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Tuesday, 17 May 2022


Largest player in digital signature certificate market

The IPO is to fund expansion of data centres, reduce debt and meet working capital requirement

Emudhra is a licensed certifying authority involved in issuing digital signature certificates in India under its eMudhra brand. The company is licensed by the Controller of Certifying Authorities (CCA), Ministry of Information Technology, and operates under the guidelines set by the Information technology Act.

It also provides various enterprise solutions and services around digital signatures like authentication solutions, paperless office solutions, solutions for securing data in transit. Apart from this, the company has solutions for Internet of Things (IoT), and other solutions around Public Key Infrastructure (PKI)


Emudhra is the largest licensed certifying authority in India, with a market share of 37.9% in the digital signature certificate market space in FY2021, having grown from 36.5% in FY 2020.


As part of its digital trust services, the company issues a range of certificates including individual/organizational certificates, Secure Sockets Layer/Transport Layer Security certificates and device certificates [used in IoT use cases] to build a digital trust backbone.


Under its enterprise solutions vertical, the company offers a differentiated portfolio of digital security and paperless transformation solutions, complementing its digital trust services business, to customers engaged in different industries, thereby making the 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 identity, authentication and signing solutions.

With more than 50 million digital signature certificates issued since inception, the company caters to all kind of subscribers who use digital signature certificates for income tax return filing, filings with the Ministry of Corporate Affairs (Registrar of Companies), tenders, foreign trade, banking, railways and many other needs. The company works closely with large government and banking customers like the 20+ public and private sector banks and state governments.


The company has been identified and ranked amongst the '20 Most Promising Tech Solution Providers for Government & Public Sector 2019' by CIO Review India. The company 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 and to be accredited to Web trust, which makes its digital signature certificates directly recognized by browsers across the world allowing the company to issue digital signature certificates in many countries.



The company has a strong digital signature certificate expertise and is the only Indian company to be directly recognized by renowned browsers and document processing software companies such as Microsoft, Mozilla, Apple and Adobe allowing it to sell digital identities to individual/organization and issue SSL/TLS certificates for website authentication globally.

The company's Enterprise Solutions are developed by the company and is built on the principle of delivering digital trust by helping users seamlessly identify, authenticate and authorize or sign digital transactions thus accelerating the transition to a presence-less and paperless way of doing business.


The company’s enterprise solutions are majorly divided into three broad categories viz., eSignature workflow solutions for paperless office (emSigner), authentication solutions (emAS) and public key infrastructure solutions (emCA). As part of these offerings, the company provides capabilities, such as password-less authentication that free users from the challenges and security risks associated with weak and forgotten credentials.


The company since inception has issued over 50 million digital signature certificates through its network of 88,457 channel partners spread across all states and union territories of India. The company has established presence and differentiated product portfolio in digital security and paperless transformation. The company has consistently designed and developing differential products at competitive price points under its business verticals which has contributed towards its growth and expansion of its customer base in recent years. Its retail customers grew from 58,872 as of March 31,2019, to 1,15,905 as of March 31,2021. Its enterprise customers grew from 249 as of March 31,2019, to 518 as of March 31,2021.


Further, as of December 31,2021 the company caters its services to 1,43,406 retail customers and 626 enterprises.

The revenue contribution of the digital products offered under its enterprise solution vertical has consistently grown from Rs 36.18 crore in FY 2019 to Rs 64.34 crore in the FY2021. As of Dec 30, 2021, the company's enterprise solutions are used by 10 out of top 10 banks, 6 of top 10 automotive companies and 19 out of top 20 companies amongst the top 500 ranked companies in India by Economic Times in FY2020.


The company provides its solutions and services in overseas regions such as, Americas, Europe, Middle East and Africa and Asia Pacific. During the nine months period ended December 31, 2021, and the Financials Year 2021, 2020 and 2019, the revenues earned from its domestic operations contributed Rs 110.8 crore, Rs 106.1crore, Rs 101.9 crore and Rs 91.4 crore, respectively, and revenues earned from its international operations contributed Rs 26.5 crore, Rs 25.5 crore, Rs 14.6 crore and Rs 10.2 crore, respectively.


The company is promoted by Mr Venkatraman Srinivasan and Taarav Pte Limited.


Object of the offer

The offer comprises a fresh issue of 62,89,063 equity shares at upper price band of Rs 256 and 66,25,514 equity shares at lower price band of Rs 243 aggregating up to Rs 161crore by the company and an offer for sale by selling shareholders Mr Venkataraman Srinivasan of up to 32,89,257 equity shares aggregating Rs84.2cr at upper price band, Taarav PTE Limited of up to 45,16,246 equity shares aggregating Rs115.6cr at upper price band , Mr Kaushik Srinivasan of up to 5,10,638 equity shares  aggregating Rs 13.1cr at upper price band, Ms Lakshmi Kaushik  of up to 5,04,307 equity shares  aggregating Rs 12.9cr at upper price band, Mr Arvind Srinivasan of up to 8,81,869 equity shares  aggregating Rs 22.6crat upper price band and Mr Aishwarya Arvind of up to 1,33,077 equity shares  aggregating Rs 3.4 cr at upper price band.


The company on May 05,2022 has raised Rs 39 crore through pre-IPO placement by issuing 16,03,617 equity shares for a cash price of Rs 243.2 per equity share.


Thecompany proposes to utilize the net proceeds of the fresh issue towards funding prepayment or repayment in part of all or certain borrowings availed by the company amounting to Rs 35.0 crore, funding its working capital requirements amounting Rs 40.22 crore, Purchase of equipment and funding of other related cost for data centers proposed to be set up in India and overseas locations amounting Rs 46.36 crore, Funding of expenditure relating to product development amounting Rs 15.03 crore, investment in eMudhra INC for augmenting its business development, sales, marketing and other related cost for future amounting Rs 15.27 crore and the balance towards general corporate purposes.



Emudhra is licensed by Controller of Certifying Authorities in India to issue Digital Signature Certificate (DSC) in India. It started operation in 2008 and is now a leading player in the digital authentication space supported by its wide network of controllers or agents spread across India.


The company has a strong track record in digital authentication market and has issued 18 lakhs DSC in FY2021. The company is the largest licensed Certifying Authority in India with a market share of 37.9% in the digital signature certificate market space in FY 2021 having grown from 36.5% in FY2020.


The company is a registered certifying authority with the Controller of Certifying Authorities and are 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. The company has obtained a variety of accreditations, security/compliance certifications which the company maintain on an ongoing basis for example, Webtrust Accreditation to provide services as a public certifying authority globally and list its digital signature certificate roots with renowned browsers.


All the services provided under trust solutions, are compliant with the quality standard of ISO 9001 and are certified by the applicable certification body. Further, its cloud offerings are compliant with SOC2 Type 2 and its eSignature workflow solutions, emSigner is listed on the SAFE Identity Qualified Product List (QPL).


The company is one of the largest players in the Indian digital trust services market with a market share of 17.8% and it enjoys 19.0% market share in the digital transformation solutions market in India for FY 2021.


The company's relevant experience in the digital secure and paperless transformation industry enabled the company in identifying and capitalising the market opportunity offered by the Indian digital certificates market and garner the capabilities of serving all kind of subscribers who use digital certificates for income tax return filing, filings to be made with Ministry of Corporate Affairs (Registrar of Companies) filings, tenders, foreign trade, banking and railways.



The company's digital trust services and enterprise solutions are backed by technological infrastructure including its data centres located in India and proposed to be set up in overseas locations, with appropriate virtualization, computing and storage, physical and logical isolation, network firewalls and disaster recovery site to support high availability, uptime and redundancy.


The digital signature certificates issued by the company are based on asymmetric cryptographic key pairs (private and public key).


The company services marquee customers through its digital trust services and enterprise solutions and has been able to form a portfolio of renowned customers in private as well as in public sectors, including, Infosys, Hindalco Industries, Mashreq Bank, Baud Telecom Company, Cholamandalam MS General Insurance Company Limited, Thales DIS CPL India Private Limited, Larsen & Toubro Infotech, DB Schenker, JSW Steel, Bharti AXA Life Insurance Company Limited and TATA Consultancy Services.


The company works closely with large government and banking customers, 20+ public and private sector banks and state governments. As of Dec 31, 2021, the enterprise solutions of the company were used by 10 out of top 10 banks, 6 of top 10 automotive companies and 19 out of top 20 companies amongst the top 500 ranked companies in India by Economic Times in Financial Year 2020.


As of December31, 2021, the company had 91,259 channel partners for digital trust services spread across various States and Union Territories in India and out of its 539 system integrator partners, 267 are present in India and 272 are present internationally in United States of America, Europe, Middle East and Africa and Asia Pacific.


The company's enterprise solution partners are broadly categorized into system integrators which comprise of large IT companies who bundle the company's solution as part of a larger turnkey offering to the end customers; technology partners with whom the company has a direct integration for selling its products on their platform; and lastly, resellers and distributors, who resell or distribute the company's digital products and solutions to their customer base.


The distribution reach and selling capabilities of its extensive partner network will continue to drive the company's business growth and provide it with the competitive advantage in the market as well as serve as a barrier to entry for new entrants.





The company's scale of operations remained moderate at Rs. 131.5 crore in FY2021, restricting the financial and operational flexibility to an extent.


The company is licensed by the Controller of Certifying Authorities (CCA), Ministry of Information Technology and operates under the guidelines set by the Information Technology Act. This exposes its business to any changes in the requirements of CCA.


Further, CCA has strict audit requirements, which DSC certifying authorities are required to follow. The license from controller of certifying authorities has been renewed in 2018 and is valid till until October 2023.


The IT industry is susceptible to risks related to technological changes, competition from substitutes and shifts in customer demand apart from data management and cybersecurity risks. This necessitates continued investments in technology upgradation. Diversification efforts will support mitigation of the technological obsolescence risk.


As part of the company's growth strategy, the company intends to expand its business operations to geographical areas in which it has limited operation history. The company cannot assure that its expansion plans will be profitable or that such expansion will not adversely affect its business, results of operations and financial condition.


One of the objects of the Offer is to invest in eMudhra INC one of the company's subsidiaries, incorporated in United States of America 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.


The company proposes to use Rs 46.36 crore of the net proceeds of the offer towards purchase of equipment and funding of other related costs for data centres proposed to be set up in India and overseas locations.In case the company is unable to set-up the data centres in a timely manner it may face delay in deploying net proceeds towards purchase of equipment for these data centres to be set up in India and overseas locations which could have impact on growth prospects of the company.



The company's security measures may in the future be, compromised. Consequently, its services and solutions may be perceived as not being secure. This may result in customers curtailing or ceasing their use of the company's solutions, its reputation being harmed and incurring of significant liabilities and lead to an adverse effect on its results and growth prospects.


The company is dependent on channel partner for a significant portion of its revenues and a loss of such partner could adversely affect its business.


If the company's solutions fail to perform properly due to defects, delays or similar problems, and if the company fails to develop enhancements to resolve any defect or other problems, it could lose customers, become subject to service performance or warranty claims or incur significant costs.


The company faces competition in the DSC from other players like Sify Communications Ltd, Capricorn Identity Services Pvt. Ltd, (n) Code Solutions, Verasys. The intense competition results in limited pricing flexibility and bargaining power with the customers for the sale of DSC in the domestic market.


Further, in the enterprise solutions business, it faces competition from established players based out of U.S. and Europe in the global market. However, Emudhra's enterprise solution has cost advantage over its competition supported by low payroll cost incurred in India.


The company relies on its data centres for efficient functioning of its technology platform, and any interruption or delay in service from these facilities could impair the delivery of its technology platform and digital products and adversely impact its business and results of operations.




For nine months ended December 31,2021, the company earned net profit of Rs 30.6 crore on sales of Rs 137.24cr.9M revenues and net profit was higher than FY2021 revenues and profit. Healthy revenue growth in 9months FY2022 was on back of improved realization on Digital Signature certificate and increase in sales of enterprise solutions in export market.

For FY 2021, consolidated sales were up by 13.2% to Rs 131.6 cr. OPM rose 291bps to 30.34% which led to 25% increase in operating profit to Rs 39.93 crore. Other income increased 146.7% to 0.86 crore while interest cost increased25.9% to Rs 0.84 crore and depreciation increased 1.9% to Rs 8.77 crore.


PBT increased by 35.5% to Rs 31.18 crore. Tax expenses increased by26.5% to Rs 5.82 crore. Net profit after minority interest stood at 17.5 crore as against net profit of Rs 16.6crore in FY2020.

At higher price band of Rs 256, the offer is made at a around 15.2 times P/ (S FY2021) and 114.5 times P/(E FY2021) and 49 times P/(E 9M Annualised FY2022) . The company on May 05,2022,through pre-IPO placement has allotted 16,03,617 equity shares for a cash price of Rs 243.2 per equity share aggregating Rs 39.0 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.There are no listed peers for the company in India.



eMudhra: Issue Highlights

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eMudhra: Consolidated Financial


1903 (12)

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2103 (12)

2112 (09)






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*EPS is calculated based on post issue share capital of Rs 39 cr at upper price band, Face Value Rs 5


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Source: Capitaline Corporate Database