Two Digital Signature Stocks to Keep a Watch On

Until a few decades back, getting the signatures of company directors, audit partners, legal heads etc on important documents, in a time bound manner, was a tough task. Especially when the said officers were travelling around the globe.

The Covid 19 pandemic resulted in social distancing norms and lockdowns that brought about a permanent change to this practice.

The pandemic forced organisations to move to 'work from home'. This resulted in the need for adoption of digital solutions that facilitated remote fulfilment of transactions. People started using online applications for making payments, filling up and submitting forms, and even signing important documents.

Paperless solutions then experienced a huge spike in demand for signing documents and the trend is here to stay as governments and global businesses adapt to a digital future.

e-Sign is one of the most important digital and paperless solutions. The Indian government has been laying strong focus on eSign, which is part of the Digital India campaign.

e-Sign is an online electronic signature service which can be integrated with service delivery applications via an open API. This facilitates an Aadhar holder (eKYC compliant person) to digitally sign a document.

It is an innovative initiative for allowing easy, efficient and secure signing of electronic documents. It authenticates the signer using eKYC services. So, by using this service, the user can digitally sign an electronic document without the need to obtain a physical signature.

A digital signature helps prove the origin, identity, and status of an electronic document, transaction. The signatory also uses it to verify informed consent.

A digital type of signature for electronic documents is created using a form of cryptography and is equivalent to a person's written signature. It provides a unique electronic link between the signer's identity and the message's origin.

Increased government backing has stimulated the digital signature market growth. For instance, in 2020, India's stock market regulator SEBI, permitted listed corporations to employ electronic signature certifications for stock exchanges filings.

With the rising need for digital record keeping, entities are now adopting and encouraging digital type of signatures to limit paper-based transactions.

Government agencies, banks, financial Institutions and educational institutions are the major users of eSign services.

The global digital signature market size is valued at US$ 7.6 bn in 2024. The market is projected to grow to US$ 119 bn by 2032, exhibiting a compounded growth of more than 30%.

Moreover, blockchain technology is an ideal approach to protecting a document's integrity after the signing process.

According to an October 2021 eMudhra report on Blockchain, digitally signed documents can ensure transaction integrity and non-tampering of data.

As blockchain systems gain traction, identity-based digital signatures are expected to become a vital component. These can maintain the traceability of users and approvers of digital documents.

For banking and insurance, retail, real estate, and government sectors, the security of digital documents transferred among individuals or departments is of utmost importance.

Therefore, large transaction-driven businesses have begun incorporating digitally enabled signatures in their work process to meet their need for secured online transactions.

This technology is considered ideal for highly regulated industries as it can prove the integrity and authenticity of the document. It also assists companies in saving time, space, and money while improving business productivity.

Similarly, organizations' need for authentication and multi-level security encourages them to opt for digitally enabled signatures. By adopting this technology, businesses can attain greater transparency, improved efficiency, enhanced document integrity, protection against fraud, and significant cost savings.

Through the Digital India Initiative, the government plans to transform India into digitally empowered economy. As an economy moves towards digitisation, necessity arises for higher security needs especially in banking and investments space.

These days the primary users of digital signatures are:

• Banks: For customer on boarding, lending, etc.
• Corporates: For paperless approval and filing of documents.
• Government: For accelerating digital transformation in citizen initiatives.
• Insurance: For policy generation and streamlined insurance claims.
• Mutual Funds and Capital Markets: For easy and seamless customer on boarding and interactions for redemptions and switches.

But who takes the responsibility for the digital signatures?

A licenced certifying authority (CA) can issue digital signature certificates (DSCs) in India.

The company is licensed by the Controller of Certifying Authorities (CCA), Ministry of Information Technology, and operates under the guidelines set by the Information technology Act.

Apart from cost efficiency and ease of use, digital signatures are also a cyber security necessity.

The huge growth of internet connected (IoT) devices has opened up the opportunity for cyber criminals to exploit vulnerabilities.

The immediate need is to make sure that the IoT devices are secured with the best possible security measures. Unauthorized IoT devices are often seen to be attached to a network without the knowledge and visibility of the security administrator.

Digital certificates are the mechanisms to identify a legitimate device and grant the device access to the network. Authorized devices need device certificates to act as a network passport.

So, without the right digital certificate, the device would be unable to connect to the network or perform the designated function.

The growth of digital signature certificates is linked to the global growth of Digital Trust certificates. In the future, however, the growth of digital signature is expected to outpace the growth of certificates for digital security.

India will remain one of the fastest growing digital security and paperless transformation markets in the world. The government's aggressive stance on digital transformation is to bring down corruption, red tape, improve process efficiency and quicker turnarounds on service delivery without compromising on security.

Currently there are 15 licenced certifying authority (CA) that can issue digital signature certificates (DSCs) in India. While the global CAs have a strong market share worldwide, they do not have the license to operate in India.

Two stocks that have a presence in this niche segment of the fintech space are eMudhra and Protean e-Gov Technologies.

eMudhra caters to subscribers who use Digital Certificates for Income Tax, Ministry of Corporate Affairs, tenders, foreign trade, banking, railways, and many other needs. The company caters to both corporate and individual clients. Its current market share in digital signature certificates is around 35%.

Also, eMudhra is one of the key certifying authorities in the country that has strong retail footprint to provide all types of eSign with eStamping capability. The company derived 48% and 30% of revenue from private sector and the government respectively in financial year 2024.

Protean e-Gov Technologies is primarily into e-governance solutions. It is engaged in the business of developing citizen-centric and population-scale e-governance solutions.

For instance, its services assist in Tax Information Networks, Pan card issuance, Central Pension system record keeping, Aadhar authentication and e-KYC services.

The company is also one of the licenced certifying authority (CA) that can issue digital signature certificates. However, compared to eMudhra, Protean has a more diversified revenue stream, with high exposure to government projects.

Do check out the detailed factsheets on the stocks here.

Warm regards,


Tanushree Banerjee
Editor, StockSelect
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)