C.E. Info Systems (MapmyIndia) listed in the BSE at Rs 1,581 - a premium of around 53 per cent to its issue price of Rs 1,033. It has subsequently given up some of those gains, and at the time of writing this was trading at Rs 1,385. The IPO had received a very strong response and was subscribed 154.71 times.

 

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In our IPO note titled ‘Map out a good entry point’, published in our portfolio edition dated December 12, we had recommended long-term investors to avoid the IPO purely on valuation grounds and we maintain that view.

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We had noted that from the business point of view, the company had many positives. It is a pioneer in its space in India, with a successful execution track record over the last two decades, at the cusp of innovation and digital trends that will speed up demand for its offerings, and a strong balance sheet with no requirement for external funding to fund growth initiatives.

However, the IPO valuation of 36 times revenue and PE of 92 times (based on FY21 numbers) made the risk-reward unfavourable. At its current price, it trades at a price to revenue multiple of around 48 times and PE of 123 times.

With the US Federal Reserve having announced an acceleration of tapering due to higher than expected inflation in the US and given indications for potentially three rate hikes next year, global and Indian markets have already started showing some signs of weakness. Hence, it is likely that long-term investors may get better entry points post market corrections to consider buying MapmyIndia at lower levels. Hence, investors are recommended to wait for such opportunities.

Business

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 digital maps, geospatial software and location-based IoT technologies (Internet of Things).

It provides products, platforms, application programming interfaces (APIs) and solutions across a range of digital map data, software and IoT. Its digital maps are comprehensive, covering 6.29 million km representing 98.5 per cent of India’s road network, and provide location and navigation data across most of India.

While the company has started to build and release digital maps for countries outside India, currently its business and offerings are predominantly India focussed.

MapmyIndia derives revenue from two business segments – Consumer tech and enterprise digital transformation (C&E) and two automotive and mobility tech (A&M). C&E, which accounted for 48 per cent of FY21 revenue, comprises offering its suite of digital maps and solutions in the areas of location intelligence, geospatial analytics to companies across verticals such as BFSI, telecom, FMCG, government, etc.

Under the A&M segment, it caters to automotive OEMs (four-wheelers, two-wheelers and commercial vehicles), as well as corporations involved in transportation, mobility and logistics. Many of the leading auto OEMs in the country are its customers.

Its revenue model is based on charging customers fees per period on a per vehicle or per assets, or per transaction, per use case or per user basis, as applicable. Overall, based on this recurring model, the subscription fees, royalty and annuity payments together contributed over 90 per cent of FY21 operating revenue.

The current use case prospects for its offering are strong, given the accelerating digitisation trends driving greater need for personal and mobile navigational devices in transportation – personal mobility, e-commerce delivery, logistics, etc.

It also finds strong use case in areas such as analytics based on data gathered via digital maps – traffic movements, location intelligence (for example: details of the area mapped out like type of buildings, distribution of retail stores). New use cases can come in the future from development and wider use of drones and autonomous vehicles.