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Incorporated in 1999, Avalon Technologies Limited is a leading fully integrated Electronic Manufacturing Services (“EMS”) company. They have end-to end operations in delivering box build solutions, with a focus on high value precision engineered products. The company provide a full stack product and solution suite, right from printed circuit board (“PCB”) design and assembly to the manufacture of complete electronic systems (“Box Build”), to certain global original equipment manufacturers (“OEMs”), including OEMs located in the United States, China, Netherlands and Japan.

* The company’s capabilities include PCB design and assembly, cable assembly and wire harnesses, sheet metal fabrication and machining, magnetics, injection molded plastics and end-to-end box build of electronic systems.

* It is specialize in manufacturing and providing design support for critical integrated assemblies, sub-assemblies, components and enclosures for multiple industry verticals.

* They have 12 manufacturing units located across the United States and India: one unit in Atlanta, Georgia, one unit in Fremont, California, seven units in Chennai, Tamil Nadu, one unit in Kanchipuram, Tamil Nadu and two units in Bengaluru, Karnataka.

* The company has 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

* Their business has expanded into products such as electric mobility, energy systems, satellite communications, and telematics, among others, that are used in industries such as clean energy and emerging communication technology, which according to the F&S Report are upcoming high growth sectors.

Outlook & Valuation: The EMS sector is a sizeable industry globally and in India and is expected to grow at a significant pace, where India also has the benefit of shifting global demand from China to India. Avalon Technologies Ltd. is a fully integrated EMS company with endto-end operations in delivering box-build solutions in India. It operates a business with high entry barriers and has a global delivery footprint. The company has strong order book. It has strong and stable financial performance with improving margins; however, its PAT margin for the first eight months of FY22 marked a decline, and it also has a high debt ratio currently. Secondly, it has a limited number of clients and serves a specific segment where a change in customer preference might affect it adversely. The issue is fully priced at a P/E ratio of around 39X; thus, after considering all the factors, we will recommend to subsribe this issue for high risk Investors for long term.

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