eMudhra IPO Day 1; should you subscribe? Here is what Anil Singhvi suggests

eMudhra IPO (initial public offer), which opened for subscription on Friday, May 20, will close on May 24. Digital signature certificate provider eMudhra has set a price band of Rs 243-256 a share. At the upper end of the price band (Rs 256), the IPO is expected to fetch Rs 412.79 crore. Half of the issue has been reserved for qualified institutional buyers, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors. 

Earlier, on Thursday, the company raised Rs 124 crore from anchor investors. The company has allocated 48,37,336 equity shares to anchor investors at Rs 256 per share, aggregating the transaction size to Rs 123.83 crore, as per company's filing on the BSE. 

Aditya Birla Sun Life Mutual Fund (MF), Motilal Oswal MF, Nippon India MF, SBI MF, Baring Private Equity India, Hornbill Orchid India Fund, Pinebridge India Equity Fund and Abakkus Growth Fund are among the investors that participated in the anchor book. 

The company has reduced the size of the fresh issue from Rs 200 crore to Rs 161 crore. Besides, there will be an Offer-For-Sale (OFS) of 98.35 lakh shares by promoters and existing shareholders. 

As a part of the OFS, promoters – Venkatraman Srinivasan and Taarav Pte Ltd – will offload 32.89 lakh equity and 45.16 lakh equity shares respectively. In addition, Kaushik Srinivasan will divest 5.1 lakh equity shares, Lakshmi Kaushik 5.04 lakh, Arvind Srinivasan, 8.81 lakh and Aishwarya Arvind 1.33 lakh equity shares. 

Meanwhile as the issue opens today, Zee Business Managing Editor Anil Singhvi has recommended long-term investors to apply for the issue. He said the company has experienced and good quality management. Besides, the company has a strong growth outlook and commands market leadership, said Zee Business Managing Editor.  

The impressive financial track record of eMudhra also infuses confidence from a long-term perspective.  

Speaking on valuations, the market guru said the company has priced its IPO a little on the higher side. "The only negative is valuations. It could have bee brought down a bit. However, Investors should apply for long-term in this IPO," said Singhvi.  

Meanwhile, the company plans to use proceeds from the fresh issue to repay debt, support working capital requirements, purchase equipment and pay for other related costs for data centre costs proposed to be set up in India and overseas locations, develop products, investment in eMudhra INC and for general corporate purposes. 

eMudhra is the largest licensed certifying authority in India with a market share of 37.9 per cent in the digital signature certificates market space in financial year 2021 having grown from 36.5 per cent in FY20. The company has been engaged in the business of providing digital trust services and enterprise solutions to individuals and organisations. 

Some of its customers include Infosys, Tata Consultancy Services, Mashreq Bank, Baud Telecom Company, Cholamandalam MS General Insurance Company and Bharti AXA Life Insurance Company. 

Meanwhile, around 12PM, eMudhra IPO was subscribed 26% of the total share sale on offer, while retail quota saw 50% bidding. Of the 1,13,64,784 shares on offer, bids were received for 29,08,410 shares so far on Day 1 of subscription.