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eMudhra IPO subscribed 40% so far on Day 1, analysts say company well positioned

eMudhra IPO subscribed 40% so far on Day 1, analysts say company well positioned

eMudhra IPO subscribed 40% so far on Day 1, analysts say company well positioned
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By CNBCTV18.com May 20, 2022 3:39:44 PM IST (Updated)

Potential investors can bid for eMudhra shares in a price range of Rs 243-256 apiece in multiples of 58 in a three-day bidding process, which ends on May 24. eMudhra shares are likely to be listed on stock exchanges BSE and NSE on June 1.

eMudhra's initial public offering (IPO) to raise up to Rs 413 crore saw an overall subscription of 40 percent on Friday — the first day of the bidding process.

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The share sale of the company, which is a licensed certifying authority that provides digital trust services and enterprise solutions, is a combination of fresh issuance of equity worth Rs 161 crore and an offer for sale (OFS) worth Rs 252 crore.
By 3 pm, the eMudhra issue received bids for 45.8 lakh shares as against the total size of 1.1 crore, according to exchange data.
CategorySubscription (%)Portion reserved (%)
Qualified institutional buyer050
Non-institutional investor415
Retail investor7835
Important dates
The three-day bidding process will end on May 24. The basis of allotment is likely to be finalied on May 27.
eMudhra shares are likely to be listed on stock exchanges BSE and NSE on June 1.
Issue price
Potential investors can bid for eMudhra shares in a price range of Rs 243-256 apiece in multiples of 58. At the upper end of the bidding process, one lot of eMudhra shares is worth Rs 14,848.
Fund utilisation 
The company aims to use the proceeds from the fresh issue towards repayment of certain borrowings, working capital needs, purchase of equipment, product development and general corporate purposes.
Financials
Particular2020-212019-20
RevenueRs 131.6 croreRs 116.5 crore
EBITDARs 40.8 croreRs 32.3 crore
ProfitRs 25.4 croreRs 18.4 crore
Should you subscribe to the eMudhra IPO?
Choice Broking
The brokerage recommends subscribing to the issue with caution.
"The pandemic has forced organisations to move to faster adoption of digital solutions like digital identity, security and paperless transformation solutions, a trend expected to continue. Companies like eMudhra are expected to benefit from growth in the addressable market," Choice Broking said.
"There are no listed peers having similar businesses. At the upper end of the price band, the company is demanding a price-to-earnings multiple of 114.5 times its 2020-21 earnings which seems high," the brokerage added.
Hem Securities
The brokerage has a 'subscribe' rating on the issue.
The company is demanding a price-to-earnings multiple of 49 times on a post-issue annualised earnings per share (basis) for the first nine months of the financial year ended March 2022.
eMudhra is well-positioned to capture the favourable industry
dynamics in India and globally, according to Hem.
"Despite being just 12 years in the market, eMudhra has a better brand recognition and a stronger channel partner relationship," it added.
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