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MIC Electronics Ltd – Review

May 4, 2007

ICICI Direct advises you to apply for this IPO. I have personally not looked into it and have no opinion. Here are ICICI Research’s thoughts.

LED display market is around US$3.55 billion and is expected to reach US$3.9 billion by 2007. This market has grown at a CAGR of 15.98% between FY04 to FY07. Also the Live entertainment industry is growing at 18% and needs more LED displays for live events. MIC could be a big beneficiary from the boom in the media space.

MIC is the only player in India to have manufacture to design capabilities for LED video display in India . The company does customised solutions for customers for LED display used in sports and live events, advertising applications, indoor applications such as shopping mall, airports etc and mobile vans. The company also has international presence and offices in many countries.

Financials:
The company posted a top line of Rs 104.4 crore for FY06 compared to Rs 21.19 crore for FY05, while its bottom line jumped to Rs 15.4 crore from Rs 2.14 crore. For the 6 months ending FY07, the company clocked an income of Rs 65.46 crore and posted a profit of Rs 10.89 crore. More than 30% of the income comes from the media business while the rest from telecommunications and info-tech businesses. We expect the company to post a top line of Rs 206 crore in FY07 and Rs 230 crore in FY08 with a bottom line of Rs 32.56 crore and Rs 40.5 crore in FY07 and FY08 respectively. We expect the revenues from the media segment to contribute more than 50% of the top line in FY08, which has EBIDTA margins around 30%.

Valuations of IPO:
The issue is being priced at a price band of Rs 129-150. At the top end of the price band, the stock commands a P/E of 7.44x FY08 EPS of Rs 20.15. Global companies in the media business such as BARCO NV and Daktronics are trading at a P/E multiple of 25 inline with Indian media companies. Based on this MIC Electronics very reasonably priced and one may consider investing in the stock.

Issue closes on May-8th.

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