Avantel

Avantel reported a stellar performance for FY21, achieving over 40% YoY growth in both top line and bottom line, with profit increasing by 50%. The company's revenue for FY21 stood at ₹77 crores. Cash flow from operations saw a significant improvement, surging from ₹3 crores to ₹44 crores, and the company currently holds a healthy cash and bank balance of ₹43 crores. The fixed asset base expanded by ₹5.5 crores during the year, contributing to a high asset turnover of 11 times.

The company's current executable order book is strong at ₹150 crores. Management is confident in achieving over ₹100 crores in revenue for the current financial year (FY22) and the subsequent year (FY23). A significant railway order, valued at ₹161-165 crores for 165 Rosada, is in the final stages of clearance, with Avantel being the L1 bidder. Revenue recognition for FY22 is expected to be back-end loaded, with 50-70% of turnover anticipated in the third and fourth quarters.

Avantel is actively pursuing diversification beyond its core aerospace and defense segments, exploring new areas such as medical electronics, IoT, cloud computing, and nanosatellites. A substantial investment of ₹40-60 crores is planned for these new ventures, with expected returns within five to six years. The company maintains an annual R&D spend of ₹6-7 crores, which is crucial for developing new products and technologies that create a 3-4 year entry barrier against competitors.

Production for the HF communication systems for the Indian Navy is slated to commence from the third quarter of FY22, with completion targeted by October 2022. Similarly, the Real-Time Train Tracking System (RTS) project is expected to debut approximately 18 months after the order signing, with comfortable completion within the same timeframe. These projects are significant contributors to the company's assured business pipeline.

Management acknowledged significant challenges, particularly the global shortage of imported semiconductor components, which is expected to impact the industry for the next two years. They also anticipate a 10% increase in raw material costs. To mitigate these, Avantel is implementing various strategies, including alternate production methods and diversifying suppliers. Despite these headwinds, management expects the bottom line profitability for the next year to be better than the current year.

During the challenging COVID-19 pandemic, Avantel demonstrated strong commitment to its employees by ensuring no job cuts or salary reductions. The company provided comprehensive support, including healthcare and vaccination efforts for staff and their families. Management also highlighted the company's excellent corporate governance practices, stating they are comparable to industry leaders like TCS.