eMudhra share price extends slide to 4th day, tanks 18% as margins take a hit in Q3

Small-cap stock eMudhra, engaged in IT services, tumbled over 18% in intra-day trade on Wednesday, January 29 as the company took a hit to its margins even as the revenue and profit growth remained strong in Q3.

eMudhra, which posted its quarterly earnings post market hours on Tuesday, saw an 11.9% year-on-year (YoY) increase in Q3 profit after tax to ₹22.4 crore from ₹20 crore in the year-ago quarter. The revenue grew 41.6% YoY to ₹140.89 crore from ₹9.95 crore. Operating performance was also strong with earnings before interest, tax, depreciation and amortization (EBITDA) rising 19.4% YoY to ₹31.94 crore.

However, the company witnessed a sharp cut in EBITDA and PAT margins during the quarter. While EBITDA margin came in at 22.7%, down from 26.9% the PAT margin in Q3 stood at 15.9% as against 20.1%, reflecting margin pressure.

Management Commentary

Commenting on the earnings performance, V. Srinivasan, Executive Chairman, eMudhra said, “During the quarter, deal closures and healthy growth in the Americas, MEA region and Asia Pacific resulted in strong performance in overseas markets. In India, the last quarter was particularly healthy in terms of deal wins for our Identity and Access management solution.”

We continue to see favourable tailwinds in terms of global standards and regulatory mandates pushing for adoption of public key infrastructure in areas such as user authentication, secure payments and device identity management in electric vehicles, Srinivasan added.

As tools around GenAI continue to evolve at a rapid pace, we continue to invest in reimagining our products in the context of deeply integrating GenAI capabilities, he added. "Some of the use cases include assessing deep fakes as part of user identity vetting, document summarizing and risk assessment, security analytics and operations and building agentic AI workflows for a range of internal process automation," Srinivasan said.

Share Price Impact

Following the Q3 earnings announcement, eMudhra share price tumbled 18.21% to the day's low of ₹682.20.

Today is the fourth straight day of fall for the IT stock, with the stock recording a nearly 30% decline during this period.

At 11.50 am, the small-cap stock was trading at ₹742, down 11.05% on the BSE.

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