MapMyIndia - A Credible Play On The Fast Growing Digital Mapping Market: Yes Securities Initiates Coverage

Yes Securities Report

Six reasons to buy CE Info Systems Ltd. (MapMyIndia)

1. Integrated provider of digital map data, analytics and geospatial software with 35% plus revenue compound annual growth rate (FY23-25E) growth outlook led by rising number of use cases and growing demand across key business-to-business and business-to-business-to- consumer markets of automotive and mobility; and consumer technology. Order booking remains strong for MapmyIndia as the total market for Indian digital map services is expected to grow from $1.7 billion in 2019 to $4.2 billion in 2025 at a CAGR of 16.1%.

2. ~40% Ebitda margin as it utilises asset light model and has low variable cost resulting in high contribution margin. It has strong pricing power as it charges its customers, fees per period based on per vehicle, per asset, per transaction, per use case, etc. Client addition remains robust for MapmyIndia as it added 250 plus clients in FY23 and its client list includes marquee names such as PhonePe, Hyundai, MG Motor, Paytm, Amazon, etc.

3. In terms of product offerings, it operates through two key product categories 1) Map and Data (39.7% of revenue), 2) Platform and Internet of things (60.3% of revenue). Among its key markets, it is market leader in the automotive sector(~80% market share); and has growing presence in the consumer technology space. Being in this business for over two decades, it has the most comprehensive, detailed and highly accurate digital map database for India compared to its peers.

4. It is also set to benefit from Government focus on 'Made in India' that will help it to win contracts from government. Also, the current government regulations favor domestic players as they don’t need permission to collect, store and process geospatial data within India. The foreign players are barred from creating detailed mapping database of India. Also, foray into B2C space and international expansion provide other levers to drive business growth

5. Strong promoter (Promoter holding 53%) track record as the management team is led by its founder and industry veteran Mr. Rakesh Verma (Chief Managing Director), with four decades of experience in the technology sector. It is a net debt free company with cash of ~ Rs 4.9 billion that provides optionality. Capital allocation remains prudent as seen in return on equity of around 20%. Days sales outstanding at 60 days remains reasonable, with robust free cash flow conversion.

6. Strong revenue growth outlook along with superior margin profile makes it credible play in the digital mapping space. Trades at PER of 35.0 times on FY25E. Revenue / Ebitda /profit after tax are expected to grow at compound annual growth rate of 37.1%/34.9%/32.0% over FY23-FY25E.

We initiate coverage with 'Buy' rating with target price of Rs 1550, valuing it through discounted cash flow method, with terminal growth rate of 5% and discount rate of 11.5%.

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