Accumulate Avalon Technologies; target of Rs 943: Prabhudas Lilladher

Prabhudas Lilladher's research report on Avalon Technologies

Avalon Technologies (AVALON IN) has reported strong revenue growth of 62.1% YoY mainly driven from Mobility/Industrial segments (grew by ~92%/85% YoY). EBITDA margin expanded by healthy ~710bps YoY to 9.2%, attributed to a favorable segment mix (Mobility/industrials contributes 26%/32% to the revenue) with increased US manufacturing (reached 20% of revenue). AVALON has upward revised its guidance from 18-20% to 23-25% growth in topline for FY26, while maintaining GM at 33-35%. We estimate FY25- 27E revenue/EBITDA/PAT CAGR of 30.5%/38.6%/47.2%, with EBITDA margin expansion of ~130bps.

Outlook

We maintain our ‘Accumulate’ rating with a TP of Rs 943 (earlier Rs 927) valuing at 45x FY27 earnings, with healthy performance in Q1FY26. We have revised our FY26/FY27 EPS estimates upward by 0.8%/1.8% to reflect stronger earnings in the quarter.