C.E. Info Systems Limited analyst Q&A

Thank you very much, sir. We will now begin the question and answer session. The first question is from the line of Chandramouli Muthiah from Goldman Sachs.

My first question is just around, I think, some of the lumpiness that you addressed. There has been a positive lumpiness in the IoT-led business this quarter, maybe headwind on lumpiness in the map-led business. So I just want to understand if there are any one-off factors there in either IoT or map-led which potentially reverse into the back half of the year? Just if you could address the lumpiness and factors behind that, that would be helpful?

IoT-led business already grew dramatically. If you're asking on the map-led business, there was some impact of GST, particularly in the auto motive vertical. And corporate lumpiness, I think we have always said we see good revenue in Q1 and very good revenue in Q4, while Q2, Q3 are normal business as usual.

Got it. That's helpful. Second question is just around the clarity that Rohan had provided on that INR10 crores to INR15 crores – given that you consider that sort of one-off investment for the future on potential revenue-generating business that you could get from these efforts, I just want to understand if you expect more sort of investment of this nature within this particular project or this set of projects in the future as well? Or if it's restricted to sort of this quarter?

We will keep investing, but maybe the investment amounts will keep coming down. So margins will keep getting better. And so this was probably the peak of the investment that we had to make, it will continue to decrease. And then, of course, the scale will also grow because we see quite large opportunities around this load safety and traffic management.

Got it. That's helpful. And just lastly, in term s of our sort of 3-year vision and target, the INR1,000 crores revenue target by FY '28. I just want to understand, if you look at it on a full year basis for F '26, maybe sort of the implied growth run rate should be in the range of that 20% to 25% run rate. The first half has been, because of all of this lumpiness, maybe a little lower than that. So I just want to understand if we seem to be on track on an annual basis towards that plan? I think you've spoken about aspiration to meet the 35% to 40% margin range and then on the top line run rates you discussed as well.

Yes, your thinking is right. FY '28 goal is definitely not changing.

The next question is from the line of Krupa Desai from Electrum Capital.

Am I audible?

Yes.

Sir, you just said that we are expecting to sign an MoU with the railways. Can you tell me what is the opportunity size there?

Well, you know what happens is an MoU from the absolutely top level, it just lays down the contour of what all can be done. For the opportunity you can think about in railways, it's up in the air for us and yourself to imagine. If you're asking me for any numbers that have been written in the MoU - they don't write the numbers there. It is for us to start converting it into business. DMRC is just one small set of railways.

Railways is a huge organization, huge infrastructure, huge operations, I mean, extremely large from an economic size and impact, and hence, it's a huge consumer of technology. And our type of technologies, which covers the three pillars of maps, IoT and digital twin, digital transformation, there are tons of different use cases. So it can be a massive opportunity size for us, a very large vertical. And that's kind of the idea - What MapmyIndia has been doing is unlocking more and more verticals and making them quite large. And so like there's defense, there's rail ways, these are all pretty key industry verticals . Roads anyways, we have been doing a lot in, but now we are able to expand it significantly. But for us, the railways, defense, these are all sunrise sectors. And so that's what gives us the bullishness for the time to come, and you're seeing the contracts and the MoUs, which are kind of precursors to that.

Okay, sir. And my one question was on this technical outsourcing expenses. So do we continue to expect these expenses at this scale or it will come down in the coming years or in the coming quarters?

Relatively, they will come down, yes.

In '26 only, from next quarter onwards?

That's correct.

And you are saying that these expenses would help us in other government projects. Is my understanding correct on this?

That's correct.

The next question is from the line of Shobit Singhal from Anand Rathi.

So, sir, my first question is given the user base has now increased to around 4 crores in our B2C Mappls app, how are we trying to monetize it going forward? And what kind of potential are we envisaging?

See there are different aspects of looking at it. I just had mentioned that we are looking at Mappls app as a technology showcase. Converting into a business or anything like that is not in today's agenda. So I will not speak anything on that, but it has a direct or indirect impact on our entire business that we do.

Okay. And sir, my second question is, Q2 usually tends to be a stronger quarter for A&M segment, but however, this quarter, some of the deliveries got shifted to Q3 due to the GST rate cut. So now given the record auto sales for both PV and 2-wheelers we have seen in October, has a similar performance been seen in our A&M segment as well?

Yes. You're right. I mean, after 15th August announcement by honorable Prime Minister, the sale of automotive really slowed down. And it picked up in the last week of September, but that was not enough from our perspective. So let's hope that in Q3, the automotive OEMs do better. And we are hoping that it will reflect on us also.

The next question is from the line of Gauravkumar Shah from Harshad Gandhi Securities.

Sir, can you please provide some color on the future pipeline of any municipal orders or tenders within next 6 months? Any opportunity size we are aiming for?

I can’t provide numbers, but suffice to say, our team is very active in a large number of opportunities in the government. As we've said before, this has become an area of focus. We pick the right types of orders, which are more product and platform aligned and to our core areas of maps, IoT, digital twin and digital transformation. And we engage at the center, state and city municipal corporation levels, so across center, acr oss state and across cities as well as in key PSUs and areas like defense and railways.

Okay. So no specific number?

We talked about a few orders that we've won in the quarter to give some color.

Yes. IOCL, as an example, or Survey of India; for technical reasons, I'm unable to specify the number, but it's a good sized number.

The next question is from the line of Gautam Rathi from CWC.

So my question is in the IoT business, there is this hardware revenue and then there is the service/map led revenue, right? We see a significant uptick, INR37.8 crores number which you have reported in the IoT-led, but map-related and service-related revenue. That's more recurring in nature, right? The understanding we had was, first, you have to sell devices or hardware to get this income, but suddenly we see a very large number there after a few quarters, right? So can you throw some more light there?

Yes, correct. See, that's the good part about the IoT-led business is that definitely, once you sell hardware, you are able to make some SaaS an nuities, and that keeps going up, but it's not exclusively in IoT-led projects that we have to sell hardware. We can offer on an opex basis. Also, we are able to just offer our SaaS solution. So there can be a mix change towards more SaaS versus hardware sale followed by SaaS. And so that mix is also playing out. But it's not that one or the other is better. Both have their place. We look at overall what is the total IRR to us over a period of time. And the other is pretty much just cash management in terms of working capital, but we have a very strong balance sheet to support this IoT, if it requires hardware upfront or in the case of government, if it requires working capital investments upfront. So the good thing that you are seeing in the IoT-led business is that there's a large proportion of SaaS revenue.

Yes.

Because it's a platform, right, like SaaS or a platform-based service. Very interesting. The other thing, Rohan, I just wanted to understand, like a lot of government-related work which you're doing now, which I just heard over the call and the presentation, right, it looks more platform- led or, say, mGIS for Survey of India, right, wh ich is again a product or a platform. So again, would this also become recurring in nature rath er than our general notion of government being a lumpy business, Q4-heavy, et cetera? Are these now more recurring in nature?

Gautam, it's a mixture. See, in the government also, once they engage in digital transformation, they also need to continue it. So many times, these extensions also happen. The nature of the beast is that they can't have an open contract. So they will give it for a particular time frame, a particular solution. But in many cases, if there's continuity in the government or the policies, et cetera, they do extend.

I'll give you two examples. So many years back, we signed contract with GSTN and CBDT. The contract got over. Again, they renewed the contract. So the whole game is if you get in with a platform and a product way into the government, after all, they need to keep providing service to their citizens or users. So that's exactly what is our strategy. So instead of getting into a pure onetime service thing and just done it and shake hands, we want sustained relationships.

If it was a pure survey kind of thing, that's what other folks are focused on while we are focused on a genuine platform that exists for many years.

And we are building new ones also from the government angle.

Amazing, amazing. No, this was great. If I can just squeeze one more in. On the C&E side, this time in the presentation, when I read the kind of wins or go lives, it looks to be increasingly API- driven or product as a platform as a service related wins. At the same time, during our channel checks or when we talk to developer folks, we always hear this feedback that somewhere the APIs are a bit more difficult to consume or the developers are not quite used to MapmyIndia API. So are we doing something there like to kick off that developer motion more and more? If you can share anything will be really helpful?

If you segment the market of developers, there's large enterprises, then there is a mid-market and then there's a long tail of developers or start-ups, etcetera. Given that majority of our business has been coming from enterprises, where the propensity to pay is higher, MapmyIndia is positioned more towards supporting large enterprises in India who have an ability to pay rather than use the API or focus on API as marketing. We use Mappls app as marketing, but we focus on customers who have the ability to pay and we provide them full service. So that's why maybe when you talk to developers who are either part of startups or who are individuals in a large organization, the self-serve aspect of it may not be coming out well. Not that we don't want to do that. It's just a choice of which do you focus more on. If we see a large opportunity around ‘Large volumes, small value’, then we will additionally orient ourselves to cater to that. But as of now, we are geared towards large enterprises, which move the needle for us compared to our most peers.

The next question is from the line of Shrinarayan from Baroda BNP Paribas AMC.

So you said whatever investments that you have done to secure this government orders, can you highlight whether these costs are booked in the map-led business or IoT-led business? I just want to look at the EBITDA margins from a normalized perspective. So if you can give some color on that?

More in IoT-led.

Okay. So how do you segregate? I mean, it's based on the potential business that you would be getting, that's how you allocate between the segments?

It's based on which product leads the solution for the customer.

Okay. So basically, delving more into the ear lier participant's ques tions that the service component of IoT-led business has risen significantly. So in that sense, our EBITDA margin of IoT-led business in a normalized sense would have risen significantly, but it's because of this investment that IoT-led margins have come down by 1% year-on-year.

Overall, EBITDA of the company would have been higher and overall EBITDA of IoT-led would have been higher, if not for this investment that we have been making.

So basically, much of the margin improvement will come in the IoT-led segment. The map-led segment margins would remain in 35% kind of range?

No, map-led margin is 47%.

So on normalized basis, how much would have been the margin in current quarter if it was not for the investment that we made?

I think we've called it out somewhere. As Mr. Verma explained, that corporate revenue tends to be lumpy. So don't look at quarter-on-quarter margin. Look at year-to-date margins. So one quarter, like last quarter, you must have seen an extremely high margin for maps-led. That was much beyond 47%. It was probably 50s or 60 or something like that, in that range.

The next question is from the line of Sujit Jain from Bajaj Life.

I'm joining the call a little late. So if ther e's repetition of questions , please pardon. While I understand that this company should be looked at like a trailing 12-month basis, not quarter-to- quarter, as you just explained, there are mileston es in between. If we kind of miss the growth rates, we'll not be able to meet the long period guidance that we have. One, what are the milestones in between that we should track? Number two, what is the big picture opportunity of India eventually deploying sovereign platforms and therefore, in the area that we operate? That is a big picture answer that one is looking forward to?

Look at full year, that's what we've always said. Mr. Verma talked about Q1, Q4 dynamics. So look at full year, that will give you a kind of picture into where we are with regards to our FY '28 milestone. And 100% India has to be Atmanirbhar in all sorts of areas, especially in geostrategic technologies. Regarding this area of maps and IoT and digital transformation, India has no option but to become Atmanirbhar and why just Atmanirbhar it can be the leading provider of product platforms globally. I think in the last month or two, what became clear is from the very top of the government, they recognize that in this area of maps, IoT and di gital transformation related to these areas, there exists a deep tech products and platforms company called MapmyIndia which is no less than the best of the West. And I think we are up to the challenge, not just from the consumer app point of view as Mappls app but being the backbone for the public sector, for the defense, for the railways, for the private sector, be it automotive or the corporate world. And if you look at kind of the suite of solutions we offer and the capabilities that MapmyIndia has to be able to provide end-to-end indigenous, meaning designed, engineered and manufactured, I'm using the word manufactured loosely because we are primarily software and map and solutions, but even so…

We are also manufacturing.

Even the hardware that we make, we can do it indigenously. The Survey of India is one indicator to you of how the government is working with MapmyIndia to build out this national geospatial platform which is kind of, as Mr. Verma said, the DPI equivalent of UPI or these others, Aadhaar. There will be many others that we will do at center, state and local level. That's the big opportunity for us, and we are working hard towards it.

Thank you.

Thank you. Ladies and gentlemen, due to time constraint, this was the last question for today. I now hand the conference over to the management for closing comments.

Well, I would like to thank all the participants and your effort to understand MapmyIndia's business, not just for now, but long term. I will ju st say that we have tried to be as transparent as possible. Please feel free to ask any questions later through e-mail and send it through whether our PR, E&Y or direct to Saurabh Somani and we'll be happy to respond.

Thank you very much, sir. On behalf of Anand Rathi Share and Stock Brokers Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.