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MIC Electronics – Review

November 24, 2008

MIC Electronics is the only listed / organized player in the LED segment with capabilities in multi color display boards and LED based lighting solutions. MIC has competencies in the design, development and manufacture of LED Video Displays, high-end Electronic and Telecommunication equipment and development of Telecom software since 1988. The company is a technology driven design-to-manufacture player with an early mover advantage and an established clientele. MIC offers a cost effective means of communicating with a longer shelf life than the traditional means of advertising through billboards.

A healthy Rs.200cr order is in the pipeline (likely by Dec 08) that includes coach lighting, emergency lighting, LED indicators in long-distance trains, etc. Initiatives to enter into home lighting business, which is albeit at a very nascent growth stage in India.Enjoys a long-term relationship with NICHIA of Japan for sourcing of LEDs – resulting in an assured LED supply – looking at backward integration plant in India.

Expect MIC to grow at a CAGR of ~ 35% over the next 2 years. LED segment, currently accounting for nearly 69% of the revenues would be the key growth driver. At the current market price of Rs 35, the scrip is quoting at 4.20x FY09e earnings of Rs.8.33 per share and 3.08x FY10e earnings of Rs.11.39 per share.

MIC Electronics had an IPO in May-2007. Since then the stock has dropped below its issue price. Investors with appetite for Risk in Small Caps can BUY the stock which can double from current levels.

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