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Buy CE Info Systems Ltd for Target Rs.2,500 - Yes Securities Ltd
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Inline financial performance with robust outlook for H2FY24
Result Synopsis
CE Info Systems (MAPMYINDIA) reported inline financial performance for the quarter. Both, the sequential revenue growth and EBITDA margin were as per expectation. It reported sequential revenue growth of 1.0% QoQ (up 36.0% YoY) led by C&E Market Segment which was up 8.8% QoQ (up 70.9% YoY) and A&M Market Segment which was down 5.8% QoQ (up 12.5% YoY). EBITDA margin decreased sequentially (down 585 bps QoQ) led by increase in overall cost. IoT-led business EBITDA margin was at 10.0% in Q3FY24 vs 8.2% of Q2FY24 as SaaS income continues to grow.
The business outlook remains strong led by rising demand for digital mapping services and navigation solutions. It enjoys strong moat in domestic B2B digital mapping space led by diverse offerings across Map and Data; and Platform and IoT categories in key markets of a) Automotive and Mobility Tech; b) Consumer Tech and Enterprise Digital Transformation. The use cases of its digital mapping services continue to grow across industries driving business growth. The B2C Mappls application is witnessing rising traction. We estimate revenue CAGR of 35.6% over FY23?26E with average EBITDA margin of 43.3% over the period. We maintain our BUY rating on the stock with revised target price of Rs 2,500/share based on DCF methodology. The stock trades at PER of 59.5x/43.8x on FY25E/FY26E EPS.
Result Highlights
* Reported revenue of Rs 920mn (up 1.0% QoQ, up 36.0% YoY). The sequential growth was led by C&E Market Segment which was up 8.8% QoQ (up 70.9% YoY) and A&M Market Segment was down 5.8% QoQ (up 12.5% YoY).
* Revenue Contribution of Platform & IoT stood at ~70% of total revenue (up 13.9% QoQ, 19.0% YoY) and contribution of Map & Data stood at ~30% of total revenue (down 20.3% QoQ, up 104.5% YoY).
* EBITDA margin decreased by 585 bps QoQ to 39.1%, led by increase in cost of material.
* IoT-led EBITDA margin has expanded to 10.0% in Q3FY24 versus 8.2% in Q2FY24, due to improved product mix and operational efficiency.
* Reported PAT of Rs 310mn (down 6.2% QoQ). Net Profit Margin stood at 33.7% (down 260 bps QoQ).
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SEBI Registration number is INZ000185632
