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Systematix Research Report
Avalon Technologies Ltd.'s weak U.S. performance (FY24 loss Rs 300 million) continue to weigh on overall results. In Q4, consol. revenue/Ebitda /profit after tax declined 20%/58%/69% YoY and missed our estimates by a wide margin.
Gross margin came at 37.5% (up 9 bps YoY and 56 bps QoQ); Ebitda margin stood low at 7.9% (down 719 bps YoY, up 21 bps QoQ). Indian manufacturing (77% of revenue mix) recorded strong 12.7% Ebitda margin and 8.5% PAT margin.
Increased focus on India business (46% of mix; aims 50%) in last 18 months helped. Inventory restocking in USA has begun after large destocking in last few quarters; a 13% QoQ rise in Q4 revenue shows initial signs of recovery.
Avalon now expects a low 14-18% revenue growth in FY25 and a strong rebound in FY26 on expectation of healthy order book accretion in H2 FY25. Despite current weakness, a guidance to double revenue in three years is maintained.
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