A solid bet with a nominal risk of downfall ; MIC Electronics

To fund its future growth plans MIC Electronics (50.00) has decided to make preferential allotment of 1.65 cr warrants to promoters and others at the rate of Rs 44 per warrant. It is further contemplating to raise nearly Rs 150 cr thru QIP or FCCB route. Although this may lead to ~40% equity dilution but it will put the company on the fast track growth for coming years. MIC is a pioneer in design, development, manufacture & supply of true color LED Video Displays, LED Lighting products and solutions. Infact, it is the only integrated LED display manufacturer in India with design-to-manufacture capabilities. To cater the rising demand company is in the midst of tripling its total capacity to 50,000 modules from 15,000 modules. It is setting up a manufacturing unit for LED true colour displays, LED lighting solutions and solar based LED lighting products at Fab City SEZ near Hyderabad for which it has already been allotted 50 acre of land on lease. Lately, company has got the RDSO approval for its unique & innovative video cum train info display system thereby becoming the first and only company to get such approval. Couple of months ago it signed an MOU with IOC for marketing high efficiency Solar LED Lantern thru their rural retail outlets. Earlier company bagged a long term contract for display of advertisement thru 50 nos of LED display system in Delhi. For FY10 it may clock a turnover of Rs 275~300 cr and profit of Rs 60 cr leading to an EPS of Rs 6 on current equity of Rs 20 cr having Rs 2 as face value. However for the next 3~4 years, company has the potential to record a CAGR of ~30%.