MAPMYINDIANSEQ2 FY2023November 04, 2022

C.E. Info Systems Limited

11,024words

140turns

18analyst exchanges

5executives

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Management on call

Rakesh Verma

CO-FOUNDER & CHAIRMAN &

Rohan Verma

CHIEF EXECUTIVE OFFICER &

Anuj Kumar Jain

CHIEF FINANCIAL OFFICER –

Saurabh Somani

COMPANY SECRETARY &

Shobit Singhal

ANAND RATHI SHARE & STOCK BROKERS MAPP LS

Key numbers — 40 extracted

35%

nts. In the Q2 Fiscal Year '23, MapmyIndia delivered a good performance with quarterly revenue up 35% year-on-year to an all-time high of INR 76 crores. H1 Fiscal Year '23, revenue was up 41% to IN

INR 76 crore

delivered a good performance with quarterly revenue up 35% year-on-year to an all-time high of INR 76 crores. H1 Fiscal Year '23, revenue was up 41% to INR 141 crores. EBITDA was up 32% year-on-year to I

41%

ue up 35% year-on-year to an all-time high of INR 76 crores. H1 Fiscal Year '23, revenue was up 41% to INR 141 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT

INR 141 crore

5% year-on-year to an all-time high of INR 76 crores. H1 Fiscal Year '23, revenue was up 41% to INR 141 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-

32%

high of INR 76 crores. H1 Fiscal Year '23, revenue was up 41% to INR 141 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-on-year to INR 50 cr

INR 61 crore

es. H1 Fiscal Year '23, revenue was up 41% to INR 141 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-on-year to INR 50 crores and PAT margin at 32%.

43%

s up 41% to INR 141 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-on-year to INR 50 crores and PAT margin at 32%. Now, while we achieved our

41 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-on-year to INR 50 crores and PAT margin at 32%. Now, while we achieved our EBITDA expectat

INR 50 crore

as up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-on-year to INR 50 crores and PAT margin at 32%. Now, while we achieved our EBITDA expectations and the way we are opera

76%

T-led business, Gtropy. I would like to address this first because C.E. Info Systems Limited owns 76% plus of this IoT company. The focus has been on a very large multibillion dollar addressable mark

INR 20

of this IoT company. The focus has been on a very large multibillion dollar addressable market of INR 20- MAPP LS plus crores existing vehicles on road in India, whi

42.8%

consolidated business of the company, which includes Gtropy, we have achieved an EBITDA margin of 42.8% during the half year fiscal year '23 on a revenue from operations of INR 141 crores. But if you s

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Guidance — 18 items

Rakesh Verma

opening

“In my opening remarks I’ll provide some basic things for everyone to understand, on what the company has been doing or is doing and what the company is generally planning to do, going forward.”

Rakesh Verma

opening

“Now, while we achieved our EBITDA expectations and the way we are operating this business, I would like to also comment on some of the things that we have recently done and what would be its benefit going forward.”

Rohan Verma

opening

“The good thing is, our Swadeshi Mappls app and platform, meaning not just B2B and B2B2C where we are very strong and intend to be very focused and strengthen ourselves even more on, but even the B2C side, the Swadeshi Mappls app that we have is making further in-roads.”

Shobit Singhal

“And the second question is on the margin side, given you have started investing in brand building and other two areas, how should we look at our margins going forward?”

Shobit Singhal

“So is there any new guidance which you want to highlight?”

Sameer Dosani

“And what is the margin profile that we should expect on this basis after the certain scale?”

Sameer Dosani

“So, if you're selling in year one, the investment of the device is INR 100 the next year, what would be the SaaS revenue on this tracking device?”

Vimal Gohil

“It will be at a slightly lower range in terms of profitability, going forward, structurally?”

Rohan Verma

“So we use these opportunities when we calibrate to increase at least to basically create awareness and future demand for, let's say, new set of use cases and so the revenue impact of that may MAPP LS come immediately, that is fine or it may create something that will be a growth engine for the future.”

Rohan Verma

“So it's part of our MaaS, SaaS, PaaS offering, it's just a more advanced solution that enables us to continue to offer kind of best- in-class, first-in-class unique solutions, so similar kind of revenue model for us going forward for these 3D and 360-degrees, just that we are at the cutting edge disruptive level of innovation here.”

Risks & concerns — 6 flagged

The impact of that is while the map data and the core business of IoT, which MapymyIndia was doing before, created a EBITDA of almost 50%.

— Rakesh Verma

So we use these opportunities when we calibrate to increase at least to basically create awareness and future demand for, let's say, new set of use cases and so the revenue impact of that may MAPP LS come immediately, that is fine or it may create something that will be a growth engine for the future.

— Rohan Verma

So are you seeing any sort of slowdown from your fintech and e-commerce clients given that there is a funding slowdown in those segments?

— Moez Chandani

If you're relating to a slowdown in our growth in the C&E compared to some previous numbers, I don't know if you are relating something like that.

— Rakesh Verma

Exact number is very difficult for me to predict, but the signs are all looking good.

— Rakesh Varma

So now the impact of this INR24 crores overall on Gtropy, led to Gtropy having an EBITDA close to zero.

— Rakesh Varma

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Q&A — 18 exchanges

I have two questions. On our C&E side, which is our fastest growing business segment given the base. So, in the first half FY '23, we have grown at just 29-30% against 40-45% historically, so what are the issues that we are facing here? And the second question is on the margin side, given you have started investing in brand building and other two areas, how should we look at our margins going forward? So earlier, you have guided the range of around 35% to 45%. So is there any new guidance which you want to highlight?

Rakesh Verma

First, let me help answer your second question. The 35% to 45%. I think we have achieved 40% in the H1. Again, I will say, always look at us on a year-to-date basis. In H1 this year, I think we have achieved 43%. So that's pretty much within, not only within the range of 35% to 45%, it is closer to 45% only. Now I think probably you want us to nail down and give a lower band rather than a 10% band, if that's in your mind, let me help you in a very simple way. This percentage and the revenue also have to be linked to expenses. When we try to accelerate the topline, we may end up spending in two

Just want to understand, Gtropy’s revenue is included in A&M or is it in C&E?

Rohan Verma

It's in both. It depends on the particular use case. Is it enabling an enterprise digital transformation? Or is it enabling a mobility use case? So, you'll start seeing the effect of that in both. So, if I were to see H1 FY '23 A&M without Gtropy, what would the number be? A&M revenue is 72% in H1 FY '23, what would be the revenue excluding Gtropy? A specific number, we can either get back or we don't have to get into the specific number at least on this call. But given that automotive sales have grown our A&M in general also has grown even ex-Gtropy. Exactly, so that was my question. We are m

Sir, just one clarification. This quarter or rather the first half of the year, I think Gtropy has done the revenue of how much would it be closer to INR 2 crores, if I'm not wrong?

Rohan Verma

Around INR 24 crores is the first half. Sorry, INR 24 crores, right. And this number in FY '21 was around INR 8 crores, if I'm not wrong, right? Gtropy’s own business. The INR 24 crores is the entire IoT base that you're referring to, right? I'm just talking about the stand-alone Gtropy business, a like-to-like revenue which you reported in FY '21, which was INR 8 crores, how much was that in H1 of ’23? Actually, just to give you more depth into the accounting side. Out of that INR 24 crores or INR 25 crores with Gtropy shown as a revenue, around INR 8 crores went to build MapMyIndia, because

All right. Thank you so much.

Management

Actually, I had a couple of questions. So firstly, I wanted to ask that we have been highlighting various initiatives with the government, so what kind of revenue can be expected out of this? And can any large contracts also be expected from the government initiatives that we are taking?

Management

See, there's multiple reasons why we partner with the government. And really the end objective is to be part of population scale platforms. The government has big plans for digital transformation and Geospatial and even IoT, maps, the areas that we are in, can play a critical role. And each partnership is slightly different as well. Like ULIP, which is the Unified Logistics Interface Platform government announced it with National Logistics Policy and Honorable Prime Minister even visited us all to see what all we are doing and then tweeted about it. This is going to be UPI for logistics. Meani

My first question was on the C&E segment. So are you seeing any sort of slowdown from your fintech and e-commerce clients given that there is a funding slowdown in those segments? So are you seeing any slowdown there?

Rohan Verma

No, not at all. I mean, see, we are riding the consumption wave, more-and-more consumption is happening, more-and-more e-commerce transactions, and fintech transactions are happening in the country. So we are riding the consumption wave. That is, of course, secularly growing. If you're relating to a slowdown in our growth in the C&E compared to some previous numbers, I don't know if you are relating something like that. Always remember, that there are some lumpy revenue booking that happens in C&E. MAPP LS Also, I wanted to understand, are you seeing greater traction in the EV two-wheeler spac

I would like to understand more about the 3D/360-degree maps, do you offer that to customers differently, pricing-wise, and some understanding on the overall potential of it?

Rohan Verma

See, as we have explained before, our map data is overall, what is this? It's a 4D digital map twin of the real world. Meaning we are representing the physical world, physical real world digitally through our map data. This enables all sorts of use cases, whether for e-commerce or fintech or government planning, or navigation or tracking, etc. Now with 360-degree panoramic views as well as the 3D Metaverse, with 3D Metaverse maps what we are able to do is, let's take real-estate for example. Now anybody wanting to do a real estate purchase would love to see how the view will look like from the

Can you just help me with the new order bookings for H1 FY '23 or the total order book as on H1?

Rohan Verma

See, we talk about annual new order bookings and open order book. This is a year-end number that we talk about because order bookings happen throughout the year and can get bunched up here or there. What I can tell you at least qualitatively is we’ve have had many-many customer wins which are new orders that we have booked across A&M and C&E. And we have kind of talked about it in our investor deck, whether on the large four-wheeler EV OEM and these are just Q2 FY’23 related. Q1 FY’23 we have anyway talked about previously, there are cement MAPP LS companies, dairy companies, fintech, I think

Just one question. So without Gtropy, you have disclosed H1 numbers. So here, the margin has moved up to 50% now, right? So is this kind of sustainable because we'll have to do some investments also. So, if I look at it without Gtropy, what would be that?

Rakesh Verma

Actually, we should all look at group level EBITDA. This was only shown for you to make sure that people understand that the other side has not fallen apart or anything like that. Just to clarify that, we made that slide. And also, one clarification on the service component on the Gtropy. As you spoke that, on INR 100 device sold, you would have INR 30-35 service component. Your the service cost would be very low because the maps are already there, you have already done that. So the service cost of that service revenue would be very less, right? Yes, that's true. So that's the SaaS part of it.

I just wanted to understand in terms of revenue, do you think in next three years, four years, we can double the revenue from current run rate? Like can we do around INR 500 or 550 crores of revenue, and whenever we do that, first, can we do that in three years to four years? If yes, what kind of margins can be there? Would we be able to maintain the same margin if we do a INR 500 or 600 crores kind of revenue? Just want to understand that on a very broad basis.

Rakesh Verma

When you say three years to four years, you are talking about a little longer term because you see, we are a tech company. But however, to answer your question since we are fundamentally a product and a platform company, in case of IoT, maybe it is a device-led, but in other cases, there could be a digital transformation happening in the country. The other one, in the automotive, there's something else, we have OEM with NCASE. So, the way we have structured our business and the fiscal discipline we have, we operate within a certain metric and that metric we have shared. So whether it is INR 50

Just two questions here. Firstly, just to go back to Gtropy again, could we just get more clarity on, one, what is kind of the margin on the IoT? So are you essentially getting a zero margin just to break into the customer? And then just if you could give us more color on the conversations you're having. So there are different use cases, all the way from the simple GPS ping to your asset or your vehicle at this one location, all the way to analytics where you help the supply chain, logistics, time to target and things like that? Just what sort of conversations are you having?

Rohan Verma

That's right. I mean just use the example, let's say, of a cement company which wants to track its shipments and wants to make sure that the shipments are on time and then they want to optimize the routes that the shipment is taking so that it can -- basically, at the end of the day, everybody is trying to minimize their logistics efficiency, minimize their logistics cost and maximize the SLA, meaning on-time arrival and the serviceability that they can do. MapmyIndia is at the center of kind of enabling that. So, it's a very exciting time to be talking to different verticals of customers in p

So sir, in terms of your '22 order book, like fixed price is largely for auto business?

Rakesh Verma

No, auto OEM business is mostly the volume-based business. The fixed price normally comes in the C&E side and is use case driven. And let's say, when you say volume business is auto business. So is it fair to assume 85% to 90% business is largely an auto business in this volume business? No, not yet. I mean of the volume business, what is the volume business. One is the automotive OEM, every car that goes out, volume business could be also API transactions. No, API transactions, we book as, as and when we… I'm talking about the revenue side, the API transaction… Revenue is what I was talking a

Ma'am, can I just finish this question. It is the extension of the -- basically, the first question only.

Management

Okay. Thanks.

Management

Hi, there. Thanks for the opportunity again. I just had one question. So, just wanted to get an outlook on the Gtropy business for rest of the year FY 2023, for 2H FY 2023. Can we expect a similar amount of growth that we are seeing in this quarter to continue in the next two quarters as well? And if that is the case, then still we can expect that the margins for the consolidated entity will be above 40% for 2H given that relatively now that we are selling more devices, therefore, the margins are lower in the Gtropy business. So your colour into that?

Rakesh Varma

So first question you asked, they doubled from the last quarter to this quarter. We are only expecting them to keep increasing for the next two quarters also. Exact number is very difficult for me to predict, but the signs are all looking good. The second one related to the margin, yes, the INR24 crores of business that went through Gtropy, let me again clarify, out of that INR8 crores they built to MapmyIndia only for MapmyIndia’s onward billing, which was less of devices, more of SaaS. So now the impact of this INR24 crores overall on Gtropy, led to Gtropy having an EBITDA close to zero. So

Good afternoon sir. Just wanted to clarify something on, in terms of understanding when we update our maps, we do it by means of feet on street, right?

Rohan Verma

We have multiple ways. I think during the IPO process also we explained it. It's quite interesting that we use the network effect of data collection, let's say, from tracking devices, from API transaction, besides the analytics and AI that we apply on the real view 360 degree of what 400 crores plus geotag photos, panoramas videos that we have, besides our team that is there, which falls more under fixed cost, so that is what has differentiated or made MapmyIndia unique compared to the global peers who have struggled with cost structure. We are highly technology- oriented and cost-efficient. B

Hi, sir. Congratulations on set of good numbers. Sir, I just wanted to ask one thing that when you are doing these set of acquisitions, I understand that you're looking at adjacent businesses like the Gtropy business and Kogo. So can you just throw some light as to what goes in your mind when you are evaluating a business? And can you throw some more light on how you will monetize Kogo, because I just wanted to understand as given it's a gaming company so what business avenues can come from that business in future?

Rohan Verma

See, what's going on our mind is clearly whether this acquisition will help us generate more revenue or revenue-led acquisitions is what we like to call them, whether they will get us more customers or that they will enhance our product portfolio that we can upsell to our existing customers. So with Gtropy, that was exactly the idea that they already had a set of customers. We can upsell, cross-sell to them our rest of solutions. And they brought in this logistics SaaS products and IoT products that MapmyIndia didn't have. So that combined, is quite a formidable IoT and logistics SaaS and mobi

I would like to thank the management and the participants for coming on the call. Thank you.

Rakesh Verma

Thank you. Thank you all.

Speaking time

Rohan Verma

Moderator

Rakesh Verma

Sameer Dosani

Amar Mourya

Rakesh Varma

Vimal Gohil

Anmol Garg

Nikunj Mehta

Shobit Singhal

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Opening remarks

Shobhit Singhal

Thank you, Lizann. Good morning, everyone. On behalf of Anand Rathi, we welcome you all to Q2 FY '23 Conference Call of C.E. Info Systems or MapmyIndia. We have with us today, Mr. Rakesh Verma, Co-Founder and Chairman of the company; Mr. Rohan Verma, CEO and Executive Director of the company. I will now hand over the call to Mr. Rakesh Verma for his opening remarks. Post that, we will open the floor for Q&A session. Thank you and over to you, sir.

Rakesh Verma

Thank you, Sobhit and thanks to Anand Rathi Group for leading this analyst call and welcome all of you who are participating in this call and good morning. This is Rakesh Verma. In my opening remarks I’ll provide some basic things for everyone to understand, on what the company has been doing or is doing and what the company is generally planning to do, going forward. But before that, I would like to share something, while you might be having the investor presentation in your hand, or you might have seen it or some of you may not have seen it. So I would like to read out a few opening statements. In the Q2 Fiscal Year '23, MapmyIndia delivered a good performance with quarterly revenue up 35% year-on-year to an all-time high of INR 76 crores. H1 Fiscal Year '23, revenue was up 41% to INR 141 crores. EBITDA was up 32% year-on-year to INR 61 crores, EBITDA margin was at 43%, PAT went up 8% year-on-year to INR 50 crores and PAT margin at 32%. Now, while we achieved our EBITDA expectations

Rohan Verma

Good morning, everybody. This is Rohan Verma, CEO and ED of MapmyIndia. So Q2 was a pretty exciting quarter for us. I mean, in terms of lots of action on various fronts, and I'll kind of go through that. We've ended H1 FY '23 on a strong note. So if you look at revenue growth, on a broad-based, for H1 FY '23 versus H1 FY '22 as we've always said, MapmyIndia’s performance should be seen on an annual basis, look at us year-to-date, you will understand us better, given that we are in the MaaS, PaaS, SaaS space where it's all about licensing or annual consumption or API transactions, etc. So A&M revenue i.e. automotive and mobility tech is up 45%, and C&E, which is consumer tech and enterprise digital transformation is up 29% on the market side. And on the product side, map and data was up 32%, and platform and IoT was up 49%. As Mr. Verma explained, our newly acquired Gtropy business grew fast in Q2. It actually doubled revenue versus Q1 FY '23. And as scale and subsequent years’ high-mar

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