Company Name – C E Info Systems Limited (MapmyIndia)
Current Share Price – INR 1,940 (Jan 03, 2024)
Market Cap – INR 10,490 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 6.3 million kilometers of the road network, ~8,000 towns at street level with 14.5 million house or building addresses, and 6.4 lakh villages.
MapmyIndia is seeing more potential as a result of activities in different sectors. When it comes to grabbing fast-moving markets, the organization 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). MapMyIndia partnered with ISRO to provide a Google Maps alternative. It is proposed that ISRO and MapmyIndia would serve as viable alternatives 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 Amazon, Apple, Flipkart, HDFC Bank, Hyundai, Airtel, Phonepe, Paytm, Bajaj Auto, Uber, McDonald's, Ministry of Finance (GSTN), etc. Automotive firms widely use the Company's navigation and location services. MapmyIndia gets ~50% of its revenue from the Automotive & Mobility Tech, and the remaining from Consumer Tech & Enterprise Digital Transformation segment.
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. Company made two acquisitions in FY22:
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 are predicted to expand from USD 1.8 billion in 2020 to USD 4.2 billion in 2025 at a CAGR of 18% based on the research commissioned by the Company.
Company is looking to reach INR 1000 cr revenue target by FY27 or FY28 implying a revenue CAGR of 35-40%.
MapmyIndia had a strong launch on 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.
Competition Commission of India (CCI) mandated Google to unbundle its eco-system opening pre-installation of Mappls map on Android phones sold in India.
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 FY23, the Company’s EBITDA margin was 42% (excluding other income), and the PAT margin was 34%.
The Company's income is 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.
Weak organic growth in FY23.
The key competitor to the Company is Google Maps.
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
Company revenue and PAT grew at a CAGR of 24% and 74% respectively in the last 3 years
MapmyIndia showed strong revenue growth in FY22 and FY23 (partly aided by inorganic growth)
Revenue growth has slowed down in Q2FY24 to 20% vs management guidance of 40% in FY24
EBITDA margin improved from 34% in FY21 to 42% in FY23 - management has guided towards an EBITDA margin of 40-45% for the Company
CFO/EBITDA (cash flow convertibility) was poor in FY22 and FY23 with an increase in working capital
ROE increased to 22% in FY23 from 18% in FY21 – which is impressive for a new-age digital company as most of them are in losses
3. What is my view on company valuation?
MapmyIndia has a very high PE (TTM) Ratio (84x) compared to the Indian Software sector 5 year average of 26x. This is after the stock has increased by ~50% over the last months. Stock is still overvalued given the organic growth (20-25%) and I believe the fair value could be ~30x.
MapmyIndia is a debt-free company with cash balance of ~ INR 500 cr solid fundamentals.
Company has a very strong competitor in Google Maps which is on ~400-500 million devices in India vs MapmyIndia on ~ 3 million devices. This provides Google maps huge advantages of scale and crowd sourced data.
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 recent CCI ruling and the high growth of digital businesses, 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.
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 jeopardize 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 organization.
About the Author
I am a stock market enthusiast.
I have had no stock, option, or similar derivative position in any of the companies mentioned in the 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 purposes and is not to be construed as investment advice. Please consult your financial advisor before acting on it.
I have used publicly available information while writing this article.
[Initial posts - Feb 2022 and Apr 2023]