Imagine leaving a high-flying career in US and returning to India to build software. In the 90s. Building digital maps for a complicated nation when no one uses them. Competing with Google. Almost winding up a few times. Finally succeeding.
A thread on MapmyIndia (MMI).
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2/n Maps are synonymous with Google Maps, so what’s special about MMI?
For one, they chose their battles carefully. When Google Maps entered India in 2005, MMI made a choice - to focus on the enterprise segment (B2B and B2B2C) instead of taking on the tech giant & burning cash.
3/n
Over two decades, MMI has mapped over 98% of India's road network, 10.5 mn locations at street level across 7.5 lakh+ cities & villages.
They claim their mapping is deeper & more accurate than Google, which shows in their growing & profitable B2B clientele.
4/n The Indian Geospatial industry got a big boost in Feb 2021 - with the new Geospatial Rules:
Liberalized mapping policy for domestic players
Foreign players can’t store data on servers & have to license it via a local partner.
Developments in 2021 - policy change, partnership with ISRO, Drone regulations, launch of Indian Space Association, launch pf Gati Shakti, etc.
As per Niti Ayog, map data is integral for Digital India - urban planning, navigation, logistics, or infrastructure.
5/n
MapMyIndia seems poised to gain significantly here. With over 25 year of dense licensed data, it gives them a big headstart and network effect (more on this later).
They are now moving into new tech 4D/ high res. mapping & analytics on existing data. Edge over new players.
6/n Business model: MMI operates as SaaS - has own API stack & mapping app which it licenses to enterprises across industries to build use cases.
Subscription and royalty contributed 90% of sales in FY21, making it scalable and profitable & earns them a valuation premium.
7/n
MMI shows potential for rapid revenue growth.
By charges fees on per vehicle, per asset, per transaction, or per user case, it becomes a platform play on growth in end use industries.
Interestingly, orderbook growth of 3.3x b/w FY19 and FY21 was before new regulations.
8/n Some proven use cases in Govt/ public utility:
1. Integrated with Cowin: Pan India Covid centres in 2 days 2. Live tracking of covid emergencies during second wave 3. Integrated with GoI Umang App 4. Mapped Indian airspace for drone operations
9/n
Drones usage will grow. In Aug '21, new Drone rules & PLI scheme was passed.
MMI enables 2D-3D visualization, surveillance of Drones. This will help many industries like Agriculture, Infrastructure, Real estate, logistics etc. Sample:
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Important: Non-govt revenue is at 90%. MMI works with global national & international B2B & B2B2C clients such as HDFC Bank, Apple, Amazon Alexa, Facebook.
Extract from FY21 annual report of Dabur shows usage in retail business:
11/n Why do companies partner with MapMyIndia?
Locational data is underutilized and a growing field. Some use cases below:
Financials:
Seeing good traction. One of the few recent IPOs with strong profitability (H1FY22 - Contribution margin of 85% and EBITDA/ PAT margins > 45%). Can this be sustainable?
Operating leverage is visible - Direct cost (% of sales) trend declining when revenue is growing.
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Dependency on Auto sector is seen declining - revenue from the automotive sector reduced to 52.5% in FY21 from 80.4% in FY19.
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Management claims the business can have strong network effect. Explained in slide below:
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Some key risk observations:
1. IPO is 100% OFS - all of 1000 cr is secondary. (spoils some excitement for us). Selling shareholders are promoters, Qualcomm & Japanese mapmaker Zenrin.
They do have a strong B/S with 340 cr cash, 100%+ ROCE and high cash flow conversion.
We looked at every company with promoter buying for the period from April 1st to June 30th (Q1 FY23).
A thread.
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1/n Total 178 names - Part 1 of top 64 here 👇
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Total 178 names - Part 2 of top 64 buying here 👇
Note: Top promoter selling at the end of the thread
3/n Sectors that saw the highest level of promoter buying: 1. Cements (mainly) and metals 2. Chemicals and API 3. Auto and auto components 4. Capital Goods 5. Financials
As Philip Fisher said: Getting a reality check directly from people associated with co. gives us "much deeper" insights☝️v/s just reading reports & financials
Russia controls ~17% of Nickel’s total supply & obviously with that amount of supply going out of system, one would assume prices to rise
But someone expected prices to fall!
A🧵on how the 2.3x surge in Nickel prices was triggered by a short trade & not due to supply crunch
What happened exactly?
A Chinese tycoon "Xiang Guangda" who owns the Tsingshan Group, the largest nickel mining group in China had placed huge short bets on London Metal Exchange (LME), expecting the nickel prices would fall.
We wonder why he held that view👀
1/n
This bet went horribly wrong when Russia banned commodity exports & Nickel prices started surging
To cover a big short position, someone had to buy equivalent long positions.
This created a short squeeze & Nickel reached $1lakh/ton & inturn led to notional loss of $8 Bn+!😱 2/n