise Solutions, some of which may be verticalized to meet domain-specific demands. Even though the company now has a vast and diverse customer and partner base, it believes there is still room for growth given the under-penetration of its numerous products and services offered by eMudhra.


Higher Dependence on One Channel Parter: As of December 2021, and FY21, one of the Channel Partners, BlueSky Infotech, contributes 8% of the company's revenue. Bluesky Infotech's loss, for whatever reason, might result in a major drop in revenues, affecting profitability.

Competitive Industry: The company faces significant competition from both established (including large global players like Adobe and Docusign) and new companies offering trust services, digital security, and paperless transformation solutions. eMudhra’s inability to compete effectively could adversely impact its business.

Agreement Renewal Risk: The company’s clients have no obligation to renew or expand their agreements after the terms of their existing arrangements have expired. If one or more clients terminate agreements, the business could be adversely impacted. Revenue from top five customers represented 12.1% (FY21), 23.7% (FY20), and 12.1% (FY19).

Seasonal Nature of the Business: The company has historically experienced seasonal fluctuation in the sales, with higher sales volumes and usage associated with the regulatory filings during the second and third quarters of the financial year.

Defending Proprietary Rights: The company could incur substantial costs in protecting or defending its proprietary rights and any failure could impair its competitive position and may lose valuable assets and incur costly litigation to protect its rights. Further, the company has assigned one of its trademarks to its Subsidiary and breach of any of the clauses of the deed, could materially impact the goodwill.

Company Description

Incorporated in June 2008, eMudhra Limited (eMudhra) was a wholly-owned subsidiary of 3i Infotech Limited. eMudhra is the largest licensed Certifying Authority (CA) in India with a market share of 37.9% in the digital signature certificates space in FY21 up from 36.5% in FY20. It is engaged in the business of providing Digital Trust Services, Digital Security Solutions, and Paperless Transformation Solutions.

Individual/organizational certificates, SSL/TLS certificates, and device certificates (used in IoT use cases) are all available through eMudhra's Digital Trust Services. Its Enterprise Solutions division offers a comprehensive range of Digital Security and Paperless Transformation Solutions to customers in various industries, complementing its Digital Trust Services business, making eMudhra a "one-stop shop" player in secure digital transformation.

With over 5 crore digital signature certificates issued since its inception, the company caters to a wide range of subscribers who use digital signature certificates for a variety of purposes, including income tax return filing, Ministry of Corporate Affairs filings, tenders, foreign trade, banking, and railways. It collaborates closely with big government and banking clients, including state governments and more than 20 public and private sector banks. As of December, 2021, it caters to 143,406 retail customers (up from 58,872 as of March 2019) and 626 enterprises (up from 249 as of March 2019).

CIO Review India has named the organisation one of the '20 Most Promising Tech Solution Providers for Government & Public Sector 2019'. It is the first Indian company to be accepted as a member of both the European Cloud Signature Consortium and the Certifying Authority / Browser Forum, a global organisation that regulates the use of SSL/TLS certificates. WebTrust has accredited eMudhra's digital signature certificates, making it instantly recognised by browsers all over the world.


The company’s past performance is promising and given the company’s leading position, strong customer base, and plans to expand business outside India, the company could post strong numbers. However, we believe the expansion plans outside India may take long time to reap benefits as the company is in the initial stages plus, the competitive businesses in those regions may not aid the company to grow at faster pace.

Overall, we feel that one should wait and evaluate a few quarterly results and look for management’s commentary on the business operations before investing in the company. Also, at the upper price band of Rs. 256, the issue is valued at 49.2x of FY22E annualised earnings, which if we compare with Global player, Adobe Inc., currently trades at ~40x of CY21 non-GAAP earnings. So, investors are advised to AVIOD investing in the company as of now.

Key Information

Use of Proceeds:
The total issue size is Rs. 412.8 crores, which is Fresh issue (39%) and Offer for Sale (61%). The company is expected to use the net proceeds from the issue as follow:

Particulars (Rs. in Crores) Amount
Repayment/pre-payment, in full or part, of all or certain borrowings 35
Funding working capital requirements 40.22
Purchase of equipment and funding of other related costs for data centers proposed to be set-up in India and overseas locations 46.36
Funding of expenditure relating to product development 15.03
Investment in eMudhra INC. for augmenting its business development, sales, marketing, and other related costs for future growth 15.27
General corporate purposes **

Book running lead managers:
IIFL Securities, Yes Securities, and Indorient Financial Services.

Venkatraman Srinivasan (Promoter and Executive Chairman), Venu Madhava (Whole-time Director), Saji K Louiz (Chief Financial Officer), Ashwin Jansale (Senior VP and Head of Channel Sales), Biju Varghese (Senior VP and Head of Business Development – India and APAC), Kaushik Srinivasan (Senior VP – Product Development), Arvind Srinivasan (Senior VP – International Sales and Strategy and head of the marketing), Janarthanan S (Senior VP and Head – Customer Success), Vijay Kumar (Senior VP and Head – Technology), and A M Kiran (VP and Head – Customers Operations).