C.E. Info Systems: Subscribe For Listing Gains, Says Motilal Oswal Financial Services

Market leader for digital mapping in India

C.E. Info Systems (MapmyIndia) is India's leading provider of advanced digital maps, geospatial software and location based IoT technologies. It is a leader in the B2B and B2B2C market, serving over 500 enterprise customers across 3 major categories - corporate, automotive and government. Some of the marquee names include PhonePe, Flipkart, Yulu, HDFC Bank, Airtel, Hyundai, Avis, Safexpress, GST Network, etc.

Strong entry barriers

Given its early mover advantage and continuous innovation, MapmyIndia has been able to build a proprietary end-to-end technology driven and AI-assisted mapping systems, that is difficult to replicate. This along with large network effect (covers 98.5% of India's road network) has created strong entry barriers for the company.

Industry tailwinds driving growth: As per F&S report, the total Indian addressable market of digital maps and location based intelligence services is expected to grow at 15-16% CAGR over CY19-25 to INR 475 bn. The industry got a boost in Feb'21 when GoI liberalized the mapping policy for domestic players while restricting foreign players from storing data on servers and forcing them to partner with local player. Policy changes along with launch of Indian Space Association, Gati Shakti, partnership with ISRO, etc. would benefit MapmyIndia immensely.

Healthy Financials

MapmyIndia's Revenue/EBITDA/PAT has grown at a 6%/42%/33% CAGR over FY19-21, while in H1FY22, it grew 81%/308%/ 163% respectively. EBITDA margins expanded from 18.9% in FY19 to 45.2% in 1HFY22. It enjoys a capital efficient business model with zero debt, strong FCF and healthy return ratios of 23%.

Issue Size

The INR10.4bn IPO consists entirely OFS from promoters and other investors, which would result in promoter's stake reducing from 61.7% pre-IPO to 53.7% post-IPO.

Valuation & View: We like MapmyIndia given its leadership in digital mapping, strong entry barriers, robust profitable data and tech platform along with consistent financials. The issue is valued at 27x 1HFY22 annualized EV/Sales, which although expensive is similar to other Indian unicorns. We believe MapmyIndia is rightly placed to tap the high growth digital mapping market. Investors with high risk appetite can Subscribe for Listing Gains given fancy for unique and first of its kind listing.

Report Courtesy: Motilal Oswal Financial Services