MapMyIndia: Can The India-based Company Beat Foreign Rivals?

MapMyIndia’s parent company CE Info Systems Limited has seen a fairly strong response for its initial public offering (IPO) that has been subscribed more than six times.

What Does the Company Do?

The company offers digital maps-as-a-service, software-as-a-service, and platforms-as-a-service. Its solutions are sold under the ‘MapMyIndia’ brand in India and the ‘Mappls’ brand outside India.

These solutions include digital maps, geospatial data, developer application programming interfaces, location based Internet-of-Things, mobility solutions, etc. These products are majorly sold to enterprise customers belonging to the business-to business (B2B) and the business-to-business-to-customer (B2B2C)categories.

CE’s original equipment manufacturer clients include Maruti Suzuki, Hyundai, KIA, Honda, Ford, Audi, BMW, Mercedes Benz, Mahindra, MG, Skoda, Toyota, Suzuki, Honda, TVS, Ola Electric and others. The company is working with Airports Authority of India as well to help develop unmanned aerial vehicle management systems. Other clients include Cars24, Apple, Paytm, PhonePe, PrasarBharti, Patanjali, SBI Branch Locator, Bajaj Finserv and others.

Customers from automotive, mobility, and logistics business are considered separate business and are offered a suite of solution in the areas of navigation, connected vehicle, autonomous safety, shared mobility, and electric mobility (N-CASE). These products help with fleet optimisation, fleet managements, logistics, etc.

Does MapMyIndia Have A Competitive Advantage?

Unlike other players who entered India recently, MapMyIndia has been involved in the business since 1995. According to MapMyIndia, its long history of operations gives it an advantage over other recent players in the space. It competes with TomTom, Google Maps, HERE Technologies and other players in the maps space.

The company offers the widest range of products in the location-power software and Internet-of-Things (IoT) space in the Indian B2B and B2B2C markets. The company’s digital maps cover 6.29 million kilometres across India, representing 98.5 per cent of India’s total road network. The company’s hyper-local artificial 4D, HD, digital map twin represents the real world in near real time according to the company. Similarly, the ‘RealView’ Maps allow the company to represent the actual on-ground views by using 40 crore geo-reference photos and 360 degree panoramic views.

The new geospatial data guidelines introduced in February 2021 are favourable for Indian companies such as MapMyIndia. The new rules have liberalised collecting geospatial data, processing it, and building applications around the data, but only for Indian entities. Foreign companies will have to license out certain maps from Indian entities.

“Several mapping activities like terrestrial mobile mapping survey, street view survey and Indian territorial waters survey are reserved only for Indian entities which proves highly beneficial for Indian mapping companies,” said the company’s prospectus.

The government has defined a threshold value of geospatial data accuracy for foreign companies. Without geospatial data accuracy, these companies would not be able to create ADAS, HD, 3D or even accurate 2D maps. For CE Info Systems, which is among the largest, and the oldest players in the space, such a regulation promises higher revenue generation opportunities in the future. Given the national security risks by allowing foreign operators to collect geo-spatial data, it is unlikely that the government would reverse such guidelines.

Company Financials

The company has high operating leverage, given the largely fixed nature of costs. As a result, higher revenues usually drop almost directly into the bottom line, as fixed costs do not increase by much. Revenues have increased from Rs 135.2 crore in FY19 (financial year 2019) to Rs 152.4 crore in FY20. The company’s contribution margins increased from 76 per cent in FY19 to 82 per cent in FY21, clearly pointing towards the low contribution of variable costs to the total costs. Margins for the earnings before interest, taxes, depreciation and amortization (EBITDA) increased from 29 per cent to 35 per cent from FY19 to FY21. However, FY20 saw a drop in EBITDA margins due to a 26 per cent increase in employee expenses.

However, despite the positives, the company does face several risks in its business. For instance, the automotive business contributes to more than 50 per cent of the company revenues. As a result, the company’s revenues are dependent on the state of the automobile industry. The company is highly dependent on its research and proprietary data – any lack of accuracy or the inability to protect such data could lead to problems as well.

Overall, CE Info Systems is growing at a fast pace, in a regulatory environment that indirectly protects the interests of Indian companies that work with geospatial data. The company’s rapidly growing customer segments should help established and profitable companies such as CE Info Systems to do well in the space.