Electronics Industry

Demand

Rs. 3.4 Lakh Crores in FY12

Production

Rs. 1.6 Lakh Crores in FY12

Import

Rs. 1.8 Lakh Crores in FY12

Expected Demand Growth Rate

25% Annually

Expected Production Growth Rate

15% Annually

Industry Median EV/EBITDA

5.8x (ttm)

Industry Median EV/Sales

0.7x (ttm)

Indian Electronics Industry 2013

Major opportunity lies in the electronics manufacturing industry as demand and supply gap is expected to further increase. Most raw materials are not available locally and need to be imported from China, Taiwan and Korea. As per Department of Electronics & Information Technology (DeitY), demand for electronics hardware in India is Rs.3.4 lakh crores in FY12 and is projected to grow at a CAGR of 25% to Rs 20 lakh crores by FY20. But the estimated production currently at Rs.1.6 lakh crores is expected to grow at a CAGR of 15% to reach only Rs.5.2 lakhs by FY20, creating a gap of Rs.14.8 lakh crores in demand and production. This creates a unique opportunity for electronics companies looking at India as their next manufacturing hub with a large domestic demand.

Major segments within electronics

Segment

Production (INR Cr)

Growth FY11-12

Products

Consumer Electronics

34,500

7%

Mobile phones, Television sets, DVD/MP3 players,
Microwave ovens

Industrial Electronics

18,500

10%

Process control instrumentation, Automation systems,
Test and measuring (T&M) instruments, Medical
instruments

Computer Hardware

16,500

10%

Personal computers, Servers, Workstations,
Supercomputers, Data processing equipment

Communication & Broadcast Equipment

40,500

14%

Digital exchanges, Transmission equipment,
Microwave transceivers, Optical fibre communication
equipment, Two-way radio communication equipment

Strategic Electronics

8,500

10%

Satellite-based communications, Navigation
and surveillance, underwater electronic system,
Infra-red based detection and ranging system,
Global Positioning System (GPS) based vehicle
tracking system

Electronic Components

25,000

14%

Picture tubes, Diodes, Transistors, Power devices,
Resistors, Capacitors, Switches, Relays, Connectors,
Magnetic heads

Valuation of Electronics Manufacturing Companies

Company

EV/EBITDA (ttm)

EV/Sales (ttm)

Videocon Industries

5.0x

0.6x

MIRC Electronics

6.6x

0.1x

Trend Electronics

5.8x

0.3x

Honeywell Automation India

15.6x

1.5x

Industry Median

5.8x

0.7x

Industry median includes Genus Power Infrastructures, Bartronics India, Zicom Electronic Security Systems, Centum Electronics, PG Electroplast, JCT Electronics, Mobile Telecommunications, Nelco, Avon Corporation, Ashco Niulab Industries, Minal Industries, Zen Technologies, APLAB, Sharp India, Shilchar Electronics, Jasch Industries, BPL, Control Print, Circuit Systems India, Fine, Incap, Gujarat Poly Avx Electronics, Bcc Fuba India, Samtel India, Sparc Systems, Linaks Microelectronics, Integrated Technologies, Samtel Color, Max Alert Systems, Mather & Platt Fire Systems

End Notes

Source: Analyst Reports, Company Press Releases, Yahoo Finance

FY: Financial Year ending March

All multiples are as on Dec 31st 2012

Conversion Rate: 1 USD = 50 INR

ttm: trailing twelve months, or last twelve months

EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization - a measure of company’s profitability

EV: Enterprise Value - a measure of company’s worth