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    Avantel

    AVANTELGood
    Capital Goods·23 Jun 2023
    Management Summary

    Avantel reported a strong performance for FY23 with significant growth in both revenue and profit, driven by successful execution of key orders like the real-time train information system. The company outlined ambitious growth targets for the coming years, supported by capacity expansion, indigenous SDR development, and diversification into medical devices. Management also confirmed plans for an NSE listing and a stock split to improve market liquidity.

    Highlights

    8

    • Revenue for FY23 increased to ₹154 crores from ₹104 crores, a YoY growth of 48.1%.

    • Profit for FY23 grew to approximately ₹27 crores from ₹18 crores, a YoY growth of 50%.

    • Net Profit After Tax (PAT) margin for FY23 was reported at 23%, up from around 20% in the previous year.

    • Current order book stands at ₹188 crores, with ₹68 crores already executed in the current quarter.

    • Company targets ₹200 crores turnover for FY24 and ₹550 crores over the next two years (FY25-FY26), comprising ₹250 crores and ₹300 crores respectively.

    • Capex of ₹5-6 crores is planned for FY24 and ₹10 crores for FY25, funded through internal resources.

    • New facilities in Vizag Electronic City and AMTZ Visakhapatnam are expected to be operational by May-June 2024.

    • NSE listing is planned for June-July 2024 to enhance liquidity and small investor participation.

    What Changed1

    vs Q4 FY24

    Guidance items15 → 17 (+2)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹154 Cr+48.1%YoY
    2. 02Profit₹27 Cr+50%YoY
    3. 03Net Profit After Tax Margin23%
    4. 04Order Book₹188 Cr
    5. 05Inventory₹44 Cr

    Guidance & targets

    17
    CategoryTargetPriority
    Revenue
    Turnover
    200 crores
    		High
    Revenue
    Turnover
    250 crores
    		Medium
    Revenue
    Turnover
    300 crores
    		Medium
    Overall Growth
    Revenue Growth
    0.20 to 0.25
    		Medium
    Profitability
    Net Profit After Tax Margin
    20-23%
    		Medium
    Profitability
    Medical Products Break-even
    break even
    		Medium
    Development
    SDR Development Completion
    all flavors of SDR
    		High
    Commercialization
    Medical Products Commercialization
    commercialized
    		High
    Capacity
    Vizag Electronic City Facility Operational
    operational
    		Medium
    Capacity
    AMTZ Visakhapatnam Facility Operational
    completed
    		Medium
    Order Inflow
    HF Systems Tender
    coming up
    		Medium
    Order Inflow
    RTS Repeat Order Tender
    10,000-12,000 numbers
    		Medium
    Market Entry
    Radar Market Participation
    participate
    		Medium
    Capex
    Capital Expenditure
    5-6 crores
    		High
    Capex
    Capital Expenditure
    10 crores
    		Medium
    Listing
    NSE Listing
    apply for listing
    		Medium
    Corporate Action
    Stock Split Decision
    decided
    		High

    Risks & concerns

    3
    RiskSeverity

    Medical equipment certification process

    The certification process for medical equipment is very long and takes time, impacting commercialization timelines. — Management acknowledged

    medium

    Initial losses in medical devices (IMAX) subsidiary

    The IMAX subsidiary may incur some losses in FY24 before breaking even in FY25. — Management acknowledged

    low

    Competition in defense tenders

    Avantel faces competition from established players like Bharat Electronics, L&T, Alpha Design, Data Pattern, and Shastra in various tender opportunities. — Management acknowledged

    medium

    Q&A highlights

    3

    “So firstly, what is the reason for the same? Second thing is how do we plan to rectify this thing? And like what is the stable state OCF to EBITDA that we can generate in probably the medium term or so? Second question is on the capacity front. So, we have doubled our capacity and the new capacity shall come on board in 2023 itself. So if you can elaborate on the same. What exactly it caters to and what hardware equipment that we will be making there? Third question is on the growth outlook in the medium term. So, given the industry related developments that are happening as in the new Indian Space Policy also has come up in 2023. And the way we have also delivered growth in the past, so, do we aspire generating maybe a 500-600 crore revenue in next five years? Or is that estimate conservative for you? And then, like with the rising scale, what will be our margin trajectory? Do we see any improvement? If you can probably talk about that. And last question is about the IMAX revenue target, as in, what do we target over there in next three to five years? And when do we expect to break even for IMAX?”

    This comprehensive question covered critical aspects of operational efficiency (OCF), future growth drivers (capacity, market outlook), and the strategic direction of the new medical devices segment, providing a holistic view of the company's future.

    asked by Ms. Neha Kharodia

    2 min read6 chapters

    Detailed Narrative

    01

    FY23 Financial Performance and Order Book

    Avantel delivered a strong financial performance in FY23, with revenue growing by 48.1% YoY to ₹154 crores from ₹104 crores. Profit also saw a significant increase of 50% YoY, reaching approximately ₹27 crores from ₹18 crores. The Net Profit After Tax margin improved to 23% from around 20%. The company currently holds an order book of ₹188 crores, with ₹68 crores already executed in the current quarter, indicating a healthy pipeline for future revenue recognition.

    02

    Strategic Focus on SDR Development and Market Opportunity

    Avantel is heavily investing in the development of SCA compliant Software Defined Radios (SDRs) across various frequency bands (VHF, UHF, L, and S band) for both terrestrial and aerospace applications. The company aims to complete the development of all SDR flavors by 2025, positioning itself to capture a significant share of the Indian defense SDR market, estimated at ₹2500 crores annually. Indigenous content in SDRs has improved to 35% from 100% import previously, enhancing self-reliance and competitiveness.

    03

    Capacity Expansion and New Facilities

    To support its growth and diversification plans, Avantel is expanding its infrastructure. A new 70,000 square feet facility in Vizag Electronic City, dedicated to SDRs, radars, and other electronics equipment, is expected to be operational by May-June 2024. Additionally, a two-acre facility in AMTZ Visakhapatnam for medical equipment manufacturing is planned, with construction starting in August-September and completion targeted by May 2024.

    04

    Entry into Medical Devices (IMAX) Segment

    Avantel is venturing into the medical equipment sector, focusing on import substitution products like non-invasive ventilators, CPAP, BIPAP, patient monitors, and syringe pumps. These products are expected to be commercialized in FY25, with the segment projected to break even in FY25, though some losses may occur in FY24 due to the long certification process. The strategy aims to make healthcare more affordable and accessible with indigenous solutions.

    05

    Future Growth Outlook and NSE Listing

    The company projects a turnover of ₹200 crores for FY24 and aims for ₹550 crores over the next two years (FY25-FY26), with ₹250 crores in FY25 and ₹300 crores in FY26. Management anticipates a healthy growth rate of 20-25% for the next three years while maintaining PAT margins of 20-23%. To enhance liquidity and broaden investor participation, Avantel plans to apply for NSE listing in June-July 2024, following the audited results.

    06

    Key Orders and Pipeline

    Avantel is executing a significant order for 6300 loco terminals for the real-time train information system, expected to be completed by August 2023. A repeat order for 10,000-12,000 loco devices is anticipated by the end of FY24. The company has also secured a 50-crore order from the Indian Coast Guard for MSS systems and expects a tender for 5kW HF systems from the Indian Navy in the coming months, further strengthening its defense portfolio.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.