C.E Info System Ltd (MapmyIndia) IPO - Information Note

5paisa Research Team 5paisa Research Team 11th December 2022 - 06:24 am

C.E. Info Systems Ltd (MapmyIndia) is a 26 year old company special in geographical positioning, digital mapping and IOT (internet of things) solutions. The company provides platforms and application programming interfaces (APIs) for a host of such digital mapping solutions.

Some of its marquee clients include ISRO, Niti Aayog, Flipkart, HDFC Bank, Bharti Airtel, Hyundai Motors, MG Motors, Phone Pe, Avis, Safexpress and GST Network.

Chunk of the revenues for C.E. Info Systems Ltd (MapmyIndia) comes from subscription services and from royalty payments. It operates in the domestic market under the “MapmyIndia” brand and in the international market under the “Mappls” brand.

Its client base is predominantly B2B in nature and it has proprietary SAAS (software as a service) offerings. Some of the major investors in MapmyIndia are Qualcomm and Phone Pe.

Key terms of the IPO issue of C.E. Info Systems Ltd (MapmyIndia)

Key IPO Details	Particulars	Key IPO Dates	Particulars
Nature of issue	Book Building	Issue Opens on	09-Dec-2021
Face value of share	Rs.2 per share	Issue Closes on	13-Dec-2021
IPO Price Band	Rs.1,000 - Rs.1,033	Basis of Allotment date	16-Dec-2021
Market Lot	14 shares	Refund Initiation date	17-Dec-2021
Retail Investment limit	13 Lots (182 shares)	Credit to Demat	20-Dec-2021
Retail limit - Value	Rs.188,006	IPO Listing date	21-Dec-2021
Fresh Issue Size	Nil	Pre issue promoter stake	61.71%
Offer for Sale Size	Rs.1,039.61 crore	Post issue promoters	53.73%
Total IPO Size	Rs.1,039.61 crore	Indicative valuation	Rs.5,500 crore
Listing on	BSE, NSE	HNI Quota	15%
QIB Quota	50%	Retail Quota	35%

_{Data Source: IPO Filings}

Here are some of the key aspects of the C.E. Info Systems Ltd (MapmyIndia) business model

A) It is a subscription based business model with most of its revenues coming by way of fees and royalty income as well as annuities from licenses.

B) It almost has built strong entry barriers in the business and that has enabled the company to retail its solid client base.

C) It has a low variable cost base and that ensures a high operating leverage for the company. Its contribution margin is as high as 83% in the latest year FY21.

D) For fiscal year 2021, the Platform and IOT products business generated 60% of the revenues while the map and data products generated 40% of the revenues.

E) In terms of sectoral mix, the corporate sector and automotive sector accounted for 44% each of the overall revenue mix. Government contributed 9% of its revenues in FY21.

How is the C.E. Info Systems Ltd (MapmyIndia) IPO structured?

The C.E. Info Systems Ltd IPO is a total offer for sale by existing shareholders and the break-up is as follows.

1) There is no fresh issue component in the IPO, so there will not be any dilution of the equity size nor any fresh funds coming into the company from the IPO.

2) The OFS component will comprise the issue of 1,00,63,945 shares and at the upper price band of Rs.1,033, OFS value works out to Rs.1,039.61 crore. That will also be the total size of the issue and the IPO is meant to list the stock and give better valuation visibility.

3) Out of the OFS of 100.64 lakh shares, promoter Rashmi Verma will sell 42.51 lakh shares. Among early investors, Qualcomm Asia, Zenrin Company and Others will offer 21.01 lakh shares, 13.70 lakh shares and 17.42 lakh shares respectively.

4) Post the offer for sale and the fresh issue, the promoter stake will come down from 61.71% to 53.73% due to the OFS. Public shareholding overall will go up to 46.27% post issue.

These share numbers are based on the assumption that the price of the IPO will be discovered at the upper end of the band.

Key Financial parameters of C.E. Info Systems Ltd (MapmyIndia)

Financial Parameters	Fiscal 2020-21	Fiscal 2019-20	Fiscal 2018-19
Sales Revenues	Rs.152.46 cr	Rs.148.63 cr	Rs.135.26 cr
EBITDA	Rs.54.32 cr	Rs.37.19 cr	Rs.40.46 cr
Net Profit / (Loss)	Rs.59.43 cr	Rs.23.20 cr	Rs.33.57 cr
EBITDA Margins	35.63%	25.02%	29.91%
Net Profit Margins (NPM)	30.91%	14.19%	20.55%
Net Worth	Rs.358.00 cr	Rs.297.74 cr	Rs.285.20 cr

_{Data Source: Company RHP}

Despite the pandemic, the company saw limited dent on profitability or on its top line. Over the 3 years, MapmyIndia has seen its EBITDA margins and net margins scale up sharply. The business model based on license fees and subscription revenues is less cyclical in nature.

C.E. Info Systems Ltd (MapmyIndia) is expected to have a listing market cap of Rs.5,500 crore assigning a P/E ratio 35 times earnings. That is a reasonable valuation for a company that has a stable revenue model, strong entry barriers and RONW in excess of 16%. This likely to be positive for future growth.

Investment Perspective for C.E. Info Systems Ltd (MapmyIndia) IPO

Here is what investors must consider before investing in the C.E. Info Systems Ltd (MapmyIndia) IPO.

a) The company has over 500 active customers on its platform and has serviced over 2,000 customers over the last many years of its existence.

b) The company has put up entry barriers in the form of a massive database of locational photographs as well as its proprietary software.

c) The company has adopted a SAAS model for business which makes the entire model scalable at limited cost, allowing easy future growth with limited friction.

d) The market for digital maps is estimated to grow at 15.5% CAGR over the next 5 years and that opens up a huge window of opportunity for the company.

e) The company derives 35% to 40% of its revenues from its global app MAPPLS. This de-risks the business from India-specific factors.

Geospatial data has been opened up only recently by the government in a big way. However, the data is sensitive and national security interests could trigger change in policy at any point. That is a risk.

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