In a span of approximately six months, MapmyIndia, a company supported by Mark Mobius, has seen its stock price double as its mapping service gains popularity in India. This success places it in direct competition with Google Maps by Alphabet Inc. However, opinions within the market are divided on whether this upward trajectory will continue.
Impressive Stock Performance
Shares of MapmyIndia, formerly known as CE Info Systems Ltd., have surged by about 104% since the end of March, leading to a substantial increase of approximately $675 million in market capitalization. This growth is attributed to the rising demand for its consumer-focused app, Mappls.
Differing Views on the Rally
There are contrasting viewpoints within the market regarding the future of MapmyIndia’s stock price. While some analysts and investors are optimistic about the company’s potential for domestic growth, others express concern over the stock’s valuation.
Optimism: Mark Mobius, a prominent investor, has endorsed MapmyIndia as one of his top picks in India. He has expressed his belief that the company will benefit from India’s ongoing digitization. Mobius Capital Partners LLP, his firm, holds a 0.74% stake in MapmyIndia. Their initial investment was made in January and subsequently increased over the following four months.
Valuation Concerns: On the other hand, some market observers, such as Piyush Pandey, a technology analyst at Yes Securities India Ltd., believe that the stock’s valuations have become stretched. They anticipate a period of consolidation for the company.
Founders and Revenue Sources
MapmyIndia was founded by Rakesh and Rashmi Verma, a husband-and-wife duo who embarked on the mission of creating digital maps of India long before Google’s web cartography revolution. The Verma family’s painstaking efforts included physically traversing India’s major cities on foot to map streets and landmarks. Today, their son, Rohan Verma, who holds a degree in electrical engineering from Stanford, serves as the company’s CEO.
The bulk of MapmyIndia’s revenue is generated by providing mapping services to various businesses, including notable names such as Apple Inc., BMW AG, and Amazon.com Inc.
Valuation and Recent Performance
Currently, MapmyIndia’s stock trades at approximately 65 times its estimated earnings for the next 12 months, in contrast to about 21 times for the S&P BSE 500 Index. The stock has retraced slightly, declining by 8.5% from its record high on October 6.
Optimistic Outlook and Growth Potential
Despite the valuation concerns, some industry experts remain optimistic. Shobit Singhal, the lead internet stocks analyst at Anand Rathi Institutional Broking Ltd., anticipates that the company’s sales will grow by 35% to 40% annually for the next 3 to 5 years. He emphasizes the absence of listed peers for MapmyIndia in such a substantial domestic market, asserting that its impressive growth and strong management pedigree warrant a premium valuation.
Future Expansion and Investments
MapmyIndia is not resting on its laurels. The company is investing in in-house drone technologies and exploring potential acquisitions of drone businesses. CEO Rohan Verma expressed the company’s international expansion plans, driven by demand from their predominantly multinational clientele.
“We want to be a full-stack drones provider,” he stated. “We have the technological know-how of navigation; now it’s time to broaden its use cases.”