Fundamental Analysis Of CE Info Systems: Remember how the problem was in earlier days to find any places, distances, road connectivity, hotels, and restaurants on the way and estimate the time to those places? As technology upgrades for the betterment of people, companies that deal in technology will flourish.
In this article about Fundamental Analysis Of CE Info Systems under a brand name called Map My India. We will take a look at the overview, financials, and future plans of CE Info Systems.
Table of Contents
Fundamental Analysis Of CE Info Systems (Map My India)
Company Overview
In 1995, Rakesh and Rashmi Verma established CE Info Systems. The business provides software services such as Digital Maps as a Service (MaaS), Software as a Service (SaaS), Platform as a Service (PaaS), and Internet of Things (IoT) for automotive OEMs, big corporations, government agencies, developers, and customers across industries, mainly automobiles.
In FY2023, they added over 250+ clients in B2B and B2B2C segments and over 850+ clients across various industries, with a retention ratio of more than 90%. It holds a market share of around 95% in the in-dash navigation market and serves services to clients such as BMW, Jaguar, Land Rover, Daimler, Mahindra, Hyundai, Mitsubishi, Ford, and Toyota in the B2B segment.
Segment Analysis
The company has recognized revenue earnings as a segment known as Map Data and Map Data-related services. The sale of hardware and SaaS accounts for 15% of revenue; 84% of revenue comes from the sale of map data; and the remaining 1% is related to service exports in FY23.
In FY23, revenue from products such as Map led to 222.4 crores and IoT led to 59.1 crores. The order book stood at Rs. 918 crore on March 31, 2023, as compared to Rs. 699 crore on March 31, 2022, an increase of 31%. The growth in the order book represents a huge potential for business growth.
There are products for the B2C segment, which are MAPPLS and Kogo App, which create business opportunities for the travel commerce segment of the company.
The company serves its customers across industries like automotive, e-commerce, food delivery, transportation, and logistics, banking; financial services and insurance (BFSI), retail and quick service restaurants (QSR), telecom and utilities, healthcare and pharmaceuticals, government, railways, and waterways.
Industry Analysis
The Indian information technology (IT) industry is estimated to contribute almost 10% of India’s GDP by 2025, an increase from 7.4% in FY22.
The industry is always evolving, with the demand for new technology and innovation paving the road for businesses to thrive for perfection and out-of-the-box concepts for survival and penetration into various market segments.
The IT business is more valuable to assisting other industries in enhancing their products and services, and it is more appealing because it is an evergreen industry.
With emerging technologies like artificial intelligence (AI) and machine learning (ML), the industry’s revenue growth in India was $227 billion in FY22 and is projected to reach $245 billion in FY23. Uncertainties in different parts of the world have caused the global economy to slow down.
To reduce inflation, interest rates were raised. The SaaS companies in India saw growth of 2x in global market share as well as in the number of internet users.
CE Info Systems – Financials
Revenue and Net Profit
The company reported Rs. 281.46 crore in FY23 as compared to Rs. 200.44 crore in FY22, indicating an increase of 40.42%. Revenue grew from FY 2019 to FY 2023 at a CAGR of 20.11%. Revenue exceptionally grew after the COVID period, aided by growth in IoT by 140% and map-led business by 27% from FY22 to FY23.
Net profits increased by 23.23% to Rs. 107.53 crore in FY23, compared to Rs. 87.07 crore in FY22. Net profits increased at a CAGR of 33.19% from FY 2019 to FY 2023. This expansion is due to the consistent increase in operating margins, which has allowed profits to expand at a healthy rate.
| Financial Year | Revenue (Cr) | Net Profit (Cr) |
|---|---|---|
| 2022-23 | 281.46 | 107.53 |
| 2021-22 | 200.44 | 87.07 |
| 2020-21 | 152.46 | 59.82 |
| 2019-20 | 148.63 | 23.2 |
| 2018-19 | 135.25 | 33.56 |
| CAGR (4 Years) | 20.11% | 33.19% |
Profit Ratios
The operating profit margin (OPM) in FY23 was 40.86%, up from 39% in FY22. OPM increased by 30.34% on average between FY2019 and FY2023. This increase is due to reduced employee costs.
Net profit margin (NPM) in FY23 was 38.2% as compared to 43.44% in FY22, with an average of 32.26% over a period of 5 years. Despite the increase in OPM, NPM fell in FY23 compared to FY22. However, the decline was due to a decrease in other income, which was reduced by 12.49 crore.
| Financial Year | OPM (%) | NPM (%) |
|---|---|---|
| 2022-23 | 40.86% | 38.20% |
| 2021-22 | 39% | 43.44% |
| 2020-21 | 33.28% | 39.24% |
| 2019-20 | 19.74% | 15.61% |
| 2018-19 | 18.85% | 24.82% |
| Average (5 Years) | 30.34% | 32.26% |
Return Ratios
The company’s RoE was 22.50% in FY23, down from 27.04% in FY22, a 16.8% decrease. The 5-year average for RoE is 24.29%. However, as reserves increased, RoE decreased.
RoCE was 28.16% in FY23, down from 29.60% in FY22, a 4.8% decrease. For the past five years, RoCE has averaged 21.98%. RoCE is greater than RoE, indicating that the debt is being used more efficiently and that the returns to equity holders are reduced as well.
| Financial Year | RoE (%) | RoCE (%) |
|---|---|---|
| 2022-23 | 22.50% | 28.16% |
| 2021-22 | 27.04% | 29.60% |
| 2020-21 | 32.70% | 24.78% |
| 2019-20 | 15.72% | 11.80% |
| 2018-19 | 23.50% | 15.58% |
| Average (5 Years) | 24.29% | 21.98% |
Debt Analysis
In FY23, the company’s debt-to-equity ratio was 0.03 percent, up slightly from the previous year. However, the level of debt is insignificant because it is too low.
Interest coverage is 50.91 in FY23, compared to 55.32 in FY22. This decrease is the result of an increase in interest costs and a decrease in other income in FY23. However, this high ratio suggests that the company can comfortably cover its interest costs.
| Financial Year | D/E | Interest Coverage |
|---|---|---|
| 2022-23 | 0.03 | 50.91 |
| 2021-22 | 0.01 | 55.32 |
| 2020-21 | 0 | 32.21 |
| 2019-20 | 0 | 12.14 |
| 2018-19 | 0 | 16.88 |
| Average (5 Years) | 0 | 33.49 |
Key Metrics
The key metrics of CE Info Systems are provided below
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | 2,202.75 | Market Cap (Cr.) | 11,791 |
| EPS | 21.33 | Stock P/E | 95.93 |
| RoCE | 28.16% | RoE | 22.50% |
| Promoter Holding | 52.93% | FII Holding | 5.74% |
| Debt to Equity | 0.03 | Price to Book Value | 18.32 |
| Enterprise Value (Cr) | 10,125.31 | Dividend Yield (%) | 0.30% |
Future Plans Of CE Info Systems
- The company has invested around Rs 7 crore to acquire a 20% stake in Indrones Solutions, engaged in drone manufacturing and data analytics, to increase its presence in the market.
- The company intends to expand its IoT business and develop full-stack drone capabilities.
- Marketing activities to help build the brand and raise awareness about MAPPLS products in order to reach customers.
- The company intends to leverage the B2C segment by investing in Gadget Space for better outreach and further improvement in Map My India.
- Investment in Kogo, a gamified social travel commerce platform with a stake of 26% for 10 crores, would enhance its capabilities for venturing into and understanding the new market.
- Recent Competition Commission of India rulings against Google may help to increase market share and presence for its business, as well as open up new opportunities as a home-grown business.
Conclusion
As we are at the end of the fundamental analysis of CE Info Systems (Map My India), we will take a brief look at the company.
It operates in a niche segment of the IT industry and has the potential to expand its business by entering multiple industries. CCI’s fine against Google for Rs. 1,338 crore for monopolistic practices may open the door to new opportunities.
Revenues and profits are increasing at the growth stage, and the high P/E commanding the current valuations will be justified by the company’s growth rate. What are your thoughts on the company’s expansion? Please let us know in the comments section below.
Written by Santhosh
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