MapmyIndia IPO

New-Delhi based MapmyIndia, also known as CE Info Systems Limited, has filed a draft red herring prospectus (DRHP) with the domestic market regulator, Securities Exchange Board of India (SEBI), for an initial public offering (IPO). Here’s all you need to know about the IPO.

Company Overview

CE Info Systems Limited is a company that provides products, platforms, application programming interfaces (APIs) and solutions across a range of digital map data, software, and Internet of Things. For the Indian market, it offers solutions under the MapmyIndia brand, and for the international market, under the Mappls brand.

Some of its marquee customers include PhonePe, Flipkart, Yulu, HDFC Bank, Airtel, Hyundai, MG Motor, Avis, Safexpress, and the Goods and Service Tax Network.

Offer details

• IPO size: Not disclosed
• Issue size: 75,47,959 equity shares
• Fresh issue: The offer includes no fresh equity
• Offer for sale: 75,47,959 equity shares

• Dates: November 2021
• Price band: Not announced
• Lot size: Not announced
• Face value: ₹2

The offer for sale comprises shares of existing shareholders including PhonePe, Zenrin, Rashmi Verma, Rakesh Kumar Verma, Qualcomm, and Nayan Arun Jagjivan.

The company’s shares will be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). It aims to raise up to ₹1,200 crore in its IPO.

The lead managers of the stock issue are Axis Capital, JM Financial, Kotak Investment Banking, DAM Capital, and Link Intime.

Reasons for going public

CE Info Systems expects the listing of equity shares to:

• Enhance visibility and brand image of MapmyIndia and Mappls
• Provide liquidity to shareholders
• Provide a public market for the equity shares in India

Objective of the offer

The company aims to use the proceeds from the IPO for the following purposes:

• To carry out the offer for sale of up to 75,47,959 equity shares 
• Achieve the benefits of listing the equity shares on the stock exchanges

Company fundamentals

Before investing in an IPO, one should understand the company fundamentals.

Largest shareholders of the company

Company financials

Here’s a look at the company’s financial status:

Competitive strengths

CE Info Systems has managed to set itself apart in the following ways:

• It has a market position in B2B and B2B2C with a competitive suite of Software as Service (SaaS), Platform as Service (PaaS), and Maps as Service (MaaS) offerings.
• It is an independent maps, global, geospatial, and location-based technology company which positions to work with various partners across industries, with strong data governance.
• It has created a market around proprietary technology and network effects, resulting in strong entry barriers.
• It has customers across sectors with strong relationships and capability to up-sell and cross-sell.
• It owns a profitable business model with a consistent financial track record, high operating leverage, and strong cash flows.

Industry outlook

The Digital India initiatives are propelling considerable growth in the geospatial information system (GIS) market. India has the world’s second-largest road network after the United States of America. The road and highway sector is projected to grow at a compounded annual growth rate (CAGR) of 36.16% between 2016 and 2025. The government’s growing initiatives to improve transportation infrastructure in the country create immense growth opportunities in the GIS services and navigational services market.

Opportunities

• Enhancing and increasing the scope and quality of products, platforms and technology
• Scaling and expanding the customer reach by leveraging market presence in India
• Building technology to drive expansion in international markets and geospatial sector
• Strategic acquisitions and investments to grow business
• Attracting, developing, and retaining employees to sustain quality of products and customer relationships

Threats

• Ability to grow depends on the decisions and actions with customers and developers.

• Customers may terminate contracts or agreements prior to completion of orders.

• A failure or disruption in the digital map database could adversely impact the business and its operations.
• Reliance on telecommunication and information technology systems and third parties maintaining internet infrastructure increases risk of good quality services.
• Government restrictions on security concerns and data privacy regulations could impact the plan of growth.
• Strategic acquisitions or investment may not be successful.
• Operations and growth strategies in the international markets are subject to risks and uncertainties.

Risks

• The company is dependent on trends in the sectors where negative sentiments or a downturn in global macroeconomic conditions can disrupt business activities, which in turn can impact sales and customers.
• As the business is dependent on the performance of the automotive sector, any changes in this sector can adversely impact the business of the company, its operations, and financial condition.
• Inability or failure to update map databases or errors in map databases could harm the reputation of the company.
• The liberalization of the digital mapping industry may increase competition.
• Interruptions or breakdowns in telecommunication networks, systems, servers, and databases could result in competitive disadvantages.
• Business operations and future opportunities is directly related to rapid technological change
• There is an outstanding litigation involving the company and one of the promoters.

With enhanced demand for applications, MapmyIndia claims to provide a premium and comprehensive car navigation system in India. The company also powers Apple and Amazon's Alexa maps, making them available to thousands of users. Now, would this help in the long term success of the company? Only time will tell.