Nomura has initiated coverage on Avalon Technologies Ltd. with a buy rating and a target price of Rs 1,722. The current market price is Rs 1,353 and the set target price implies an upside of about 27.3%.
The brokerage sees Avalon as a strong play on the global industrial electronics manufacturing services (EMS) upcycle. It noted that the demand from emerging sectors such as artificial intelligence, high-voltage direct current systems, semiconductors and energy storage should support strong growth visibility over the coming years.
Nomura believes global capex cycles across power and semiconductors are likely to see a structural uptick over a long time period. The rise of generative Al is driving strong power demand from datacenters, and at the same time memory shortages are spurring investments in semiconductor production equipment (SPE).
Nomura Bullish On Avalon EMS Growth
Nomura also expects trends such as nearshoring, clean energy and battery energy storage systems to create meaningful opportunities for outsourced industrial EMS companies. These opportunities could come in areas such as power electronics and control systems, where EMS work can form a notable part of project capital expenditure.
The brokerage firm believes smaller but capable EMS players with a global presence should benefit from this shift. Avalon, it said, is well placed because of its vertically integrated model, focus on box-build solutions, US manufacturing footprint and access to key customers.
Management has guided for revenues to double over FY26-29, showing confidence in execution. Nomura expects Avalon's revenue to grow at a 31% CAGR over FY26-29, with EBITDA margins improving from 10.8% in FY26 to 13.2% in FY29. This, in their view, should drive a 41% EPS CAGR over the same period.
Avalon Technologies Ltd. Share Price Today
Avalon Technologies Share Price Today
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Shares of Avalon Technologies Ltd. rose as much as 1.85% on Wednesday with the stock trading at Rs 1,360.50 at 9:40 a.m. This compares to a 0.74% decline in the NSE Nifty 50 Index. It has risen 53.89% in the last 12 months and 52.74% year-to-date. Total traded volume so far in the day stood at 0.50 times its 30-day average. The relative strength index was at 70.59.
Out of 18 analysts tracking the company, 10 maintain a 'buy' rating, four maintain a "hold", and four maintain a "sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 1,289.06 implies a downside of 4.3%
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