Multibagger series - a solid player

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Dear Readers,

The following is a guest post by Mr Jagadeesh Reddy Yaramada, one of my esteemed clients and a young, fervent investor from Hyderabad. He has prepared an admirable research on an emerging company involved in the niche, LED Lighting and Display sector. The article is with ample statistics and he has concluded with his viewpoint on the business model and the future potentials of the product range with logical means. I am publishing this article with pleasure. Request my readers/clients to have a close read and comment…

MIC Electronics

With current numbers there is a huge gap between the demand and supply of electricity in India and this gap is expected to widen in future, with only so much of electricity available and though new power projects are being built, but the demand is also expected to rise at the same pace. So it is very critical to use the electricity produced efficiently and the company we are talking about operates in the area of LED Lighting and displays, which are 10 times more efficient.

It is estimated that electricity for lighting costs about $185 billions annually, the globe consumes 2300 TW.h of power and generates about 2bn tones of toxics annually. Since LEDs are about 10 times more efficient and since Governments all over the world are looking to reduce carbon emissions, I think MIC stand to gain from this.

Company Snapshot

BSE Code: 532850

Market Cap: 443.87 Cr

CMP: 43.75(09/02/2010)

EPS: 5.72

P/E: 7.65

52Wk High/Low - 59.90/14.35

Book value: 28.80

Face Value: 2.00

Chairman: Dr. M V Ramana Rao

LED Lighting

MIC has a vast range of LED lighting solutions available to cater from homes to large industries. The application potentials of the LED lights are enormous. The lighting gamut covers Architectural lighting, Channel letter/contour lighting, Consumer portable lights, Residential lighting, Retail Display lighting, Entertainment lighting, Safety/Security lighting, Outdoor lighting, Off-grid lighting(solar powered and others), Commercial / Industrial lighting and Automotive applications.

Indian Railways planning to modernize over 599 railway stations across the nation and decided to replace the single color LED displays with the multi color LED displays. MIC being the only Indian company approved by the RDSO and there is a noteworthy business break of more than Rs.700 cr over the next four to five years.

MIC has secured an order for transforming 10000 street lights of various kinds to LED lights in the city of Rajahmundry (Andhra Pradesh). More cities from in and out of India are expected to transform to the high efficient LED solar lighting systems as a better power saving option. City of Pittsburgh (USA) and Campbell (Australia) has been selected MIC's street lights for evaluation and the lights are undergoing trials. Is the beginning?

The portable Solar Rechargeable LED Lantern has been recognized by The Energy Resources Institute (TERI) and they have declared the adoption of MIC’s solar lanterns for their prestigious 'Light a Billion Lives' (LaBL) program. It is expected that, each Lantern is expected to replace 500-600 liters of Kerosene in general, thus mitigating about 1.5 tons of Carbon Dioxide emissions.

LED Displays

MIC's flagship products, LED Video Displays (indoor/outdoor/mobile) have become an integral part of Sports Stadiums, Transportation Hubs, Digital Theatres and Theme Parks, Advertisements and Public Information Displays in Railways and Airports. MIC has already partnered with IPL for providing LED displays. The company is mastered in following range of LED displays.

Indoor Video Screens
Digital Posters
Outdoor Video Walls
Mobile Video Displays
Digital Billboards
Digital Posters
Ticker Displays
Perimeter Displays
Variable Signage Displays
Networked Displays
Interactive Displays
Passenger Information Displays
Digital Theme Parks
3-D Displays


Recognitions

ISO 9001: 2008 certification.

Approval from MNRE for Solar LED Lantern.

Selected for "Best Under 1 billion" by Forbes Asia, one of the 22 Indian companies among 200 of Asia Pacific region.

RDSO Approval for True Colour Passenger Information Display System.

Only Indian company having ‘Design-to-Display’ capabilities in True colour LED video display Segment.

The first company to introduce LED Mobile Video Display in India, Middle East & South Africa

My View:-

Over 1.6 billion people in the world lack access to electricity and 25% of them live in India. I am expecting these solar lanterns to find more demand in future. Governments have already started talking about reducing emission and saving energy, the LED lighting developed by MIC would find usage in more and more cities across the globe in coming years. Few cities have already started the transformation process. With India’s focus on improving Infrastructure, MIC Electronics appliances like LED sign boards, advertising screens would find a good demand in areas like Expressways, new Highways, Airports or in such public venues.

MIC’s LED Displays have already been deployed at a number of sports stadiums across the world and many more stadiums would soon be follow the suit. There is around 1000 cr marketplace with Indian Railways itself for supplying coach lights, signal lights, emergency lights and for coloured display boards, sign boards and advertising screens. MIC as the only company approved by Research Design and Standards Organization (RDSO) has set to gain good business from the world’s largest Railways.

I am expecting, much more organizations will transform their Industrial and Outdoor lighting systems to more efficient and renewable solar LED lighting systems, which could provide a very good opportunity to MIC. LED lights with their long life span and less maintenance costs are expected to find use in Refrigerators, Traffic lights, Petrol pumps, mobile phones and for a lot others in the 24x7 category.

by Mr Jagadeesh Reddy Yaramada, Hyderabad

Thanks a lot Jagadeesh. I too believe that MIC is in the path of making a multibagger, but we have to offer adequate time to the management. The appealing range of products is compelling me to think vibrant on this scrip. Like all the other products, the fast growing advertising industry will undeniably boost the MIC business in very near future. It seems the flex board advertising trend may shift to the MIC LED displays in short span of time which will illuminate our malls, cities and highways.

Thanks again and keep it up...

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