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Company Description

Avalon Technologies is one of the leading fully integrated Electronic Manufacturing Services (EMS) companies with end-to-end capabilities in delivering box build solutions in India, with a focus on high value precision engineered products. They provide a full stack product and solution suite, right from printed circuit board design and assembly to the manufacture of complete electronic systems to certain global original equipment manufacturers (OEMs), including OEMs located in the United States, China, Netherlands, and Japan

The company commenced its operations in 1999 as a pure play PCB assembler with a niche focus on their capabilities and has become vertically integrated to include multiple offerings. They have a significant level of vertical integration in the EMS industry that includes PCB assembly, cable assembly and wire harnesses, sheet metal fabrications and machining, injection molded plastics, magnetics and end-to-end box build.

Currently, they have 12 manufacturing facilities spread across the United States and India i.e 1 unit in Atlanta, Georgia, 1 unit in Fremont, California, 7 units in Chennai, Tamil Nadu, 1 unit in Kanchipuram, Tamil Nadu and 2 units in Bengaluru, Karnataka. Moreover, their electronic manufacturing facilities comprise an aggregate of 66 production lines, consisting of 11 Surface Mount Technology (SMT) lines, 12 Through Hole Technology (THT) lines and 43 assembly lines.

Company have developed long relationships with certain of their customers through a client servicing model which aims to provide fully integrated solutions, robust manufacturing capabilities, delivering quality products on time, supply chain efficiency as well as a focus on new product development. Their new product development approach typically starts with component level design engagement with customers. This allows them to be entrenched with the customer from the conception of their product, and subsequently move up the value chain with them by leveraging their fully integrated offerings

Some of the marquee customers includes Kyosan India Private Limited, Faiveley Transport Rail Technologies India Private Limited, a Wabtec Company, TransDigm Technologies, India Private Limited, Zonar Systems Inc., and Collins Aerospace in the mobility industry, Caire Inc., in the medical industry, e-Infochips Private Limited and Haas Automation, Inc. in the industrial sector, TMEIC and Ohmium India Private Limited in the clean energy sector. Their key customer base increased from 72 as of November 30, 2021 to 89 as of November 30, 2022, increasing their order book (open order) from ?9,182.32 million as of November 30, 2021 to ?11,902.46 million as of November 30, 2022.

Valuation & Outlook

Avalon Technologies Ltd. has end–to–end integrated solutions, providing a “One Stop Shop” for electronics and electro – mechanical design and manufacturing services with high entry barriers to business through their collective cross-industry experience, customer engagement capabilities and leading position in the high mix flexible volume product manufacturing segment and global delivery footprint with high quality standards and advanced manufacturing and assembly capabilities.

At the upper price band company is valuing at P/E of 41x with a market cap of ? 28,467 million post issue of equity shares and return on net worth of 85%.

We believe that company is fully priced and recommend a “Subscribe- Long term” rating to the IPO.

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