CE Info Systems Ltd Q1 FY2024 Concall Summary

Key Takeaways

• Broad-based growth, on track for 40% CAGR: Revenue grew across all segments, driven by a large opening order book (INR 918 crores) and 250+ new customer additions in the past year.
• IoT margin expansion is the quiet story: IoT margin improved from 4% to 6.3% as the SaaS income layer from past hardware sales began to kick in, a trend management expects to continue.
• Moat rests on irreplicable data, not protection: Management argued the map data product, built over decades at national scale, cannot be replicated by capital alone, and explicitly stated Google has operated freely in India since 2007-08.
• International revenue is not in the base plan: This year's growth is designed to come from the India story only; the roadmap to INR 1,000 crores does not depend on international contribution.
• What to watch next quarter: Whether the IoT SaaS renewal rate is disclosed, the pace of IoT margin expansion, and any conversion from the INR 25,000 crore TAM pipeline.

Revenue Drivers & Segment Performance

• A&M segment: Automotive OEM volume is growing faster than industry single-digit volume growth, supported by key go-lives (Hero MotoCorp, Harley-Davidson built-in, Ultraviolette EV bikes) and fleet wins including schools with IoT solutions.
• C&E segment: Consumer tech companies (e-commerce, D2C, food delivery, travel) are using APIs for delivery address capture; ONDC-enabled apps are starting to use MapmyIndia; corporates across BFSI, energy and consumer durables are using the platform for workforce management and geospatial analytics.
• Government & defence: Government business continues to grow across maps, IoT and drones; defence business has been won and is being executed, with products well suited from a technical and Atmanirbharta standpoint.
• Mappls app: Increased B2C usage driven by 3D junction views, trip cost info and safety alerts is expected to have a knock-on effect on B2B and B2B2C business; B2C gadgets are doing well.
• Geospatial analytics: Solutions went live during the quarter for customers on retail expansion sprees, using geo-demographics down to 0.5 sq km grids in urban areas and village-level data in rural areas.

Rakesh Verma: "there is hardly anyone who has tried to combine the power of these 3 pillars together to create a business where the use cases are becoming enormous."

IoT Business & Margin Dynamics

• IoT margin expansion: IoT margin expanded from 4% to 6.3% sequentially as SaaS income from past hardware sales started kicking in; the hardware is not a pass-through but generates future recurring subscription income.
• SaaS complexity: Management described the hardware-SaaS relationship as a complex calculation not easily analysed, given many different hardware types with different SaaS components, and declined to provide a renewal percentage stat.
• Device volume: The company is on track for IoT device volume on a yearly basis, but specific quarterly numbers were not disclosed.
• Technical services outsourcing: This cost line is rising because the company is building and spending more on internal map creation and certain subsidiary deliveries; as map product creation and IoT business increase, this cost goes up while employee benefits remain stable.
• Overall margin posture: Management did not provide specific margin guidance for the IoT/drone/map mix, arguing that continued investments in moat and IP will keep them differentiated, and that no map company worldwide has 50% margins.

Rohan Verma: "look at our business year-on-year is what I'll always say it will give you more reliable analysis."

Competitive Moat & Market Position

• Irreplicable data asset: Building a map data product at national scale requires IP, intellectual capital, time investment and the ability to create many use cases that further enhance the map; since 1995, others including GIS companies and large players have tried and failed.
• No government protection: Management explicitly stated India provides no government protection to MapmyIndia and that Google has operated freely in the market since 2007-08.
• Ongoing investment: Significant further investments are being made in 4D high-definition digital map twins, drones and IoT for advanced map data products, plus software covering automotive, mobility, NCASE, logistics SaaS, consumer tech APIs and enterprise digital transformation.
• Map updation: Master map data for the entire country is updated and released monthly; real-time updates occur as well, with a new airport in Port Blair available on Mappls the same or next day.

Rohan Verma: "It's not easy to build a map data product at the scale that we have been able to build, which is using the entire country, and we are not stopping just here. So the business that we have built, definitely has a very strong moat, it's not replicable by just capital that anybody else can..."

Drone Business

• Full-stack positioning: The company acts as a solutions provider that can supply drones, provide services (fly drones, acquire and analyse data, deliver output), and serve as a systems integrator where the drone is part of a broader solution.
• Natural adjacency: Drone-captured data from the sky is processed, analysed and delivered on mapping and geospatial GIS platforms; management argues a mapping company is best placed to provide drone-based solutions.
• No segment disclosure: Drone revenue is not broken out segment-wise, and management declined to provide a 2-3 year revenue outlook.
• Inorganic partnerships: The company is not manufacturing drones itself but has inorganic investments and partnerships for hardware.

Rohan Verma: "Drone is used to capture data from the sky versus the ground. So who better than a mapping company actually to provide the drone based solution... It is actually enhancing."

International & Revenue Roadmap

• India-only base plan: This year's revenue projection does not include anything from international; growth is designed and supposed to happen from the India story only.
• INR 1,000 crores roadmap: The Analyst Day discussed a roadmap to INR 1,000 crores, but management did not break down revenue by country or geography.
• International as upside: When asked whether international revenue would be additional to the base plan, management did not clearly confirm or deny, stating "I'm not trying to say that" and reiterating the India focus.
• TAM pipeline: Management deflected a question on the breakup and conversion timeline of the INR 25,000 crore TAM pipeline, referring the analyst to the June Investor Day presentation.

Rakesh Verma: "Please understand that in our Analyst Day we have talked about our road map to INR 1,000 crores. Every revenue from which country and which place, definitely, we have not talked. And this year, definitely, we are saying that our growth is designed and supposed to happen from the India story only."

Guidance & Commitments

Key Metrics