Company Name – C E Info Systems Limited (MapmyIndia)
Current Share Price – INR 1,410 (February 25, 2022)
Market Cap – INR 7,508 cr
1. What is interesting about the stock?
CE Info Systems is an information and digital company that offers its customers unique digital software as a service (SaaS), maps as a service (MaaS), and platform as a service (PaaS). To distance itself from the opposition, the firm is always working to expand the breadth and quality of its present services. In 2004, the business established the first interactive digital mapping platform in India, www.mapmyindia.com. The company’s AI-powered 4D, HD, information-rich map, which digitally and geospatially depicts the natural world in near real-time, is a never-ending effort that will enable them to build and control an asset that will become immensely valuable and financially profitable in the future for a growing variety of use cases. So far, the organization has mapped over 10.5 million distinct destinations increased its coverage to over 6.3 million kilometers of the road network, 7,068 cities at street level with address level for 80 cities, 6 lakhs+ villages, and 2D and 3D landmarks in 86 cities. MapmyIndia also intends to deliver high-definition, four-dimensional mapping solutions for the metaverse, providing a realistic perspective of the whole world with granular data points to assist both public and private sector use cases.
MapmyIndia is seeing more potential as a result of activities in different sectors. When it comes to grabbing fast-moving markets, the organisation is quite opportunistic. To increase its product offerings and strengthen its position in this specialized market, the maps and navigation systems provider has established agreements with government and corporate institutions such as the Indian Space Research Organisation (ISRO), Idea Cellular, and Reverie Language Technologies. MapMyIndia partnered with ISRO to provide a Google Maps alternative. It is proposed that ISRO and MapmyIndia would serve as a viable alternative to Google Maps and similar sites. Companies that work with MapmyIndia include the automobile industry, consumer technology firms, telecom, transport and logistics, public sector and infrastructure, smart city solutions, e-commerce, education, banking, financial services, and insurance. Some of the significant customers of MapmyIndia include Flipkart, HDFC Bank, Hyundai, Airtel, Phonepe, Honda, Rebel Foods, Paytm, etc. The company presently has 5,000 business clients. Automotive firms widely use the company's navigation and location services, and it has a 95% market share in India for GPS navigation. MapmyIndia gets 39% of revenue from the automotive sector, 54% from the corporate sector, 5% from the government sector, and 2% from the retail sector.
In the past, MapmyIndia's growth tactics allowed it to expand its range of business products and geographical reach. The company also considered investments and acquisitions in areas where they've seen a significant need to enhance their technology. Recently, the company announced its intention to buy a 9.9% interest in geospatial firm Pupilmesh Private Limited for roughly INR 49 lakhs. MapmyIndia anticipates that the purchase would help it expand its navigation business.
The company's technology stack is designed to be internationally applicable and geographically neutral. Under the MapmyIndia and Mappls brands, it provides products, platforms, application programming interfaces (APIs), and solutions in a range of digital map data, software, and IoT for both the Indian and worldwide markets. Outside of India, the firm creates and distributes digital maps for Sri Lanka, Bhutan, Myanmar, Nepal, the United Arab Emirates, Bangladesh, and Egypt. Indian digital map services is predicted to expand from INR 12,614 crore in 2019 to INR 31,164 crore in 2025 at a CAGR of 16.1%, while the worldwide digital map services market is expected to grow at a CAGR of 13.6%, from INR 5.26 lakh crore in 2019 to INR 11.27 lakh crore in 2025.
Despite the stock market's unpredictability, MapmyIndia had a strong launch in December 21, opening with a 53% premium. MapmyIndia plans to use the cash garnered from its IPO to expand its marketing efforts, make acquisitions, and improve its technology.
The firm pioneered digital mapping and has a leading market position in the B2B and B2B2C industries for digital maps and location intelligence technologies and services.
The company collects a lot of data which it uses to offer incremental value to its clients and consumers.
According to the Geospatial Guideline, all finer-grained digital maps and geospatial data must be preserved and utilized within domestic borders. As a result, when it comes to partnering with foreign companies to provide navigation-related services in India, the company has a competitive edge.
Because most of their goods, platforms, and solutions are digital, developed in-house, and then deployed and offered via the cloud, they are asset-light and have a low variable cost base. As a result, the company functions with a high level of operational leverage. In the fiscal year 2021, the Company’s contribution margin was 83%, EBITDA margin was 35% (excluding other income), and PAT margin was 31%.
The company's income is heavily reliant on the automotive sector. Therefore, any setbacks in the sector's outlook might have a detrimental impact on its business, operational results, and financial position.
Increased government restrictions around data collection and utilization might put extra strain on the company's operations and growth.
The company's inability to maintain or update its map database, as well as inaccuracies in the database, might tarnish its reputation and hurt its ability to sell its products and services.
Inevitable failures have occurred due to unanticipated factual mistakes, such as regulatory filings for earlier business activities performed by the corporation.
The company's peers are primarily multinational players:
Mapbox- is used by organizations such as Foursquare, Lonely Planet, the Financial Times, The Weather Channel, Instacart Inc., and Snapchat to produce customized online maps.
HERE Technologies provides corporate clients with mapping, navigation, and location solutions to create a digital representation of reality that substantially improves the way people, things, and things interact.
TomTom - partnered with Veniam, the world's top provider of intelligent networking for connected vehicles, to deliver the best possible connectivity for onboard apps and automakers throughout the world.
AutoNavi Software Co., Ltd.,- founded in 2001, is a Chinese supplier of web mapping, navigation, and location-based services.
Rakesh Kumar Verma is the company's Chairman and Managing Director. He co-founded it with Rashmi Verma (his wife) in 1995.
2. Key Historical Financials
The company’s consolidated profit for Q3FY22 came in at INR 19 crore, down 14% year-on-year. In the same period, the company's revenue fell 12% YoY to INR 43 crore. Lower revenue during the quarter was attributed to sales of automobile OEMs being hampered by a semiconductor shortage.
MapmyIndia recorded a significant rise in earnings in FY21 at a PAT of INR 60 crore, more than doubling the previous financial year's net profit of INR 25 crore. The company's revenue increased 2% to INR 152 crore from INR 149 crore. The company has delivered healthy ROCE/ROE of 20%/ 19% and is debt-free.
3. What is my view on company valuation?
MapmyIndia has a very high PE (TTM) Ratio (156x) compared to the Indian Software sector average (28x).
MapmyIndia is a debt-free company with solid fundamentals.
After the IPO, MapMyIndia's founders Rakesh Verma and Rashmi Verma still own around 53% of the firm, making them the dominant owners.
The business is performing well, and the business strategy is long-term. New-age technologies, such as SaaS, PaaS, and MaaS providers, have a bright future ahead of them. Following the Covid 19 outbreak, the firm's business model looks compelling, and it is a digital organization with a promising future. It is a high-quality firm that may be held in a long-term stock portfolio for individual investors after valuations have corrected significantly from the current levels.
4. What are the risks to the investment analysis?
Events beyond their control, such as political, economic, or other factors, may have a detrimental influence on their business and operations.
Currency swings are a risk for overseas customers' income.
To run its business, the company depends on telecommunications and information technology systems and infrastructure, and any disruption or failure in these systems, networks, infrastructure, or technical systems could jeopardise the company's ability to effectively operate its platforms and provide its products and services.
Developments in the industries in which its customers operate have an impact on the organisation.
About the Author
I write about the stock market, cryptocurrency, blockchain. I have Bachelor of Arts degree with more than 10 years of experience in finance and cryptocurrencies.
I have no stock, option or similar derivative position in any of the companies mentioned since last 30 days, and shall not initiate any such positions within the next 5 days. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from SocInvest). I have no business relationship with any company whose stock is mentioned in this article.
I am not a SEBI registered advisor. This article is purely for educational purpose and not to be construed as an investment advice. Please consult your financial advisor before acting on it.
I have used publicly available information while writing this article.