AVALON - Avalon Tech

📊 NSE: AVALON 🏢 Electronics - Components 📅 Last Updated: 12/13/2025 18:46

💰 Financial Performance

Revenue Growth by Segment

Revenue grew 26.6% YoY in FY25 to INR 1,098 Cr. Segmental shifts saw Industrials grow to 30% of revenue (up from 28%), Mobility/Transportation to 27% (up from 26%), and Clean Energy to 20% (up from 18%), while Communications dropped to 8% (from 13%). Q2 FY26 revenue reached INR 382 Cr, a 39.1% YoY increase.

Geographic Revenue Split

India operations accounted for 87% of revenue in FY25, serving both domestic and global clients. The US business serves as a strategic beachhead, with over 50% of US customers transitioned to Indian manufacturing to optimize costs.

Profitability Margins

Gross Margin was 35.8% in FY25 (-55 bps YoY) and 34.3% in Q2 FY26 (-252 bps YoY). PAT margin improved significantly to 5.7% in FY25 (up from 3.2%) and reached 6.4% in Q2 FY26 (+13 bps YoY) due to operational efficiencies and scale.

EBITDA Margin

EBITDA margin stood at 10.5% in FY25, an increase of 325 bps from 7.2% in FY24. In Q2 FY26, EBITDA margin was 10.1%, down 86 bps YoY but up 85 bps sequentially from Q1 FY26.

Capital Expenditure

Capex for Q2 FY26 was INR 14.8 Cr and INR 24.4 Cr for H1 FY26. Investments are focused on the export-focused Chennai plant and Phase 2 brownfield expansion in Chennai, expected to complete by Q3 FY26.

Credit Rating & Borrowing

Finance costs were INR 17 Cr in FY25 on total debt of approximately INR 141 Cr, implying an effective interest rate of ~12%. Net Debt to EBITDA improved to 0.1x in FY25 from -0.3x in FY24.

⚙️ Operational Drivers

Raw Materials

Key materials include metals, electronics, polymers, and specialized components. Cost of raw materials consumed was INR 719 Cr in FY25, representing 65.5% of total revenue.

Import Sources

Sourced globally across multiple geographies to reduce dependency on single vendors; specific countries are not disclosed but include a strategic sourcing framework for global procurement.

Key Suppliers

Not disclosed by specific company names; Avalon utilizes a strategic sourcing framework with multiple suppliers to mitigate monopoly risks.

Capacity Expansion

Current facilities span 575,000+ sq. ft. across 15 units in the US and India. Planned expansion includes Phase 2 of the Chennai brownfield facility to be completed by the end of Q3 FY26 to meet rising domestic demand.

Raw Material Costs

Raw material costs increased 28.1% YoY to INR 719 Cr in FY25. Procurement strategies include long-term contracts to lock in prices and substituting high-risk materials with stable alternatives.

Manufacturing Efficiency

Asset turnover improved to 8.7x in Q2 FY26 from 7.5x in FY25. ROCE improved to 18.4% in H1 FY26 from 15.7% in FY25, driven by better capital utilization.

Logistics & Distribution

Not disclosed as a specific percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

39.10%

Growth Strategy

Growth is driven by a 'dual-shore' model (US/India), expanding the order book (INR 1,485 Cr as of Sep 2025), and entering high-potential segments like semiconductor equipment. The company is transitioning US customers to India-based manufacturing to capture higher margins and scaling new projects in Clean Energy and Industrials.

Products & Services

Electronic Manufacturing Services (EMS) including Printed Circuit Board Assemblies (PCBA), Cable Assemblies, Wire Harnesses, Sheet Metal Fabrication, Machining, Magnetics, and full Box Build integration.

Brand Portfolio

Avalon Technologies, Sienna, Sienna ECAD.

New Products/Services

Entry into the semiconductor equipment space and expansion into advanced technology segments; specific revenue contribution % for these new lines is not yet disclosed.

Market Expansion

Expanding global presence through strategic market entries and increasing domestic capacity via the Chennai Phase 2 expansion by Q3 FY26.

Strategic Alliances

Collaborates with emerging pioneers in sunrise sectors like Clean Energy; specific partner names are not disclosed.

🌍 External Factors

Industry Trends

The EMS industry is seeing structural growth driven by 'China+1' strategies and increased electronics content in Industrials and Clean Energy. Avalon is positioning itself in high-mix, low-to-medium volume segments which offer higher barriers to entry.

Competitive Landscape

Operates in a competitive EMS market but differentiates through niche market support and prototyping-to-scale transitions.

Competitive Moat

Moat is built on a 'dual-shore' presence, integrated capabilities (design to box-build), and specialization in high-mix, low-volume manufacturing which is less commoditized than high-volume EMS.