Avalon Technologies Ltd. (NSE: AVALON) shares surged by over 11% today, reflecting investor confidence in the company’s robust performance for the second quarter (Q2) of FY25 and its promising outlook.
Key Financial Highlights (Q2 FY25)
- Revenue: Avalon reported revenue from operations of ₹275 crore, marking a 36.8% year-over-year (YoY) increase compared to ₹201 crore in Q2 FY24. Sequentially, revenue grew by 37.9% from ₹199.5 crore in Q1 FY25.
- Net Profit (PAT): The company’s PAT surged by 140.1% YoY to ₹17.5 crore in Q2 FY25, up from ₹7.3 crore in the same period last year.
- Profit Margin: PAT margin improved to 6.3% from 3.5% in Q2 FY24, reflecting a 273 basis points increase.
- EBITDA: EBITDA rose significantly by 139.6% to ₹30.1 crore, with an EBITDA margin of 11%, up from 6.3% in the previous year’s quarter.
Financial Performance Overview
Avalon’s performance for Q2 FY25 exceeded analyst expectations, with both revenue and earnings per share (EPS) beating forecasts. Revenue surpassed estimates by 16%, while EPS outperformed by 93%, highlighting the company’s operational efficiency and strategic cost management.
Positive Developments Driving Stock Performance
The strong Q2 performance is not the only driver for Avalon’s share surge. Additional highlights from the recent report include:
- Order Book Growth: The company’s order book increased by 19.4% YoY, indicating healthy demand and robust project pipelines.
- Operational Efficiency: Net working capital days improved by 27 days, reducing from 161 days in March 2024 to 134 days by September 2024, demonstrating Avalon’s efficiency in managing its financials.
- Expansion Initiatives: Avalon has initiated operations in a new export plant, and Phase 2 of its brownfield expansion for domestic demand is expected to start early next year. This expansion aligns with its strategy to tap into both domestic and international markets.
Industry and Market Position
As a leading player in the Electronics Manufacturing Services (EMS) industry, Avalon is well-positioned to benefit from India’s growing electronics sector. Revenue growth is projected at 20% per annum over the next three years, in line with the 25% growth forecast for India’s electronics industry.
Leadership and Recognition
- New CFO Appointment: Mr. Suresh Veerappan, who has led business finance and investor relations for the last 2.5 years, has been appointed as the new CFO.
- Awards and Recognition: Avalon has won multiple technical awards, including recognition at the Precision Sheet Metal Technology Fair, further solidifying its position as a key player in the EMS sector.
Analyst Perspective
Analysts have responded positively to Avalon’s strong Q2 performance, with expectations of sustained growth driven by robust order inflows, operational efficiency, and strategic expansion. The impressive profit margin expansion and rising demand have positioned Avalon as a promising investment in the EMS sector.
As of 11:57 am today, shares of Avalon Technologies Ltd. were trading 11.79% higher at ₹791.00 on the NSE, underscoring investor optimism following its strong Q2 results.
