Micromax Informatics Ltd, the Gurgaon based mobile handset company, is gearing up for a debut on the bourses. The largest domestic mobile handset player, which recently raised private equity funding from TA Associates, is slated to hit the capital markets in the coming months and has already engaged bankers for the issue, said sources.
VCCircle has learnt that Citigroup Global Markets, Edelweiss and JP Morgan may be the lead bankers to the public offering. While the discussions on valuations and structuring are still in the preliminary stage, sources tell VCCircle that Micromax could be looking at a valuation of around Rs 3,000-3,500 crore. Micromax may be eyeing a mop-up of around Rs 600-800 crore as it looks to expand its presence throughout the emerging markets.
Vikas Jain, business director at Micromax, declined to comment on the development. "As a company policy, we would be unable to comment on any speculative event for Micromax. Should we be ready for any announcement, shall get in touch," he said in an emailed response. An email sent to Citi's spokesperson to confirm on the Micromax mandate did not elicit any response till the time of writing this story.
Micromax, which started as a telecom equipment distributor in 2000, has registered a phenomenal growth in the burgeoning domestic mobile market. The company entered the mobile handset market in April 2008 and its current market share stands at 4.1% market share by revenue.
In a total of domestic mobile handset manufacturers standing at 14% last year, Micromax garnered the largest share with 4.1% followed by Spice and Karbonn had a share of 3.9% and 3% in FY10, said the V&D100 Indian Telecom Survey conducted by CyberMedia Telecom journal Voice & Data. Mobile phones sale stood at 108 million across the country in 2009-10, amounting to Rs 27,000 crore in sales revenues up from Rs 25,910 crore in the previous year.
Apparent from the increasing market share, the company’s numbers in FY10 stood at around Rs 1,600 crore in topline and Rs 150 crore in PAT (profit-after-tax). The firm has been able to quickly expand its product offering with its handsets now being sold through more than 45,000 retail points in 120 cities across India.
It has become the third largest handset provider in India, as measured by volume, said Micromax in a release, just below Nokia and Samsung in that order. Earlier this year, US-based PE firm TA Associates infused $45 million (Rs 204 crore) in Micromax valuing the company a little above Rs 1,000 crore. The IPO would result in a liquidity event for TA Associates, which has also earlier invested in Idea Cellular.
"The company has registered a phenomenal growth and may be looking to raise this kind of money to open its own production plant in India", said an analyst with a Mumbai based broking firm who did not wish to be named. It has till now been assembling and branding the product
procured from China. It also plans to open an app store and roll out the product internationally. Vikas Jain, business director, Micromax recently told Telecomyatra, "We are looking at three areas for international operations– SAARC, Middle East, Africa and Latin America."
The Indian wireless market is one of the fastest growing in the world with 10 to 15 million new mobile subscribers per month, says research by Macquarie Research and Grant Thornton. The number of subscribers has grown from approximately 100 million in 2006, to more than 400
million today and is expected to grow to over 800 million over the next three years.
Micromax offers entry level handsets from Rs 1,750 to high-end models up to Rs 16,000. But most of its mobiles are sold in the Rs 2,500-5,000 segment.
Domestic Mobile Handset Market
Recent times have seen a flux of domestic mobile handset makers as the consumer acceptance of these brands have increased. Micromax leads this pack with other players including companies like Videocon, Karbonn, Maxx, Intex, Zen and Lava. Other players include Bling Telecom and MVL Telecom.
Keeping up with the fast growing domestic handset market in India, there are other domestic mobile handset makers who are looking to raise money to ramp up their expansion plans. Lemon Mobiles, a mobile brand promoted by Fast Track Communications, is also looking to raise capital to fund a $100 million (over Rs 460 crore) investment in India over the next three years. The company claims that it is already amongst the top 10 handset manufacturers in the country and aims to be amongst the top five within the next two years.
Others like Spice Mobile have earlier said that it will merge with parent company Spice Televentures as part of a plan to consolidate the group's telecom business and raise money by selling treasury stock in the market to raise Rs 300 crores.