Avalon Technologies Limited

Technology — Electronic Components · NSE

₹1,982.00−₹64.90 (−3.17%)

DalalBaazaar Score

69 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Avalon Technologies Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Avalon Technologies Limited, together with its subsidiaries, provides integrated electronic manufacturing services in India, the United States, and internationally.

IndustryElectronic Components

SectorTechnology

Employees1,525

Annual revenue₹1,599 Cr

How does it make money?

Turns over ₹1,599 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation. Each of its 1,525 employees supports ₹1.05 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin10.8%

Net margin7.1%

Revenue / employee₹1.05 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Some evidence

ROCE of 21.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE21.7%

ROE15.6%

Peer median ROE32.0%

What is the outlook?

16 analysts covering the stock expect revenue to grow about 31.8% and earnings to grow about 40.8% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+31.8%

Est. earnings growth+40.8%

Analysts16

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +70% while net margin moved +27% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+70%

Margin effect+27%

DalalBaazaar Score

69/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 99.4x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 117.6x
✗ P/B of 18.35x is a steep premium to book

Quality vs. Valuation

Company Quality

79/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

32/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

99.4x

3Y Median

117.6x

40 monthly readings · mean 123.2x · range 60.5x–230.3x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 15% below its 3y median of 117.6x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 501% above the peer median of 16.5x.

vs. its own history

Fair

117.6x median over 40 months · -15%

vs. sector peers

Expensive

16.5x median of 4 peers · +501%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

99.4x

P/B

18.35x

EV/EBITDA

77.3x

PEG

3.42

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well7

Debt is being paid down
Total debt is down 33% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from 9.8% to 15.6%.
Return on capital is rising
ROCE has improved from 14.5% to 21.7%.
High return on capital employed
ROCE of 21.7% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.30x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 21.7% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Deleveraging frees up earnings
Debt is down 33% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹4 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 501% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 14% a year✓ 19.3% CAGR
Latest reported year was 49.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 9%✓ 10.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹4 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 19%✓ 21.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 2 neutral · 2 weak

Market Cap

₹13,256 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

99.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

18.35x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹19.93

Profitable

Profitable on a per-share basis

ROE

15.6%

Strong

Strong capital efficiency

ROCE

21.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.30x

Low

Conservative leverage

Revenue Growth (YoY)

49.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

145.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹4 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹1,982

P/E (Forward)

54.1x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

10.2%

Average

Average margins

Net Margin

7.6%

Average

Average bottom-line conversion

Current Ratio

2.05

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.89

Market-like

Moves roughly in line with the market

52W Range Position

65%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

2321.8 / 2222.2

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

29.8

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹943 Cr	₹865 Cr	₹1,096 Cr	₹1,599 Cr	+19.3%
EBITDA	₹111 Cr	₹66 Cr	₹118 Cr	₹173 Cr	+15.9%
EBITDA Margin	11.8%	7.6%	10.7%	10.8%	—
PAT (Net Profit)	₹53 Cr	₹28 Cr	₹63 Cr	₹113 Cr	+29.1%
EPS	₹8.04	₹4.19	₹9.48	₹16.86	+28.0%
ROE	9.8%	5.1%	10.4%	15.6%	—
ROCE	14.5%	7.4%	14.8%	21.7%	—
Total Debt	₹304 Cr	₹156 Cr	₹164 Cr	₹203 Cr	-12.6%
Free Cash Flow	-₹41 Cr	-₹18 Cr	-₹21 Cr	₹4 Cr	—

🟢 Revenue has grown at 19.3% a year over 3 years.

🟢 EBITDA has grown at 15.9% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 10.8% over 3 years.

🟢 PAT (Net Profit) has grown at 29.1% a year over 3 years.

🟢 EPS has grown at 28.0% a year over 3 years.

🟢 ROE has risen from 9.8% to 15.6% over 3 years (+5.9 pts).

🟢 ROCE has risen from 14.5% to 21.7% over 3 years (+7.2 pts).

🟢 Total Debt has shrunk at 12.6% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹41 Cr to ₹4 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,264 Cr

Total Liabilities

₹543 Cr

Total Debt

₹203 Cr

Cash & Equivalents

₹71 Cr

Operating Cash Flow

₹57 Cr

Capex

-₹54 Cr

Shareholding (proxy)

Institutional Holding

32.9%

Insider Holding

54.4%

Analyst Consensus

Recommendations

8 Buy · 1 Hold · 7 Sell

Target Price (Mean)

₹2,031.25

+2.5% vs CMP

Target Range

₹983 – ₹2,998

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

3 mixed1 negative2 general

What Has Actually Changed At Avalon Technologies After A 125% Jump

Simply Wall Street, 18 Oct

Avalon Technologies Share Price Fall: Price and Valuation

Univest, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Avalon Technologies stock drops over 5% on reports of promoter stake sale; firm issues clarification

Upstox, 30 SeptOwnership

🔴Potentially negativePromoter selling or pledging is a signal worth understanding, though the reason is often personal rather than about the business.

Avalon Technologies shares fall 5% after equity worth ₹883 crore changes hands in block deals - CNBC TV18

LinkedIn, 29 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Avalon Technologies Has Returned 158% in One Year. The Business Behind That Move Is More Interesting Than the Stock Price

Dalal Street Investment Journal, 28 Aug

Avalon Technologies (NSE:AVALON) Shares Decline After ₹883 Crore Block Deal

Kalkine India, 30 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

🟡Business QualityAdequate12.4/20

🟢Financial HealthStrong17.6/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong10.9/15

🔴ValuationDemanding5.3/15

🔴RiskHigh4.2/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you.

This thesis breaks if

✓Revenue growth stays above 14% a year19.3% CAGR
✓EBITDA margin holds above 9%10.8%
✓Free cash flow remains positive₹4 Cr
✓Debt / EBITDA stays below 2x1.2x
✓ROCE stays above 19%21.7%