IPO Size: Rs. 1,040 cr – Entire offer for sale (OFS)

• 42% of OFS is by promoters (62% stake to drop to 59%)
• 27% by Qualcomm, completely exiting 5% stake at 26% CAGR return in 13 years  
• 14% by Zenrin (Japanese map publisher) trimming 9% stake to 6%

Price band: Rs. 1,000-1,033 per share

Mcap: Rs. 5,500 cr, implying 19% dilution

IPO Date: Thu 9^th Dec to Mon 13^th Dec 2021, Listing: Tue 21^st Dec 2021

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Company Overview:

C E Info Systems (MapmyIndia) is a products-cum-platform company, offering MaaS, Saas and Paas – map, software and platform as a service respectively to B2B customers, earning annuity-like income from subscription fees and royalty.

Strengths:

1. FY21’s Rs. 152 cr revenue rose to Rs.100 cr in H1FY22, with half revenue from automobile OEMs and mobility (Hyundai, MG Motor, Avis, SafeXpress) and balance half from consumer tech (Flipkart, PhonePe), BFSI (HDFC Bank), telecom (Airtel), government (GSTN).
2. Combination of growth with high margins: Unlike Saas player RateGain, whose IPO is also open, operating leverage has kicked in for the company, with EBITDA margin, excluding other income, at 34% in FY21, which rose to 45% in H1FY22. If we exclude other income (mainly treasury gains), H1FY22’s PAT of Rs. 30 cr has exceeded FY21’s Rs. 29.4 cr, with net margin rising from 19% to 30% during this period.
3. Large existing market growing in mid-teens, with emerging opportunities in drone, vehicle automation, shared and electric mobility, integration of digital maps with ISRO’s satellite imagery etc. India’s Geospatial Guidelines liberalized in Feb 2021, restricting foreign players like Google Maps from high definition mapping, ground survey, 360 degree street view survey, providing company a competitive edge. 

Concerns:

1. Client Concentration: Top 25 of over 500 customers accounted for 80% of revenue, with revenue share from government at 9% in FY21, up from 4% YoY. Revenue share of PhonePe, holding 19% stake in the company, although not disclosed, may also be significant, as both Flipkart and PhonePe are customers.
2. Competition, changing regulation or technology obsolescence may be a serious challenge in future and can have a material impact.
3. Premium Valuation: Annualizing H1FY22 EPS of Rs. 8.6 leads to a PE multiple of 60x, which is high in absolute terms, given 17% RoE in FY21. But company has a cash-generating, unique and profitable business model, with cash and equivalents of Rs. 370 cr on net worth of Rs. 410 cr. Other new-age high-growth tech stocks, although not exact peers, make company’s valuation in line as they are ruling at high PEs - Route Mobile (60x), Indiamart (65x), Affle (85x).