Tuesday, February 9, 2010

Multibagger series - a solid player

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


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...



  1. Thanks Shabu for reviewing, editing and posting the article...

  2. LED are the future. As the cost starts to come down,they will increase and over take the incandescent. As Peedabo as an indoor billboard company the use of LED's in our business will lower our operating cost and in crease the value of our company . I think it will have the biggest impact i the OOH industry. Great article.

  3. Dear Shabu,

    Nice to read yuur article about LED's future and possibilities. Thanks for posting this.

    Best regards,

  4. The article is very good Jagadeesh. Keep writing such articles.

    Madan N

  5. Dear Shabu sir and Jagadeesh sir,

    Thanks for the article. Few days ago I got an email containing ad from a reputed portfolio management company about their new recommendations. From the clue they gave I was impressed and tried to search internet about energy saving LED lights. But I was disappointed because from my initial search I thought that Asian electronics was their recommendation. I stopped doing more research as I was not at all bullish on Asian electronics. But from this article I realize that the company they recommend was MIC.


  6. Very Good article Jagadeesh & thanks for sharing..

    These articles help beginners like me :-)

  7. Hi,

    Thanking you all on behalf of Jagadeesh for encouraging comments..

  8. Thank you all for the encouraging comments....I will try to write more of these in future and more frequently.....

  9. Hi Williams, Thanks for mentioning the OOH(Out of Home Telivision) industry. Yes, I am expecting it to benefit from LEDs in a great way....OOH is a gaining concept and we have already seen these in railway stations, bus stations etc., I am expecting lot of malls and other public places like parks, busy streets etc, to host these TVs as with conventional TVs provide the option to skip ads at home where as with OOH TVs viewers cannot skip ads and also the other reasons being consumer spend lot of time outside commuting to and from work, walking on streets, waiting in bus/railway stations etc., Also with OOH TVs companies can deliver felxible and targetted message to customers.....

  10. Hi Everyone,

    I think LED has great future.

    But from what I have seen is that there is going to be lot of competition from unorganised players in the LED space, reason being some LED products are quite easy to manufacture and sell.

    Already, there are many companies who have come out with LED Lamps and Lanterns targeting rural India.

    There are many startups who are focusing on the LED lighting sector.

    So the point is that:
    Will MIC Electronics be able to sustain the competition?
    Does it have any patent for any of the LED products?

    So according to my view,
    I think MIC Electronics might get advantage of economies of scale by winning govt and pvt. LED lighting projects but the low priced LED products will face immense competition from unorganised players in this space.

  11. Hi Sheel,
    Yes, you are correct. There is huge LED market available for taking and also there is competition as well as there is oppurtunity. We have to give some time for the management to gain from the oppurtunity.....being the only company approved RDSO, TERI picking up MIC's Solar lantern for prestigious Light a billon Lives program and wide range of LED display and lighting products definetly add to its advantage....

    We have to give adequate time to the management and also keep a close on the company's performance....

    According to MIC's website they have applied for 50 Trademarks, 5 copy rights, 9 designs and 9 patents in India and 8 Trademarks in USA till date.

  12. I think there will be companies that will outperform MIC. I was holding shares of this companies and all the hooplah around it is gone. There are other companies in the electrical applicances business that will go way ahead of MIC. The turnover =and profit of this company are continuusly falling. The management was not capable of taking advantage of the business line they were and now that first mover advantage is gone. In my view this will be give a return of 2 times over the next 3 or 4 years (which by itself is not bad) but there will many other electrical companies that will give much much more return.

    I do not think this is a good company to invest in and therefore I disagree with you.

  13. Thanks a lot to all of you who find time to make comments whether negative or positive.. Time will show us the real value of this scrip..


  14. Excellent analysis.
    It would have been better if you had also mentioned some future numbers and the competition expected.

  15. Respected sir,
    plz advice me on cerebra intigrated,i have 4900 share,i want to know abt its feature and e-waste plant.plz try yr level best for me.
    urmil desai

  16. hi ,shabu's your comments is really good and positively

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