Earnings impact: eMudhra hits record high, surges 26% in two trading days

Shares of eMudhra hit a new high at Rs 319.80 as the stock surged 12 per cent on the BSE in Tuesday’s intra-day trade. The stock of a digital trust, digital security and paperless transformation solution provider, has rallied 26 per cent in the past two trading sessions after the company reported healthy earnings for the quarter ended June 2022 (Q1FY23).

The stock traded at its highest level since listing on June 1, 2022. Currently, it quoted 25 per cent higher against the issue price of Rs 256 per share. The stock had hit a 52-week low of Rs 236.30 on June 22, 2022.

eMudhra is engaged in the business of providing Digital Trust Services and Enterprise Solutions to individuals and organizations functioning in various industries. It has 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 individuals and organizations worldwide and issue SSL/TLS certificates for website authentication.

For Q1FY23, eMudhra reported 44 per cent year-on-year (YoY) and 27 per cent quarter on quarter (QoQ) jump in its consolidated profit after tax of Rs 13.71 crore. Earnings before interest, taxes, depreciation, and amortization (ebitda) margin remained stable at 40.1 per cent in Q1FY23, against 40.6 per cent in Q4FY22, while improved 540 bps from 35.2 per cent in Q1FY22. The margins improvement was driven by higher contribution from Enterprise Solution business and operational efficiencies.

Operating revenue grew 15 per cent YoY and 21.7 per cent QoQ at Rs 52.22 crore. Revenue from operations registered a strong growth primarily led by increase in Enterprise Solution business especially in international markets which grew by 140 per cent YoY.

The management said the performance was aided by growth in international markets. This is also a reflection of enterprises globally adopting cybersecurity and paperless transformation solutions as part of enterprise digital initiatives.

While there are headwinds with the macro environment, the space the company operate in is niche and the management see sustained demand for the company’s solutions in the context of security requirements for Trust Services, IoT, Electric Vehicles and initiatives such as ESG which lays emphasis on paper usage and carbon footprint reduction. Further, improved Blockchain adoption are resulting in need for solutions driving integration of identity backed digital signatures into such Blockchain systems, yielding newer market opportunities for the company, the management said.