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Decoding Avalon Technologies: A Rollercoaster Journey in the World of EMS! 🚀🎢
Introduction:
Hey, savvy investors! 📈 Today, let's unravel the tale of Avalon Technologies, a company that took the IPO plunge in April '23 at ₹436 per share. The rollercoaster ride ensued, with shares skyrocketing to ₹700, only to dip to a low of ₹450. Join me on this six-month journey as we explore why Avalon, amidst giants like KES and Dixon, seems to be facing a challenging terrain. 🤷♂️
Avalon's Hybrid Dance: Navigating Through US Slowdown and Indian Boom! 🕺💡
Picture this: Avalon, established in 1999, operates on a hybrid model with manufacturing units in both the US and India. While the US presence secures orders, Indian manufacturing optimizes costs, crafting Avalon's EMS success story in India. 🌐✨ However, this hybrid dance exposed Avalon to the current US market slowdown, creating a stark contrast with India's booming EMS market.
The Numbers Game: F23 Glory to F24 Challenge – Operating D Leverage Unveiled! 📊💔
In the first nine months of F24, Avalon's sales slipped from ₹945 CR (F23) to ₹650 CR. The Absolute Business (AB) plummeted from ₹113 CR to ₹45 CR, showcasing the impact of operating D leverage. 📉 What's that, you ask? It's the art of incurring higher fixed costs with lower sales realization, impacting margins and absolute profits. The P ratio at 75 may seem daunting, but don't be fooled – it's the aftermath of operating D leverage.
Guidance Rollercoaster: From Soaring Expectations to F24's Reality Check! 🎢📉
Heading into F24, Avalon's management anticipated a growth of 25-30%, with EBITA touching 12-15%. Share prices soared to ₹700. Reality check – they didn't foresee the US slowdown impact. In August '23, they revised the guidance to 15-25%, and as a result, share prices felt the tremors. Fast forward to Q4 of F24, the latest con call guides for a degrowth of 8-10% in FI 24. While a slowdown was expected, negative growth wasn't on the menu.
India vs. US: The Business Mix Tango and Growth Resurgence! 🌍📈
Avalon's India business grew by around 12% in Q3 of F24, while the US business witnessed a decline. The business mix is tilting – once 70% US-focused, Avalon is now balancing at 47% from India and 53% from exports. Late entrant in the Indian market? Perhaps. But Avalon sees a bright future in India's resurgence, gearing up for 85% business from India and 15% from the US in the long term.
Opportunities on the Horizon: Railway Ventures, Industrial EV, and More! 🚄🔍
Avalon's ventures into Railway projects, like 'kavach,' an automatic rail protection system, hold promise. Industrial EV and energy segments in India also beckon opportunities. On the US front, Avalon anticipates recovery in H1 of F25, gaining traction in the latter half. The management emphasizes the need to focus on long-term vision and opportunities amid short-term challenges.
AUD Books, Contracts, and Market Faith: The Silver Linings! 💰📆
As of December '23, Avalon boasts an AUD book of ₹1,275 CR, executable in 12-14 months. Long-term contracts worth ₹843 CR are in the pipeline, slated for execution over the next 2-3 years. While F24 was a tough nut to crack, especially from the US business perspective, F25 seems to be donning a promising cape. Hold on tight as we navigate through more research and informative videos in the pipeline.
Conclusion: Navigating the Avalon Adventure – Faith, Challenges, and Foresight! 🌌🤝
In this topsy-turvy journey, remember, good prices and good news rarely dance together. Sometimes, the best deals emerge from the chaos. Holding onto faith, considering F25 and beyond, Avalon could be a contender for your portfolio. Whether you're already on the Avalon train or considering a ticket to the EMS story, keep a keen eye on each quarter of F25 to navigate the tracks wisely.
Stay Informed, Stay Empowered: Subscribe, Share, and Stay Tuned! 🚀🌐
Stay tuned for the next adventure! 🚀✨ If personal finance and investment are your jam, consider subscribing to this channel. If this journey through Avalon's tale struck a chord, share the wisdom with your friends. Together, let's ride the waves of knowledge and investment savvy. 🌊📈
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