has it discovered the winning approach for IPOs in the present climate?
a company whose founder once said it wants to compete with one of the world’s biggest corporations is bound to get attention. MapMyIndia, holding its own against Google Maps, is doing very well to live up to those high expectations. it is riding its geographical advantage in India, no pun intended, to navigate its way to the public markets. its IPO is already a mega hit, having received applications for nearly 155 times the shares it put up for sale.
what made it a hit with investors?
geospatial data is extremely precious, and MapMyIndia’s repository is among the best in the world. one of the reasons is that it has been in the business for a long long time, having been established in 1995. that’s three years before Google, for those keeping track. the other is that its time to shine may soon arrive.
a range of companies from mega automakers such as GM and Ford to tech giants such as Apple and Xiaomi are looking to build smart cars. these autonomous vehicles will boost the demand for such data, internet of things (IoT) devices integrated into the system, and software that connects them. this is exactly what MapMyIndia has been building, and its 95% share of the Indian dashboard-GPS market is testament to its dominant position in the country. further, its location services are used by countless on-demand and location-based companies such as Flipkart, Uber, Ola, Grofers, PhonePe, Airtel and more. this puts it in an excellent position for growth for a long time to come.
one of the biggest concerns in this mega year of IPOs has been the valuations that some of them have successfully commanded. while generous multiples on earnings (given the companies were turning a profit in the first place) sailed by during the market bull run, investors are getting a little more scrupulous as the market stagnates. MapMyIndia is taking a different route. At 36.1x its FY21 price-to-sales ratio and 28x its annualised FY22 price-to-sales ratio, its valuation is in line with those of other tech companies such as Paytm (27x) and Zomato (~32x) as of December 13. however, MapMyIndia has something the other two do not: net profits, which are starting to pick up. its revenue for the first half of FY22 grew more than 81% over the corresponding period of the previous year, and net profit grew 151% on the same comparison.
on top of this, its offering size, at Rs 1,040 crore, is on the low end of the spectrum, meaning the supply is very limited. these factors have combined to return the spectacular subscription numbers mentioned above, and definitely placed it on investors’ radars.
as the gray market suggests, MapMyIndia is likely to cause a big splash on its debut, potentially doubling the investment for those who overcome the odds to be allotted shares. but its potential suggests it may be worth more than a quick flip.