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MapMyIndia IPO: Facts, Stats, Opportunities and Risks

Editor, TRANSFIN.
Sep 6, 2021 8:17 AM 5 min read
Editorial

CE Info Systems, the parent company of digital map maker MapMyIndia, filed its DRHP with SEBI last week for a ₹1,200cr ($164.63m) IPO.

This company joins a long list of startups that have hit the bourses in 2021. However, it would be only the fourth profitable company to go public this year (after ixigo, Nykaa and CarTrade).

Fast Facts

  1. As an Offer for Sale (OFS), MapMyIndia’s IPO will consist of a sale of 7,547,959 shares by its existing shareholders and promoters, amounting to c. 19% of post-offer paid-up equity share capital.
  2. The selling shareholders include the startup’s executive director Rashmi Verma, Qualcomm and Zenrin, among others.
  3. When it comes to shareholding, fintech firm PhonePe is the biggest shareholder with a 36.11% stake. Others include Zenrin (17.82%) Rashmi Verma (17.66%), Rakesh Verma (14.11%) and Qualcomm (8.5%).
  4. Link to DRHP

 

About the Company

Founded in 1995, MapMyIndia deals in digital maps, geospatial software and location-based IoT technologies. It offers proprietary digital maps as a service (“MaaS”), software as a service (“SaaS”) and platform as a service (“PaaS”). It counts 734 employees and 5,000+ clients, including Apple, Amazon, BMW, Toyota, Honda, PhonePe, McDonald’s, Grofers, Yulu, Bajaj Finserv, 99acres, SBI, CBDT and the Government of India (which tied up with the company for the CoWin platform).

The company claims to have built digital maps for more than 99% of India’s roads. Its "RealView" maps also provide actual roadside and on-ground views based on geo-referenced photos, videos and 360-degree panoramas. The startup also has a presence in Sri Lanka, Bangladesh, Nepal, Bhutan, Myanmar, UAE and Egypt.

MapMyIndia earns money through customer royalties, subscriptions and annuities in return for providing licenses and usage rights to its IP-based digital map data, platforms, APIs and software. The company commands a staggering 90% market share in the automotive maps market. This isn’t surprising, since it’s been around for a long time and the sector has high entry barriers. The startup’s USP, it says, is that its offerings are specifically localised and tailored for a challenging geography like India, “which has a high level of complexity, dynamic and constantly evolving nature of geographical expanse”.

That said, MapMyIndia does have its share of competitors, within India and globally. This list includes Google Maps, Trimble, ESRI, MapBox, Here Technologies and TomTom.

 

Money Matters

In FY21, MapMyIndia reported ₹152cr ($20.85m) in revenue from operations, up 3% YoY. 90% of this came from the sale of map data and software, with the remaining being accounted for from the sale of IoT products. Net profit, meanwhile, more than doubled to ₹59cr ($8m) in the same period.

Its earnings per share increased to ₹14.66 ($0.2) in FY21 (vs ₹5.70 ($0.08) in FY20). New orders registered a value of ₹468cr ($64.2m) last FY compared to ₹271cr ($37.18m) YoY. And its EBITDA margins have been impressive -  29%, 25% and 35% for FY19, FY20 and FY21 respectively, with EBITDA growing at a CAGR of 16%.


Industry Overview

Digital mapping aka digital cartography has been one of the biggest achievements of the tech industry. Making geospatial information available to anyone with a smartphone has been a revolutionary contribution, to say the least. Think of it - you use some form of map data, either on Uber/Ola, Google Maps, e-commerce or in your car every single day. This technology also finds application across many sectors including healthcare, emergency planning, urban planning, infrastructure management, resource management, business planning, logistics etc.

As per MapMyIndia’s DRHP, the total addressable market of digital maps and location-based intelligence services in India is expected to grow to $7.74bn in 2025 at around 15.5% CAGR from 2019 to 2025. Globally, the total addressable market is expected to reach around $173.6bn by 2025.

 

Reading the IPO Room

Now, when you think of digital maps, the first thing that may come to mind might be Google Maps. And why not. The web mapping platform is omnipresent. More than 2 billion users (on Android, of course), use Google Maps in some way or the other. Apple Maps’ floundering performance - which had been likened to “the most embarrassing, least usable piece of software Apple has ever released” - further helped Alphabet consolidate its position in the digital mapping market.

But MapMyIndia has quite a few things going in its favour.

Firstly, unlike Google, it has a team of hundreds of surveyors who go to a location to collect details about the same. This enables it to give detailed localised information to a degree greater than even Google.

Secondly, the startup has the distinction of being a homegrown company. That’s an important selling point, considering the winds of Atmanirbhar-ity and Make-in-India-ness that are blowing ever so fiercely these days. MapMyIndia is strong in vernacular content vs. Google Maps which uses transliteration at best. 

Thirdly, it helps that the reputation of Google, like its Big Tech peers, is becoming increasingly stained. Regulators in India and across the world are leaving no stone unturned in reigning in these powerful companies and India, where contempt against Google’s Play Store policies runs high, is no exception.

Fourthly, a major roadblock the startup faces is the fact that India is an overwhelmingly Android nation, and all Android phones come with Google Maps pre-installed. But given that MapMyIndia derives most of its revenues from automotive clients (40%) and Government contracts (another 40%), this handicap may be less lethal than one may imagine.

Fifthly, and probably most significantly, GoI has relaxed its stringent controls over mapping data, deregulating the space and making geospatial information available easily to Indian companies. This was followed by MapMyIndia announcing a tie-up with ISRO wherein the latter would provide it with satellite imagery to further improve the quality of its map data. Crucially, the relaxation of rules is only for domestic players; foreign players are still barred from using high-precision satellite imagery, collecting street-view data and conducting ground surveys to build up their maps. Advantage: MapMyIndia.

 

The Bottom Line

Risks involved in a MapMyIndia bet include its overwhelming reliance on the automotive sector, any inability to protect its IP, inability to innovate when it comes to R&D, risk concentration in the hands of a few customers, and the fact that the liberalisation of digital mapping in India could increase domestic competition.

However, the fact that the company is already profitable + enjoys double-digit EBITDA growth is bound to attract investor interest. Moreover, the scope of growth in the digital mapping industry in India is immense, and MapMyIndia is best-poised to make the most of the opportunity.

FIN.
 

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