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Motilal Oswal Report
Avalon Technologies Ltd. reported a weak quarter with a revenue decline of 8%/3% YoY in Q3 FY24/nine months FY24, led by a continued slowdown in the U.S. business (reported a loss of ~Rs 200 million in nine months FY24). However, the India business registered a growth of 12% in nine months FY24.
The order book showed some resilience with order inflows of ~Rs 2.45 billion across sectors (such as power, industrial, clean energy, automotive and railways). The inflows led to an increase in the closing order book to Rs 12.75 billion as of December-23 (versus ~Rs 12.4 billion/Rs 11 billion in September- 23/June-23).
Factoring in the weak Q3 FY24 performance and a slowdown in the U.S. business that led to an operating deleverage, we reduce our earning per share estimates for FY24/FY25/FY26 by 44%/25%/19%.
Reiterate 'Buy' with a target price of Rs 610 (premised on 35 times FY26E EPS).
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