Accumulate Avalon Technologies; target of Rs 927: Prabhudas Lilladher

Prabhudas Lilladher's research report on Avalon Technologies

Avalon Technologies (AVALON IN) has reported strong earnings growth of 244% YoY led by strong pickup in the clean energy and mobility segment. EBITDA margin expanded by healthy ~410bps YoY to 12.1%, attributed to a favorable segment mix (Mobility/industrials increased to 31%/28% of revenue) with increased domestic manufacturing (reached 87% of revenue). AVALON's revenue grew by 58.1% YoY, supported by 91.0% YoY increase in the mobility segment (contributed ~31% to revenue), and ~88% YoY growth in the clean energy segment (~18% to revenue). AVALON has guided 18-20% growth in topline for FY26 and with a GM 33-35%. We estimate FY25-27E revenue/EBITDA/PAT CAGR of 27.5%/37.7%/45.9%, with EBITDA margin expansion of ~170bps.

Outlook

We maintain our ‘Accumulate’ rating with a TP of Rs 927 (earlier Rs 900) valuing at 45x FY27 earnings, due to uptick in the stock prices, healthy performance in Q4FY25. We have revised our FY27 EPS estimates upward by 3.0% to reflect stronger growth in order book.

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