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Emudhra, the leading licensed certifying authority in India, has witnessed remarkable growth in its stock value over the past year, delivering substantial returns to its shareholders. The company’s shares, valued at ₹214 each a year ago, have surged by an impressive 245%, reaching the current market price of ₹738.40.
Looking at the stock’s annual performance, it witnessed a notable 42.72% increase in CY23. However, the stock has surpassed its entire CY23 returns within the first four months of the current year, recording a remarkable 64% growth. In March, the stock recorded a new lifetime high of 833.50 apiece.
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The company shares were listed on the Indian stock exchanges in June 2023 at ₹257.9. Taking the stock’s current market price into account, it is trading 189% higher than its IPO prices.
Emudhra, is a wholly owned subsidiary of 3i Infotech Limited. It is engaged in the business of providing digital trust services and enterprise solutions to individuals and organisations functioning in various industries.
It has strong digital signature certificate expertise and is the only Indian company to be directly recognised by renowned browsers and document processing software companies such as Microsoft, Mozilla, Apple, and Adobe, allowing it to sell digital identities to individuals and organisations worldwide and issue SSL/TLS certificates for website authentication.
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The company announced its financial results for Q4 FY24 and for the full-year FY24 on April 30. It reported a revenue of ₹3800.4 million, an increase of 49.6% from the previous year. Its EBITDA for the year came in at ₹1164.8 million, with an EBITDA margin of 30.6%, while the net profit jumped 20.1% in FY24 to ₹763.5 million.
The company’s Enterprise segment forms 70% of total revenue and has been the key driver behind revenue growth led by expansion in the key markets of the US and Europe.
It is working on several POC cases for the US market and has been trying to get into large enterprises. It has been seeing strong traction in other new products such as eSign, emDiscovery, etc. The acquisition of Ikon Tech has helped to drive cross-sell/upsell opportunities, said domestic brokerage firm Centrum Broking.
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More rally ahead?
Domestic brokerage firm Centrum Broking expects the company’s expansion of enterprise businesses in the US and Europe to drive overall revenue growth. Key enterprise solutions like emSigner are experiencing robust demand globally, underpinning the company’s revenue trajectory.
Moreover, Centrum Broking projects a favourable outlook for the Trust business in the near term, fueled by increased realisation in channel sales. The brokerage anticipates revenue, EBITDA, and PAT to grow at 38.0%, 49.2%, and 50.8% over FY24–FY26E. It also revised its EPS estimates for FY25 and FY26 by 2.2% and 2.3%, respectively.
Reflecting on a strong spike in the share price, the brokerage has adjusted its rating from ‘buy’ to ‘Add’. However, it revised its target price higher to ₹832 apiece from an earlier price target of ₹694 apiece in view of sustained long-term potential to grow at 30% CAGR.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 02 May 2024, 04:59 PM IST
