At a Glance
Avalon Technologies, the EMS (Electronic Manufacturing Services) player with global ambitions, just delivered a Q1 FY26 revenue of ₹323 Cr (+62% YoY) and PAT of ₹14 Cr (+715% YoY). Margins at 9% are okayish, but the stock trades at an eye-popping P/E of 74x, because apparently investors think Avalon is the next Foxconn with a sprinkle of TSMC. Spoiler: it’s not.
Introduction
Avalon makes high-value precision electronics for global OEMs. Think PCBs, box builds, and systems integration—basically the unsung hero behind fancy gadgets and industrial machines. The growth is hot, but the balance sheet is not-so-hot, and promoter stake has dropped to 44.6% (ouch). Investors are paying premium pricing for a business that’s still finding its scale mojo.
Business Model (WTF Do They Even Do?)
Avalon offers end-to-end EMS solutions:
- PCB Design & Assembly: The electronic backbone.
- Box Build Solutions: Full-fledged assembly of electronic systems.
- Global OEM Supply: Clients across US, China, Netherlands, Japan.
They aren’t just soldering circuits; they’re assembling dreams for global brands—but margins remain in single digits, and capital intensity is high.
Financials Overview
Q1 FY26 Results
- Revenue: ₹323 Cr (+62% YoY)
- EBITDA: ₹29.9 Cr (EBITDA margin 9.2%)
- PAT: ₹14.2 Cr (+715% YoY)
- EPS: ₹2.14
FY25 Snapshot
- Revenue ₹1,098 Cr (+26% YoY)
- PAT ₹63 Cr (+125% YoY)
- ROE 11%, ROCE 13%
💡 Commentary: Explosive PAT growth this quarter is nice, but base effect plays a role. Scale is improving, but P/E at 74x means perfection is already priced in.
Valuation
Step 1: P/E Method
- EPS (TTM) ₹12.1
- Industry P/E ~40x
- Fair Value ≈ ₹480 – ₹550
Step 2: EV/EBITDA
- EBITDA (TTM) ₹136 Cr
- EV/EBITDA (industry avg 15x) → EV ₹2,040 Cr
