Market Leader in B2B and B2B2C segment
Network effect and Technology is helping them to build strong entry barriers
Marquee customers across sectors
Higher dependence on cyclical automotive sector
MapmyIndia’s business is significantly dependent on automotive sector (52.5% of revenue in FY21). Revenue from automotive sector is cyclical and periodic fluctuations in overall demand for vehicles could result in fluctuations of demand for company’s products and services.
As of FY21, top 25 customers represented 80% of revenues from operations any loss of key customers or reduction in demand from these customers could adversely affect the business. Also, if customers do not enter in to new high-growth segments, MapmyIndia might not be able to capitalize on new growth opportunities.
liberalization may increase competitive intensity
The liberalization of the digital mapping industry may increase competitive intensity and it can result in the loss of customers and market share. It can lead to pricing pressures from other companies, including multinational companies for few or most of its offerings. Such increase in competition can affect its long‐term profitability.
Entire issue is an OFS, the company will not get any proceeds from this IPO
Growth in revenue over last 3 years (FY19 to FY21) is meagre although gross margin & EBITDA margin is quite impressive. In view of further liberalization & benign regulatory environment in future competition is going to only increase which imply top line growth will be a challenge.
C.E. Infosystems (MapmyIndia) is a data and technology products and platforms company offering proprietary digital maps as a service (MaaS), software as a service (SaaS) and platform as a service (Paas). It is India’s leading provider of advanced digital maps, geospatial software and location-based IoT technologies.
Operating under the brand MapmyIndia (for Indian market) and Mappls (for international market).
It serves marquee and renowned companies across different industries. Some of the key clients include: PhonePe, Flipkart, Yulu, HDFC Bank, Airtel, Hyundai, MG Motor, Avis, Safexpress and Goods and Service Tax Network (“GSTN”).
The company primarily service enterprise customers across 3 major categories:
In addition, they also offer professional grade maps and products directly to retail customers, through
their ‘Move’ app and GPS IoT enabled gadgets and devices.
As of September 30, 2021, they had serviced over 2,000 enterprise customers since their inception. In Financial Year 2021, they had over 500 customers on their platforms.
Some of their customers include PhonePe, Flipkart, Yulu, HDFC Bank, Airtel, Hyundai, MG Motor, Avis, Safexpress and Goods and Service Tax Network (“GSTN”).
MapmyIndia’s operations are centrally located in India, with an office in United States and partner representation in Japan. As on FY21, the company had combined workforce of 734 employees, comprising of 410 permanents and 324 non-permanent employees with an average age of ~32 years.
MapmyIndia’s revenue stood at Rs. 1,525 Mn in FY21 (2.3% Y-o-Y, resilient despite COVID impact) with EBITDA margin of 35%. Order book has grown at strong rate of 82% CAGR over FY19-21 indicating strong revenue growth ahead. Cash conversion is strong with OCF/PAT at 140%/115% in FY20/21 and ROE is healthy at 17% in FY21.
At the upper price band of Rs 1033, the PE works out to be 94x to its FY21 earnings. If we annualize FY22 earnings and attribute it to its post-issue paid-up equity capital, then the asking price is at a P/E of around 59x.
The company has leading position within marquee client base, strong moat resulting from most comprehensive and innovative solutions, specifically localized for challenging geography of India, solid network effects resulting from continuous feedback loop in digital mapping, asset light business model with high operating leverage. Hence, we recommend SUBSCRIBE to the IPO for long term perspective.
Use of Proceeds:
The IPO consists of an offer for sale (OFS) of 10,063,945 shares. There is no Fresh Issue.
Book running lead managers:
Axis Capital Limited ICICI Securities Limited Nomura Financial Advisory And Securities (India) Pvt Ltd
Rakesh Kumar Verma is the Chairman and Managing Director of the company. Has significant experience as an entrepreneur in the field of digital maps and geospatial information technologies. Rohan Verma is the Whole-time Director and CEO of the company. He has experience as an entrepreneur in the digital mapping, geospatial technologies and automotive mobility technologies. Mrs. Rashi Verma is the co-founder and chief technology officer of the Company.
|Particulars (Rs. in Crores)||FY19||FY20||FY21|
|Revenue from Operations||135.26||148.63||152.46|
|Gross Margin (%)||85.32%||90.20%||89.25%|
|Employee Benefit Expenses||50.75||64.27||53.95|
|EBITDA Margin (%)||18.86%||19.75%||33.72%|
|EBIT Margin (%)||12.09%||13.18%||27.23%|
|Profit Before Tax||41.80||31.61||78.77|
|Effective Tax Rate (%)||19.70%||26.58%||24.54%|
|Profit After Tax||33.57||23.20||59.43|
|PAT Margin (%)||24.82%||15.61%||38.98%|
|Earnings Per Share (Rs.)||6.19||4.27||10.99|