Avantel Limited

Technology — Communication Equipment · NSE

₹152.80+₹4.45 (+3.00%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Avantel Limited engages in the manufacturing of wireless communications products in India.

IndustryCommunication Equipment

SectorTechnology

Employees453

Annual revenue₹222 Cr

How does it make money?

Turns over ₹222 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹22 left at the operating level before interest, tax and depreciation. Each of its 453 employees supports ₹49.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹49.1 lakh

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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 8.2% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE32.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +44% while net margin moved -61% 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+44%

Margin effect-61%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 246.5x is demanding — it needs sustained high growth to justify
✗ P/E is 230% above its own historical median of 74.6x — expensive by its own standards
✗ P/B of 12.00x is a steep premium to book

Quality vs. Valuation

Company Quality

49/ 100

Average

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

Valuation

23/ 100

Expensive

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

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

246.5x

2Y Median

74.6x

29 monthly readings · mean 104.2x · range 53.0x–296.6x

Sector Median

16.5x

median of 4 sector peers

⚠️Current valuation is approximately 230% above its 2y median of 74.6x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 1389% above the peer median of 16.5x.

vs. its own history

Expensive

74.6x median over 29 months · +230%

vs. sector peers

Expensive

16.5x median of 4 peers · +1389%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

83.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.10x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 25.0% to 4.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 36.8% to 8.2% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 2 high · 3 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 8.2 points, from 30.3% to 22.1%.
🔴Inventory building faster than salesFinancial
Inventory up 109% against revenue up 44% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹83 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 44% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 80% against revenue up 44% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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?

Margins are being competed away
EBITDA margin has fallen from 30.3% to 22.1%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 80% against revenue up 44%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 230% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 25.0% to 4.4%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Micro 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 10% a year✓ 12.9% CAGR
Latest reported year was 35.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 20%✓ 22.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹83 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 8.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 11 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
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹4,061 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

246.5x

Expensive

Expensive — verify against sector peers

P/B Ratio

12.00x

Rich

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

EPS (TTM)

₹0.62

Profitable

Profitable on a per-share basis

ROE

4.4%

Weak

Weak capital efficiency

ROCE

8.2%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.10x

Low

Conservative leverage

Revenue Growth (YoY)

35.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

66.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.13%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹83 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

14.7%

Average

Average margins

Net Margin

7.1%

Average

Average bottom-line conversion

Current Ratio

3.72

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.20

Defensive

Steadier than the market

52W Range Position

44%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

149.9 / 154.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹154 Cr	₹224 Cr	₹249 Cr	₹222 Cr	+12.9%
EBITDA	₹47 Cr	₹82 Cr	₹93 Cr	₹49 Cr	+1.6%
EBITDA Margin	30.3%	36.8%	37.4%	22.1%	—
PAT (Net Profit)	₹27 Cr	₹53 Cr	₹56 Cr	₹15 Cr	-17.6%
EPS	₹1.05	₹2.03	₹2.3	₹0.54	-19.8%
ROE	25.0%	32.0%	23.8%	4.4%	—
ROCE	36.8%	43.8%	31.7%	8.2%	—
Total Debt	₹30 Cr	₹18 Cr	₹26 Cr	₹34 Cr	+4.2%
Free Cash Flow	-₹10 Cr	₹34 Cr	-₹28 Cr	-₹83 Cr	—

🟢 Revenue has grown at 12.9% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (1.6% a year).

🔴 EBITDA Margin has fallen from 30.3% to 22.1% over 3 years (-8.2 pts).

🔴 PAT (Net Profit) has shrunk at 17.6% a year over 3 years.

🔴 EPS has shrunk at 19.8% a year over 3 years.

🔴 ROE has fallen from 25.0% to 4.4% over 3 years (-20.5 pts).

🔴 ROCE has fallen from 36.8% to 8.2% over 3 years (-28.6 pts).

🔴 Total Debt has grown at 4.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹410 Cr

Total Liabilities

₹72 Cr

Cash & Equivalents

₹6 Cr

Operating Cash Flow

₹10 Cr

Capex

-₹93 Cr

Shareholding (proxy)

Institutional Holding

0.4%

Insider Holding

44.2%

Corporate Actions

Dividend Rate

₹0.2

Ex-Dividend Date

12 Jun 2026

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

1 positive5 mixed

Avantel share price soars 9% in weak market on heavy volume

Business Standard, 24 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Avantel shares rise 9% after Rs 177 crore satellite communication order from Zetwerk

The Economic Times, 24 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

27% Jump In Six Months: Avantel Share Price Surges Over 9% In Trade Today. Here's Why

NDTV Profit, 24 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Price Action: Avantel shares surge 8% on order win; Macquarie initiates ‘Neutral’ on Angel One

Moneycontrol.com, 24 SeptOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Avantel shares jump 9% on bagging order worth over ₹177 crore from Zetwerk Manufacturing

Upstox, 23 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Key Reasons Why Avantel Share Price Is Falling in 2026

Univest, 05 MayPrice 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.

DalalBaazaar Thesis

StrongFinancial Health

WeakBusiness Quality · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑