MIC Electronics- Seemingly good prospects, but one should wait
MIC Electronics Limited. is a leader in the design, development & manufacturing of LED Video Displays, high-end Electronic and Telecommunication equipment and development of Telecom software since 1988. Importantly, MIC has no real competitor in India in its LED business and is currently enjoying monopoly position in the market.
However, during the last one year, the performance of the company has deteriorated, and has not improved as evident from the latest June quarter results. The demand for its LED solutions seems to have shrunk in the last 1 year. So, does it culminate into an ever-lasting situation ? Well, not exactly.
Looking into the future, I can see enough demand for its LED true colour displays, and also for its LED lighting solutions, which have proved to be quite efficient. The LED lighting solutions are finding wide-spread usage, and should be omnipresent by the next decade, as LEDs represent the most energy and cost-efficient lighting source, consuming 10 times less power than CFLs and being biodegradable. In India, Railways is implementing LED lighting systems in a big way.
I would not put in numbers for the growth expected in the segment of LED displays, but a quick comparison with developed countries like US, UK really tell us that how short we are on our billboard advertizing expenditure, and thus with businesses growing like never before, advertizing is one space which will flourish like anything.
Performance
As I mentioned that performance was not that great over the last year. The company reported Rs 305 cr in revenues for 2008-09 and a bottomline of Rs 68 Cr, with diluted EPS at Rs 5.77. The performance was actually satisfactory till March, but the sales and profit dipped in the June quarter with both sales and profit dipping by more than 50% in the June quarter. The current market price stands at Rs 52, and if I take into account the diluted EPS (outstanding 1,74,81,725 convertible share warrants issued at Rs. 122/-each on preferential basis have been considered.), then the valuation satnds at a P/E of 9. However, the probability of conversion seems remote.
Fund Raising
MIC Electronics has decided to raise an amount of Rs 218.96 crore by issuing warrants to various promoters, non-promoters and from international markets. The company would offer 93,75,000 warrants at Rs 44.36 per share amounting to Rs 41.58 crore and would further issue 71,25,000 warrants at Rs 44.36 a piece, aggregating to Rs 31.60 crore to various promoters and non-promoters.
Further, the company would raise $30 million (nearly 145.77 crore) by issuing Global Depository Receipts (GDRs) and American Depository Receipts.
The company has contemplated resorting to another issuance of warrants, as I said earlier that the possibility of conversion of earlier issued warrants seems remote. Thus in effect we can consider the above accounted valuations, which is not that high. Although the future of the company seems good, but one should await positve developments in the income statement, before taking an exposure.
However, during the last one year, the performance of the company has deteriorated, and has not improved as evident from the latest June quarter results. The demand for its LED solutions seems to have shrunk in the last 1 year. So, does it culminate into an ever-lasting situation ? Well, not exactly.
Looking into the future, I can see enough demand for its LED true colour displays, and also for its LED lighting solutions, which have proved to be quite efficient. The LED lighting solutions are finding wide-spread usage, and should be omnipresent by the next decade, as LEDs represent the most energy and cost-efficient lighting source, consuming 10 times less power than CFLs and being biodegradable. In India, Railways is implementing LED lighting systems in a big way.
I would not put in numbers for the growth expected in the segment of LED displays, but a quick comparison with developed countries like US, UK really tell us that how short we are on our billboard advertizing expenditure, and thus with businesses growing like never before, advertizing is one space which will flourish like anything.
Performance
As I mentioned that performance was not that great over the last year. The company reported Rs 305 cr in revenues for 2008-09 and a bottomline of Rs 68 Cr, with diluted EPS at Rs 5.77. The performance was actually satisfactory till March, but the sales and profit dipped in the June quarter with both sales and profit dipping by more than 50% in the June quarter. The current market price stands at Rs 52, and if I take into account the diluted EPS (outstanding 1,74,81,725 convertible share warrants issued at Rs. 122/-each on preferential basis have been considered.), then the valuation satnds at a P/E of 9. However, the probability of conversion seems remote.
Fund Raising
MIC Electronics has decided to raise an amount of Rs 218.96 crore by issuing warrants to various promoters, non-promoters and from international markets. The company would offer 93,75,000 warrants at Rs 44.36 per share amounting to Rs 41.58 crore and would further issue 71,25,000 warrants at Rs 44.36 a piece, aggregating to Rs 31.60 crore to various promoters and non-promoters.
Further, the company would raise $30 million (nearly 145.77 crore) by issuing Global Depository Receipts (GDRs) and American Depository Receipts.
The company has contemplated resorting to another issuance of warrants, as I said earlier that the possibility of conversion of earlier issued warrants seems remote. Thus in effect we can consider the above accounted valuations, which is not that high. Although the future of the company seems good, but one should await positve developments in the income statement, before taking an exposure.
MIC Electronics Limited. is a global leader in the design, development & manufacturing of LED Video Displays, high-end Electronic and Telecommunication equipment and development of Telecom software since 1988. An ISO 9001: 2008 certified, it has marked presence in the highly dynamic domains of:
- LED Video, Graphics and Text Displays
- LED Lighting Solutions
- Embedded, System and Telecom software
- Communication and Electronic Products
Today, MIC's flagship products are LED Video Displays (indoor / outdoor / mobile), that have become an integral part of Sports Stadiums, Transportation Hubs, Digital Theatres and Theme Parks, Advertisements and Public Information Displays.
Headquartered at one of the fastest emerging IT cities, Hyderabad (India), it has nation wide presence in the form of a vast network of marketing, sales and service support centres in all metros of India. To meet the demand of its products worldwide, it has offices in Australia,Korea and USA. Now the company is gradually setting up operations in other international markets.
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