C.E. Info Systems Ltd, popularly known through its brand MapmyIndia, has launched its three-day initial public offering (IPO) yesterday— Dec 9. In this article, we take a closer look into the company and learn more about its IPO.

Company Profile – C.E Info Systems Ltd

Incorporated in 1995, C.E. Info Systems Ltd (CEISL) offers advanced digital maps, geospatial software, and location-based Internet of Things (IoT) technologies. They provide products, platforms, application programming interfaces (APIs), and solutions across a range of digital map data and software under the MapmyIndia and Mappls brands. The digital maps offered by the company cover 6.29 million kilometers of roads in India, representing 98.5% of the total road network.

CEISL is an early mover in India’s digital mapping space. It has pioneered several digital mapping technologies such as AI-powered 4D HD digital maps and NCASE mobility suite for vehicles. The company offers the widest range of location-powered software and the most comprehensive set of offerings compared to its global competitors. MapmyIndia’s digital maps and solutions are localized for the challenging Indian geography and are extensive in terms of coverage.

Strong Customer Base:

The company caters to marquee global tech giants, new-age consumer IT companies, and leading automotive manufacturers. CEISL also offers its products to large businesses across industry segments, including banking, financial services and insurance (BFSI), telecom, fast-moving consumer goods, logistics, and government organisations. Their customer base includes PhonePe, Flipkart, Yulu, HDFC Bank, Bharti Airtel, Hyundai, MG Motors, and the government’s Goods and Services Tax (GST) Network.

Interestingly, MapmyIndia’s data powers Apple Inc.’s Maps and Amazon.com Inc.’s Alexa in India!

More than 93% of CEISL’s revenue comes from subscriptions, annuity, and royalties. It derives ~50% of revenue from the automotive and mobility sector. As of Sept 30, 2021 (Q2 FY22), they have serviced over 2,000 enterprise customers. C.E. Info Systems is now looking to expand its operations to Nepal, Bhutan, Bangladesh, Sri Lanka, Myanmar, Egypt, and the United Arab Emirates (UAE).

About the IPO

C.E. Info Systems’ public issue opens on December 9 and closes on December 13. The company has fixed Rs 1,000-1,033 per share as the price band for the IPO.

The IPO is entirely an offer for sale (OFS) of 1.006 crore equity shares by promoters and early investors, aggregating to Rs 1,039.61 crore. Individual investors can bid for a minimum of 14 equity shares (1 lot) and in multiples of 14 shares thereafter. You will need a minimum of Rs 14,462 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 182 equity shares (13 lots).

The main objective of the IPO is to provide an exit strategy (or liquidity) to CEISL’s shareholders. The company aims to achieve the benefits of listing the equity shares on NSE and BSE. The total promoter holding in the company will decline from 61.71% to 53.73% post the IPO.

Financial Performance

CEISL has shown stable growth in revenue and profit. They reported a net profit of Rs 59.43 crore in the financial year 2020-21 (FY21), an increase of 156.3% YoY. Total income rose 17.6% YoY to Rs 192.27 crore during the same period. Profit in the six months ended September 2021 (H1 FY22) jumped to Rs 46.76 crore, compared to Rs 17.86 crore in the same period last year. Revenue rose 81% YoY to Rs 100.03 crore during the same period.

In FY21, 25 customers accounted for 80% of revenue. In the first half of FY22, 18 customers accounted for 80% of the company’s revenue. 

Risk Factors

  • CEISL is dependent on trends in the sectors (such as automobile, consumer, logistics) where its enterprise customers operate. Any adverse changes in the conditions affecting these sectors can impact its business.
  • The inability to maintain or update the company’s map database or errors could harm its reputation and severely affect its ability to sell products and services.
  • The company is dependent on the success of its Research & Development (R&D) team. The failure to develop competitive new products could adversely affect its business and financial performance.
  • The inability to protect its intellectual property (IP) or third-party claims could harm CEISL’s reputation and overall operations.
  • C.E. Info Systems depends on a limited number of customers for a significant portion of its revenues. The loss of key customers or a reduction in demand for its products from them could severely impact its operations and financial condition.
  • They are dependent on telecom and information technology systems, networks, and infrastructure to operate their business. Any interruption or breakdown of such systems could impair the company’s ability to operate its platforms.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital, DAM Capital Advisors, JM Financial Consultants, and Kotak Mahindra Capital. C.E Info Systems Ltd had filed the Red Herring Prospectus (RHP) for its IPO on December 2. You can read it here. Out of the total offer, 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors.

Ahead of the IPO, CEISL raised Rs 312 crore from anchor investors. The marquee investors include Fidelity, Nomura, Goldman Sachs, Morgan Stanley, SBI Mutual Fund (MF), Tata MF, and HDFC MF. 

Conclusion

C.E. Info Systems has built a strong moat by capitalising on its early mover advantage, developing integrated technologies, constant innovation, and a robust sustainable business model. Its solutions are adopted by new-age companies and start-up firms across consumer tech, last-mile delivery, shared mobility, and e-commerce segments. As per reports, the total market for Indian digital map services is expected to grow from Rs 12,614 crore in 2019 to Rs 31,164 crore in 2025, at a CAGR of 16.1%. Meanwhile, the global digital map services market is expected to grow at a CAGR of 13.6% to Rs 11.27 lakh crore by 2025.

The company has received significant investor interest in the grey market. CEISL’s IPO shares are trading at a premium of ~Rs 780-795 in the unofficial market. Before applying to this IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

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