Mirc Electronics July 2025 RI Review - (Avoid)

•    This is the 2nd RI from the company since September 2014.
•    It has skipped dividends from FY 2011-12.
•    It has marked losses for the reported periods, though it declined for FY25.
•    The RI is priced at a discount of approx. 30% based on its last traded price.
•    Considering its losses and carried over deficit, the issue appears aggressively priced.
•    There is no harm in skipping this risky bet which carries “High Risk/Low Return” tag.

ABOUT COMPANY:
Mirc Electronics Ltd. (MEL) was founded in 1981 and headquartered in Mumbai, is known for its renowned brand Onida. Starting with a goal of manufacturing televisions sets, it transformed into a complete consumer durable company with a wide product portfolio including Flat panel TVs (LED LCD TVs), Air Conditioners, Washing Machines, Microwave Ovens, Refrigerators and Air Coolers. Onida has been an enduring brand in the Indian Consumer Durable space, and has won the trust of millions of consumers with its high-quality products. Being an Indian company, the company understands the unique requirements of the Indian consumer – more than any other company does. This has found expression in so many of the innovative products that have been launched over the years. This understanding of the consumer is one of the core strengths of the company that has enabled it to compete in the market.

In the chronicles of Indian advertising, Onida enjoys a storied past. Onida's advertisements were unconventional and became a defining feature of the brand. The company introduced creative elements, such as the Onida Devil, and memorable taglines like "Neighbor's Envy, Owner's Pride," establishing a powerful and lasting presence in advertising. It has world class manufacturing facilities at Wada (Maharashtra) and Roorkee (Uttarakhand) with a capacity of over 1 million Televisions and 8 lakhs Washing Machines respectively. With a Maverick leadership team, Onida has become a torch-bearer for consumer-centric innovations and unconventional communication.

The company has been a key player in India's electronics industry, leveraging its innovative marketing and product range to build a strong presence. However, it has also experienced challenges, such as fluctuating profits and operational inefficiencies. Onida has often been voted as the top most trusted consumer durable brand in India – a reflection of its continued success. Onida is committed to quality and strives for continual improvement through innovation and human resource development to give the customer better value for money always and Comply with the statutory requirements.

The company has positioned its brand towards Trendy, Unconventional Brand for Young Nesters that offer products with Innovative form functionality, satisfying consumer needs in surprising ways. Brand values that define Onida are – Unconventionality, Creativity, Surprising thoughtfulness, and Wit. With 44 years of Innovation and Excellence, MIRC Electronics Limited (ONIDA) has always been known for TVs and high quality innovative and futuristic products. Being an Indian company and the pride of India for 44 years, Onida has always strategically kept Indians and their needs as the main criteria and developed products as per these needs. 

The company understands the unique requirements of the Indian consumer more than any other company does. This has found expression in many of the innovative products that have been launched over the years. This understanding of the Indian consumers is one of the core strengths of the company that has enabled it to compete in the market in categories like Air Conditioners, LED TVs, Washing Machines, Refrigerators and Air Coolers. As of March 31, 2025, it had 460 employees on its payroll.

According to the management, they have the legacy of over four decades in the industry and has suffered a severe setback on account of big fire that dragged them almost a decade back in restructuring the operations to stay tuned with the time. It is trying hard to be back on track with many diverse activities and tie-up with government in helping them for Digital India, Atmanirbhar Bharat initiatives. However, it may take a year or more to be back on track and come out of wood with wiping out the carried forward losses. 

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 49489847 equity shares of Re. 1 each at a fixed price of Rs. 10 per share to mobilize Rs. 49.49 cr. The RI is opening for subscription on July 14, 2025, and will close on July 21, 2025. The company is offering RI in the ratio of 3 for 14 to its eligible stakeholders as of the record date of June 30, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 4.22 cr. for this RI process, and from the net proceeds, it will utilize Rs. 38.00 cr. for working capital, and Rs. 9.81 cr. for general corporate purposes. Higher spending for RI process raises eyebrows.

The RI is self-managed by the company itself, and MUFG Intime India Pvt. Ltd. is the registrar to the issue. 

Post RI, company’s current paid-up equity capital of Rs. 23.10 cr. will stand enhanced to Rs. 28.04 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 280.44 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total revenue/ net profit/ - (loss), of Rs. 1112.66 cr. / Rs. – (12.47) cr. (FY23), Rs. 974.52 cr.  / Rs. – (62.21) cr. (FY24), Rs. 757.42 cr. / Rs. – (2.30) cr. (FY25). It posted decline in its top lines for the reported periods. However, it marked losses for the said periods, however, the loss for FY25 has reduced, but still remains concern. Perhaps, higher other income helped it to lower its losses for FY25 in general and Q4 of FY25 in particular, as it managed to earn net profit of Rs. 1.18 cr. due to higher other income of Rs.3.85 cr. for the said period, though its top line marked decline.
 
DIVIDEND POLICY:
The company has not declared dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 500279 (FV Re.1).
The scrip last closed on cum-right basis at Rs. 16.91 on June 27, 2025, and opened on an ex-right basis at Rs. 15.60 on June 30, 2025. Since then, it has marked a high/low of Rs. 16.30 / Rs. 13.68. The scrip last closed at Rs. 14.31 as of July 11, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 30.62/ Rs. 10.30. 

The promoters’ holding has been constant around 53.36% for the last three quarters ended with March 31, 2025. The counter is currently trading above RI price and is well operated to tempt investors.