MapMyIndia IPO opens for subscription: Grey market premium strong, should you subscribe?

Ahead of IPO subscription opening, shares of MapMyIndia were commanding a handsome premium of Rs 880 in the grey market.

IPO
The IPO is entirely an offer for sale of up to 1.06 crore equity shares.

By Harshita Tyagi

IPO of C.E. Info Systems Ltd. (CIES), a data and technology products and platforms company that owns the MapmyIndia portal, opened for subscription on 9 December and will close on December 13. The company is looking to raise Rs 1,039.6 crore from the issue, which is entirely an offer for sale (OFS) by existing shareholders. Investors can bid for the issue in a fixed price band of Rs 1,000-1,033 apiece. Shares are likely to be listed on stock exchanges BSE and NSE on December 21.

MapmyIndia IPO Grey Market Premium:

Ahead of IPO subscription opening, shares of MapMyIndia were commanding a handsome premium of Rs 880 per share in the grey market, over the IPO price. MapMyIndia share GMP, according to IPO Central, was in the Rs 1,000 – 1,033 range on Thursday. The company’s shares are expected to list on exchanges on December 21, 2021.

The IPO is entirely an offer for sale of up to 1.06 crore equity shares by existing shareholders and promoters. The IPO committee has finalised allocation of 30,19,183 equity shares to anchor investors at a price of Rs 1,033 per equity share. The public issue is expected to fetch Rs 1,039.6 crore at the upper end of the price band.

Profitable business model with consistent financial track record, high operating leverage and strong cash flows 

Axis Capital in its IPO note said, “Company’s business model is to charge their customers fees per period based on per vehicle, per asset, per transaction, per use case, per user, as applicable. These take the form of subscription fees, royalties, annuities in return for providing licenses and usage rights to their proprietary digital MaaS, PaaS and SaaS offerings. The subscription fee, royalty and annuity payments together contributed over 90% of their revenue from operation for Fiscal 2021. Since most of their products, platforms and solutions are digital, created in-house, and then deployed and delivered over the cloud, the company as a business are asset-light, with relatively low variable cost base. This enables them to have a high operating leverage in the business. For the Financial Year 2021, their Contribution Margin was 83%, EBITDA margin was 35% and PAT margin was 31%.

Subscribe to the issue for the long term

Arihant Capital in its report on C.E. Info Systems IPO, recommended to ‘Subscribe for long-term’. “At the upper price band of INR 1,033 the issue is priced at a P/E multiple of 94x based on the FY21 EPS of INR 11. CEIS is the market leader in the digital maps and geospatial software industry, effectively creating an entry barrier against potential competition. Its long-standing relationships with high-value clients not only generate repeat sales but also encourage cross-selling and up-selling. The company has strong fundamentals, and it’s profitability is expected to inch up going further. Hence, we recommend that investors Subscribe to the issue for the long term,” it said.

No listed companies in India whose business is comparable

Brokerage house Marwadi Shares and Finance Limited recommended ‘Subscribe’ for the IPO. “There are no listed companies in India whose business is comparable with that of the company’s business. We assign the “Subscribe” rating to this IPO as the company is one of the leading data and technology products and platform company has a well-known brand MapmyIndia with customers like PhonePe, Hyundai and Flipkart. Also, it is available at a reasonable valuation considering the future growth potential,” they said.

“The total Indian addressable market of digital maps and location-based intelligence services is expected to grow to Rs 479.9 billion in 2025 at around 15.5% CAGR from 2019 to 2025, and most of this growth would be from new projects and policies announced by the Government of  India that encourages domestic players of digital maps and associated solutions. We believe MapmyIndia is well placed to capitalize on domestic opportunities. At the upper price band of Rs 1,033, stock is aggressively priced at 58.8x its FY22E  EPS of Rs.17.57 (based annualize latest earnings). Hence, we recommend subscribing to the issue only for listing gains”, said Investments Ltd in its report.

Subscribe from long-term perspective

Recommending ‘Subscribe’ for the issue, Ashika Research said in its note, “Increased adoption of the navigation, connected, autonomous, shared and electric mobility technologies in the automotive sector, and of the IoT and telematics technologies in the mobility, transportation and logistics sectors also help in business growth. Hence, it is recommended to “SUBSCRIBE” the issue from the long-term perspective.”

Fidelity, Nomura, Goldman Sachs, HSBC Global, Morgan Stanley, University of Notre Dame DU LAC, Volrado Venture, Aberdeen Standard Asia Focus Plc, Theleme India Master Fund, Pinebridge Global Funds, and Alchemy Leaders are among marquee investors that invested in the company via anchor book.

Domestic investors including SBI Mutual Fund, HDFC Trustee Company, ICICI Prudential, Aditya Birla Sun Life Trustee, Nippon Life, HDFC Life Insurance, Tata AIA Life Insurance, Tata Mutual Fund, Sundaram Mutual Fund, IDFC MF, and Edelweiss Trusteeship participated in the anchor book.

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