Avalon Technologies IPO Review – Should you Invest?

Avalon Technologies Limited is a leading fully integrated Electronic manufacturing services company in India. It is coming up with an IPO that would open for subscription on 3rd April and closes on 6th April, 2023. This article provides Avalon Technologies IPO details, IPO dates, Financials and Review.

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About Avalon Technologies Limited

They are one of the leading fully integrated Electronic Manufacturing Services (EMS) companies with end-to end operations in delivering box build solutions in India in terms of revenue in Fiscal 2022 (source: F&S Report), with a focus on high value precision engineered products.

Through a unique global delivery model, they provide a full stack product and solution suite, right from printed circuit board (PCB) design and assembly for the manufacture of complete electronic systems (Box Build), to certain global original equipment manufacturers (OEMs), including OEMs located in the United States, China, Netherlands and Japan.

Through its end-to-end operations, they believe its customers may achieve tangible benefits such as reduced manufacturing costs, improved supply chain management and reduced inventory obsolescence. Its capabilities include PCB design and assembly, cable assembly and wire harnesses, sheet metal fabrication and machining, magnets, injection molded plastics and end-to-end box build of electronic systems. They specialize in manufacturing and providing design support for critical integrated assemblies, sub-assemblies, components and enclosures for multiple industry verticals.

The end-use industries they cater to include a mix of established and long product life cycle industries, such as industrial, mobility and medical devices and high growth sunrise industries, such as solar, electric vehicles and hydrogen in the clean energy sector and digital infrastructure in the communications sector.

Avalon Technologies IPO Review

Avalon Technologies IPO Issue Details

Here are the IPO issue details.

IPO Opening Date 03-Apr-23
IPO Closing Date 06-Apr-23
IPO Listing Date 18-Apr-23
Issue Type Book Built Issue IPO
Face Value Rs 2 per equity share
IPO Price band Rs 415 to Rs 436 per equity share
Lot Size 34 Shares
Min Order Quantity 34 Shares
Listing at BSE and NSE
Total Issue Size Rs. 865 Crores
    Fresh issue     Rs. 320 Crores
    OFS     Rs. 545 Crores
QIB shares offered Not less than 75% of the offer
NII/HNI shares offered Not more than 15% of the offer
Retail shares offered Not more than 10% of the offer

Avalon Technologies IPO – Company Financials

Financial Year ending / Period ending (Amt in Crores)
Particulars FY20 FY21 FY22 Nov-23
Total Assets 449.7 512.5 588.0
Revenues 653.2 695.9 851.7 596.9
Profit After Tax 12.3 23.1 68.2 34.1
Profit % 1.89% 3.32% 8.00% 5.71%

Avalon Technologies IPO Valuations

Its IPO price band is Rs 415 to Rs 436.

If we consider last year FY22 EPS of Rs 7.36, P/E ratio works out to be 59x.

If we consider last 3 years weighted average EPS of Rs 11.3, P/E ratio works out to be 38x.

Even if we consider 8 months ended Nov-22 EPS and annualize it, P/E ratio works out to be 48x.

The listed peers like Kaynes Technology is trading at P/E 106x (Highest) and Syrma SGS trading at P/E of 50x (Lowest) and industry average P/E is 76x. Hence, the IPO Price band at P/E of 38x to 59x is fully priced.

Positive Factors to invest in Avalon Technologies IPO

Company is one of the leading integrated electronic manufacturing services companies in India. Company with end to end integrated solutions providing a one stop shop for electronics and electromechanical design and manufacturing services.

Company is into business that has high entry barriers.

The company has well diverisifed business leading to strong growth. Its revenues and margins improved significantly in the last few years.

Risk or Negative factors of investing in Avalon Technologies IPO

Company serves into specific markets where customer preference can change in the future which can impact company financial performance.

Company depends on a limited number of customers and any loss in any of these customers can impact the revenues of the company.

Investors can read complete risk factors from RHP of the company.

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Should you invest in Avalon Technologies IPO?

It is one of the leading integrated electronic manufacturing services companies in India with well diverisifed business leading to strong growth. Its revenues and margins improved significantly in the last few years.

On the other side, the company has a limited number of customers. Its serves into specific segment where customer preference can change in the future.

The IPO Price also fully priced.

High risk investors can invest in this IPO with medium to long term perspective.

Avalon Technologies IPO Review and Analysis is based on RHP filing on SEBI website

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