by Welcome back to Traders Ideology, In this article, we will do a fundamental analysis of Mapmyindia. If you have been reading my articles you would know that I strongly believe that technology is one sector that will generate the next set of multibagger stocks.
The only problem is that majority of tech stocks are available at ultra-high valuation and at a very high market cap, moreover, the majority of them are currently in loss but starting 9th December we have a new IPO of CE Info System also known as Mapmy India.
Mapmyindia is a technology company and also a profitable company now if you are here just for the grey market premium then map my India latest grey market premium is around 68.
In this article, I am going to explain the business of the company in detail for those who are genuinely interested in knowing about the business model of the company and its long-term growth prospect that would be helpful. If you are planning to invest for the long term and if you are planning for long-term wealth creation
In this article, we’ll cover the business model of map my India, its promoters, competitors, and key risk, future growth, and financials then we’ll look at the IPO details along with valuation. Finally, we’ll conclude if it is worth applying for the IPO or not all right. let’s get started.
Disclaimer: This article is only for educational purposes. I do not recommend buying or sell so please consult your advisor and do your own research before investing.
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Introduction
Mapmy India is a data and technology product and platform company offering propriety digital map as a service software as a service and platform as a service.
As per the report from Frost and Sullivan, it is India’s leading provider of advanced digital maps geospatial software, and location-based IoT technologies.
Promoters
- Let us look at the promoters of the company although mapmyindia is a data and technology play company you would be surprised to know that it was established in 1995.
- In the early 90s, Mr. Rakesh Verma and his wife Rashmi verma moved to India after working for around 12 years in top MNCs like IBM, and General Motors in the USA.
- On one side we keep hearing about Indian minds leaving our country and leading the US tech companies and feel sad about it but look at this site where the couple left their bright career in the USA to do something for their country at that time going to the USA was a dream in itself.
- Mr. Rakesh Verma and Rashmi Verma left their well-paid job in the USA to do something in India eventually they co-founded map my India. Mr. Rakesh Verma is the chairman and MD of the company and alumni of Bits Pilani in1972.
- He has significant experience in the field of digital maps and geospatial, information technology. Mrs. Rashmi Verma is the co-founder and CTO of the company and she’s an IIT Roorkee alumni of batch1977 and she has done her master’s in computer science from Eastern Washington University.
- Their son Mr. Rohan verma is the CEO of the company he has received his bachelor’s degree in electrical engineering from Stanford University which is among the top three universities in the world where he was awarded the president’s award for academic excellence.
- Then he did his MBA from London business school again a very prestigious college for masters now you can understand the quality of promoters you can’t expect anything better than this a family-like business with top academics and vast experience.
- I always believe that promoters are the anchor of the company and their competence and ethics drive the future of the company and with such top-quality promoters, the future of the company is shortly bright.
Fundamental Analysis of Mapmy India
Fundamental Analysis of Mapmy India are as follows:
Business Model of Mapmy India
- Let me try to simplify their business with an example today GPS is one of the most important parts of our life the moment we need to go from one location to another or share our location we open google maps isn’t it.
- Not only do we as end customers require the GPS even the enterprise required GPS in their devices so meet your car service provider or e-commerce companies or food delivery companies or logistic companies or even the corporates.
- Everyone needs a GPS now the moment we think of maps or GPS we think of google maps and almost everyone uses google maps at this already integrated into the android phone.
- In fact, the majority of us have not even heard about Mapmy India before the IPO isn’t it.
- How is Mapmy India different from google maps and where does it come into the picture also we are anyway using google maps for free so how does Mapmy India earn money please try to understand this carefully.
- To answer this in a very simple language google Maps is into b2c business that is business to consumer. for example, we are the end consumer and we directly use google maps however map my India is into b2b that is business to business and b2b to c is business to business to consumer.
- Here b2b means Mapmy India clients are not the end consumers like us but the corporate houses for example some of its b2b clients include Hdfcbank which is India’s largest private bank, Airtel which is again India’s second-largest telecom provider then GSTIN which is a non-profit organization that manages the entire IIT system of GST portal where people pay their GST.
- These are just some of the examples of b2b clients there is a long list of marquee customers like Bajaj Finserv, SBI branch locator, Asian paints, Tata power even the Covid app that we use for covid vaccination uses map my India services then it includes b2b to c clients that collaborate with other businesses to sell products or services to end consumers.
- For example, some of the market clients of map my Indian b2b to c segment include companies like Flipkart, phone pay, McDonald’s, rebel, car 24, 99acre, magic brick, Hyundai, mg motor, and many more.
- Basically, map my India has clients across industries including e-commerce automobile food delivery logistics and so on. As of September 21 map, my India has 2000 plus enterprise customers 500 plus customers on their says platform, and 80 of all cars in the Indian market are using their navigation solutions.
- Now the question is how does map my India earn money before I even discuss the revenue model let me briefly mention the offerings of map my India.
Offerings of Mapmyindia
Offerings of Mapmyindia are as follows:
Map and data
- Its first offering is a map and data company that provides digital maps and geospatial data products company has built its own proprietary AI-assisted mapping system that processes geospatial data and produces digital maps with accurate details about the physical world and it gets updated dynamically in the near real-time for your live traffic weather location-based safety alert changes in road condition etc. The maps are also available in regional languages.
Platform and Iot
- The second service is platform and IoT Mapmy India provides 2d and 3d visual and voice-based navigation platforms including your location search traffic update as well as turn by turn route planning optimization Mapmy India also provides the developer API and SDKs.
- API and SDKs are basically codes that enterprises can integrate with their software for example when you use a Hyundai car you basically use the mapmyindia navigation system that has been embedded with Hyundai software likewise all its enterprise clients use these APIs with their software to integrate the navigation within their apps and websites.
- It is not only used in navigation but also used in various other businesses activity like optimizing the supply chain and logistic cost by identifying the optimal route than used by the government to track the location of taxpayers traders etc.
- These maps and APIs have multiple use cases it also offers a wide range of IoT devices such as GPS-based tracking systems that can be installed inside vehicles’ connected camera, RFID, connectivity, panic button, and remote immobilization.
- I hope now you understand the various offerings of map my India just to give you an idea of the scale of map my India business its digital map cover 6.29 million kilometers of roads in India representing 98.5 percent of India’s role network covering 7900 plus towns and around 6.37lakh villages.
- If you look at the revenue model as I mentioned before company deals in your b2b and b2b, b2c segment where it charges its clients on various use cases like fee per vehicle, per asset, per transaction, per user, and so on.
- For example with automotive OEMs, the payment is typically on a weekly basis for the contract period and top-up payment for internet services and subscription charges.
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Competitors
- If you look at the competitors of the company there are companies like google map, Esri, Trimble, here tomtom, and map box that are all global players but like I said google map which is the most popular among end consumers is mainly into b to c segment and mapmyIndia into b2b and b2b2c.
- The next important point is the economic model and entry barrier in the industry with a head start of over 25 years mapmyindia has built a proprietary digital map database for locations across India and developed indigenous tools technologies and systems for data acquisition processing and decimation these are difficult to replicate and have created a high entry barrier in the map and navigation business in fact mapmyindia has an even better product offering than google maps.
- Competition wise mapmyindia being an Indian company would have a regulatory advantage in India otherwise on parameters like technical expertise frequency of map update, overall experience, consumer base, cost, parameter, map my ideas, among the top three companies. mapmyindia also has registered copyright for CE info special database which includes the map database of India.
Key Risk of Mapmyindia
- As far as risk is concerned one key risk is that the digital sector is very dynamic any inability to update with the latest technology can impact the e-business of the company.
- companies also need to update their map database and ensure information accuracy, any failure in data accuracy can impact the business of the company.
- As per the research report, the total Indian noticeable market of digital maps and location-based intelligent services is expected to grow to 7.74 billion dollars that are around 58 000 crores in 2025 at around 15.5 percent cagr between 2019 to 25.
- Most of this growth would be from new projects and policies announced by the government of India that encourages domestic players of digital maps and associated solutions.
- The total global addressable market stood at around 86.55 billion dollars that is around 6.4lakh crore as of 2020 and is expected to reach around173.61 billion dollars that are around12.9 lakh roads by 2025 growing at a cagr of 13%.
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Future Growth Prospects
- Some of the key growth drivers include growing demand for mobile apps where location-based functionality is very common and India is one of the fastest-growing app markets in the world then there’s increasing usage of mobile phones and internet printation that would boost the usage of the navigation systems and digital maps.
- 5g is about to roll out and it would be the co-driver for digitization in India then IoT market is growing rapidly and has applications across the industry.
- Future is all about electric autonomous and connected vehicles and digital maps and GPS navigation systems are the core of these automobiles. It would be used across two-wheeler four-wheeler passenger and commercial vehicles we can see that there are already so many use cases of digital maps in the newest internet companies like your e-commerce companies fintech companies ride-sharing companies food delivery companies, logistic companies, IoT manufacturers, etc.
- Although mapmyindia core business focuses on the Indian market the geospatial software and location-based IoT platform product’s APIs and solutions are geographies and data-agnostic enabling them to offer global solutions.
- The company has also started to build and release digital maps for countries outside India such as Sri Lanka, Bangladesh Nepal, Bhutan, Myanmar, UAE, and Egypt.
- Then very important aspect is the government focus on Atmanirbhar Bharat where it is promoting indigenous companies mapmyindia has recently entered into various memorandums of understanding with key government organizations such as ISRO, Nitiayog, national e-governance, division ministry of electronics, and information technology, ministry of housing, and urban affairs to provide atmanirbhar or indigenous geospatial solutions and capabilities to Indian users. In short, the future is looking very very bright .
Financials of Mapmyindia
- If you look at the revenues of mapmyindia its revenues have grown from 163 crores in FY19 to 192 crores in FY21.
- In the first half of FY22 company has generated a revenue of 122 crores. Its profits have grown from 33.5 crores in fy19 to 59.4 crores in FY21.
- In the first half of FY22, itself company has generated a profit of 46.7 crores. so the profit growth is looking good.
- If you look at the profitability company has high margin and its EBITDA margin are consistently about 25%, the latest EBITDA margin is 46%.
- If you look at the ROE of FY22 is 11.5%.
- The company is completely debt-free with zero debt companies cash-rich with cash and cash equivalent growing from 8 crores in FY19 to latest cash and cash equivalent of 61.4 crores. overall financially the company is looking very good mapmyIndia.
Mapmyindia IPO Details
- IPO window is between 9th December to 13 December.
- The IPO price band is between 1000 to 1033 rupees.
- The face value of each year is rupees 2.
- A market lot is 14 shares and the minimum investment is rupees fourteen thousand four hundred sixty-two rupees.
- The IPO issue size is rupees one thousand thirty-nine crore which is a complete offer for sale where its promoters including Qualcomm, and Zenrin are the early investors who are selling their stake.
- The company’s cash-rich is not diluting its equity to raise money.
- The major reason for the IPO is to gain more credibility as a public listed company in this IPO retail quota is 35 percent, QIB quota is 50% and HNI quota is 15%.
Valuation
- Finally, if you look at the valuation at a higher price band of rupees 1033.
- The company would be valued at around rupees 5500 crores so it is a small-cap company.
- It has generated a total earning of around 88 crores in trilling 12 months that is last four quarters and its trailing 12-month eps comes out to be around 16.58 at a higher price band of 1033 company would be valued at a PE ratio of 62.
- If we consider the h1 earning and annualized it for fy22 then at a higher price band company would be valued at a PE of 58.8.
- Considering the future growth potential I believe this valuation is reasonable, there is already a good response to this IPO in the grey market, and is currently trading at around 68 premium.
Conclusion
- Overall if we conclude mapmyindia is in the business of advanced digital map geospatial software and location-based IoT technologies.
- It is in the business of b2b and b2b2c with leading enterprises and new edge fintech and technology companies as it has an exceptional promoter pedigree with extensive knowledge and experience.
- It is the only Indian company in the category with a high entry barrier and among the top two-three players globally companies.
- Financially sound with good profit, growth good profitability zero debt cash bridge and with the asset-light model. Overall on fundamentals, I would rate it 4.5 stars out of 5.
- As far as valuation is concerned companies launching at a trailing 12-month PE of 62, and annualized fy22pe of 58.8. Considering the fact that the future is digital where GPS navigation would be a very important component across automobile industry logistics sector, e-com fintech, and other sectors and being an indigenous company mapped by India would also benefit from government policies and regulation hence I believe that there’s very bright growth respect for the company and the valuation is looking reasonable.
- On the valuation, I would rate it four-star out of five. overall mapmyindia has all the right ingredients to be a multibagger in the long term although nobody can predict the future with a hundred percent conviction I am very optimistic about this company and I am going to apply for sure in this IPO for the long term wealth creation.
- What is your take on this ipo let me know in the comments I hope you will appreciate the hard work I put behind this analysis.
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