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Growth story unscathed; maintaining a Buy

MapMyIndia’s 9M FY23 revenue grew 45.7% y/y (org. 23.4%) to Rs2.1bn. Its A&M business (bringing 53.8% to revenue) grew 51.1% y/y, and its C&E business (46.2%) grew 40.1% y/y. The 9M EBITDA margin was flat y/y at 42.2%, chiefly due to higher marketing expenses and high growth in the IoT business. This initially compresses margins as device hardware has lower margins, but then (12 months down) generates high margin SaaS revenue. Factoring in all this, we cut our FY23e/FY24e EBITDA 4.4%/7.4% and introduce FY25e. We retain our Buy rating on the stock with a lower TP of Rs1,500 (45x FY25 earnings). Given MMI’s clear advantages in the context of India, which are not easily replicable and huge barriers to the maps-and-navigation business, we believe its premium valuations should endure.

We anticipate a 35.8% revenue CAGR over FY23-FY25 based on FY23’s opening order book of Rs7bn, which shot up ~86% y/y (~24% of it to be recognized in FY23 itself) and the greater contribution from Gtrophy. We expect the A&M business to record a 30% CAGR over FY23-FY25, and the C&E business a 43% CAGR.

We expect EBITDA to clock a ~34.8% CAGR over FY23-FY25. Excl. the Gtropy business, the 9M FY23 EBITDA margin was 53%. The 9M consolidated EBITDA margin was flat y/y at 42.2%, chiefly due to a pick-up in the device-driven IoT/Gtropy businesses. These are margin-dilutive in the first year, but pick up from the next year due to the greater SaaS revenue contribution. Margins were also compressed by higher marketing expenses and due to investments in product development. To factor in the greater contribution from the Gtropy business, we lower our FY25e EBITDA margin 400bps to 41%.

Risks: Competition from large global operators such as Google; high clientconcentration (80% of its revenue comes from 35 clients).

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