Avalon Technologies IPO Review: In a time of funding winters and bleak growth, few companies have taken on the challenge of going public despite skeptical market sentiments. We’re going to cover the upcoming initial public offering of Avalon Technologies Limited. The IPO will open for subscription on April 3rd, 2023, and close on  April 4th, 2023. It is looking to raise up to ₹865 Crores.

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In this article, we will look at Avalon Technologies IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out! 

About The Company

Avalon Technologies was founded in 1999, making it 24 years old. It started when the founders were assembling circuit boards in California, in 1995. Today they have transitioned to an international manufacturer with over 1,900 employees. They are an end-to-end electronics manufacturing service provider.

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Some of the companies they consider clients are Collins Aerospace, e-Infochips, The US Malabar Company, Meggitt, Kyosan India, and Zonar Systems, to name a few.  

They have 12 manufacturing plants in two key countries – India as well as the USA. The company’s promoters are Kunhamed Bicha and Bhaskar Srinivasan. They received approval from SEBI for the IPO in the month of January this year. 

As per the DRHP of the company, they are one of the leading fully integrated manufacturers having end-to-end operations in delivering box build solutions in India. They provide complete support to their clients from the PCB (printed circuit board) design to the box build of electronic systems. Other services provided by the company include cable assembly, machining, magnetics, injection molded plastics, and sheet metal fabrication. 

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Avalon is an ISO-certified company, with a presence in major industries such as aerospace and defense, power, railways telecom, clean energy, etc. 

Financial Highlights

If we look at the financials of Avalon Technologies Limited we find out that their assets have grown from Rs. 449.65 crore in March 2020 to Rs. 587.96 crores in March  2022. Their revenues also follow a similar trend, it has grown from Rs. 653.15 crore in March 2020 to Rs. 851.65 crores in March 2022.

As of November 2022, the company’s revenue stand at Rs 596.75 crores for FY22-23.  Their profits have grown from Rs. 12.33 crores in March 2020 to Rs. 68.16 crores in March 2022. As of November 2022, the company’s profits stand at Rs 34.18 crores for FY22-23.  It is also important to note that the company’s borrowing has increased from Rs. 248.48 crore In March 2020 to Rs. 294.05 crores on March 22.

Revenue Breakup of Avalon Technologies Limited

Avalon Technologies IPO Review - Revenue

(Source: RHP of the company)

Balance Sheet Of The Company 

Balance Sheet

(Source: RHP of the company)

Profit and loss Statement of the company

Avalon Technologies IPO Review - Company Statement

(Source: RHP of the company)

Avalon Technologies IPO Review – Competitors

The following are the competitors of the company in India:

Dixon Technologies (India) Ltd, Elin Electronics Ltd, Amber Enterprises India Ltd, Syrma SGS Technology Ltd, Kaynes Technology India Ltd, VVDN Technologies Private Ltd, Bharat FIH Ltd, and SFO Technologies Private Ltd 

Strengths

  • The company offers an integrated and well-diversified solution suite comprising PCB design and assembly, and manufacture of various components which allows them to offer PCB design and analysis for new product development. It is one of the few EMS companies in India to offer one-stop services from PCB design and analysis to new product development and subsequent volume production.
  • The company has created an entry barrier in the industry to any new participants through its experience in offering EMS services across product and industry verticals for customers globally for several years.
  • Over the years the company has diversified and expanded its customer bases and developed its operations to cater to various end-use industries across multiple product capabilities
  • The company’s aim to become a significant player in the EMS industry has hinged its performance and its ability to build longstanding relationships with its customers.
  • The company has established a global delivery footprint with quality standards and advanced manufacturing and assembly capabilities. As of November 30, 2022, the company operates through 12 manufacturing units spread across California & Georgia in the US, and Karnataka & Tamil Nadu in India.

Weaknesses

  • The company acquires its raw materials from suppliers mainly on a purchase-order basis. Any non-compliance in fulfilling the contractual obligations by the suppliers, increase in the cost of raw materials,s or any disruption in the supply chain will have an adverse impact on the business operations.
  • A large portion of the company’s revenue is earned from a few key customers. A loss of relationship with any of these customers can have a huge impact on the profitability of the business.
  • The company’s business is spread across other nations and as a result, it will have an effect on its earnings and profitability in the case of foreign exchange fluctuations.
  • Failure to obtain or renew certain accreditations, licenses, and permits from the government, and regulatory authorities in a timely manner can affect the operations of the business.
  • The company is required to comply with strict quality requirements and delivery schedules at pre-determined prices for its products. Failure to do so will have an impact on the reputation of the company which in turn can affect its financials.

Key IPO Information

ParticularsDetails
IPO Size₹865 Cr
Fresh Issue₹320 Cr
Offer for Sale (OFS)₹545 Cr
Opening dateApr 3, 2023
Closing dateApr 3, 2023
Face Value₹ 2 per share
Price Band₹415 to ₹436 per share
Lot Size34 Shares
Minimum Lot Size1 (34)
Maximum Lot Size13 (442)
Listing DateApr 18, 2023

Promoters: Kunhamed Bicha And Bhaskar Srinivasan

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Book Running Lead Manager: JM Financial Limited, DAM Capital Advisors Limited, IIFL Securities Limited, Nomura Financial Advisory and Securities (India) Private Limited

Registrar to the Offer: Link Intime India Private Limited 

The Objective of the Issue

The net proceeds from this issue will be utilized for the following purposes:

  • For full or part prepayment or repayment of outstanding borrowings availed by the company and its subsidiary i.e. Avalon Technology and Services Private Limited
  • Funding the Company’s working capital requirements
  • General corporate purposes

In Closing

In this article, we looked at the details of Avalon Technologies IPO Review 2023. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

Are you applying for the IPO? Let us know in the comments below.

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