Avantel Limited — Q4 FY25 earnings call

Call held 23 Jun 2025

Management summary

Avantel reported robust financial performance for FY25, with significant growth in sales and profit over the past four years. The company is strategically investing in R&D and new facilities to capitalize on opportunities in defence communication, satellite technology, and medical equipment. While short-term growth is expected to stabilize, management anticipates steep growth from FY28 onwards, driven by successful execution of iDEX projects and expansion into new market segments.

Highlights

  • Sales for FY25 reached ₹248 crores, representing a 300% increase from ₹77 crores in FY21.

  • Profit for FY25 was ₹59.56 crores, a 400% increase from ₹15 crores in FY21.

  • The current order book stands at ₹210 crores, with management confident of booking at least ₹200 crores more in FY25 (within the next nine months).

  • Five iDEX projects, primarily focused on satellite communication for Defence, are underway, with 4-5 expected to complete within 12-16 months.

  • The new ECT facility is partially operational, and VSAT services are projected to be operational by August 2025.

  • The IMAX medical equipment division aims for 40-100% year-on-year growth, with revenue targets of ₹30-100 crores after an initial phase of ₹4-5 crores.

  • A new antenna manufacturing facility near Vijayawada, funded by an ₹80 crore rights issue, is expected to commence operations by August 2025.

Key financials

  1. Sales ₹248 Cr +300%YoY
  2. PAT ₹59.56 Cr +400%YoY
  3. Order Book ₹210 Cr
  4. ESOP Expense ₹14.5 Cr

What they filed

Q1 FY27: revenue up 35.7%, net profit up 66.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue77 71 49 52 55 −28%52 −27%64 +30%70 +36%
EBITDA35 32 12 10 11 −67%13 −61%14 +17%17 +67%
Net profit23 20 6 3 4 −81%3 −86%5 −22%5 +67%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Growth Trajectory

  • Sales Growth Growth Trajectory · FY26-FY27 (stable), from FY28 (steep) · Medium confidence Stable growth for next 2 years, then steep growth
    I would like to caution here is that the growth that you have expected in the last four years, it will stabilize now and the same kind of growth you can expect after two years... from 27-28 again, you can expect a steep growth.

    — Dr. Abburi Vidyasagar

Order Booking

  • New Orders Order Booking · Within next 9 months (FY25) · High confidence At least ₹200 crores
    And right now we have 210 crores of orders and we are confident that at least 200 crores orders will book in this financial year, in the next nine months, within the next nine months.

    — Dr. Abburi Vidyasagar

Project Completion

  • iDEX Projects Completion Project Completion · Next 12 to 16 months · High confidence 4 out of 5 projects
    iDEX I have already told you we will be completing in the next 12 to 16 months. We will be completing at least four of them, four out of five.

    — Dr. Abburi Vidyasagar

Facility Operations

  • VSAT Services Operational Facility Operations · August 2025 · High confidence Operational
    So, then we should complete it by July end and then we will make it operational in August, the VSAT services.

    — Dr. Abburi Vidyasagar

  • New Antenna Plant Operational Facility Operations · August 2025 · High confidence Operational

    Previously 15th June → Operational

    new facility is likely to commence from 15th June as per annual report. Today, I understand that that facility is likely to start from August 2025

    — Dr. Abburi Vidyasagar

IMAX Revenue Growth

  • Revenue Growth Rate IMAX Revenue Growth · After certification (starting with 4-5 crores) · Medium confidence 40-100% year on year
    And in Imax when... the growth rates will not be 10-15%, but they could be 40-50% year on year or even more 100% or something like that.

    — Dr. Abburi Vidyasagar

IMAX Revenue Target

  • Revenue IMAX Revenue Target · After initial phase (starting with 4-5 crores) · Medium confidence ₹30-100 crores
    So once it starts with some 4-5 crores this year, afterwards it could be 30 crores, then it could be 60 to 75 and then hundred.

    — Dr. Abburi Vidyasagar

Regulatory Guidelines

  • GSAT Operational Guidelines Regulatory Guidelines · Next 2-3 months · Medium confidence Received
    I mean, we are expected maybe every time they are expecting them in 2-3 months. But right now also we are hoping that we will be able to receive the guidelines in next 2-3 months.

    — Dr. Abburi Vidyasagar

Risks & concerns

  • Defence Procurement Delays & Order Visibility

    medium

    Defence procurement procedures make it difficult to give firm commitments on sales value or numbers, leading to uncertainty in order inflow timelines.

    Management acknowledged

  • Working Capital Intensity

    medium

    The capital goods sector is cash-flow hungry, especially with long project cycles and government receivables, requiring significant working capital.

    Management acknowledged

  • Regulatory Delays for GSAT Ground Station

    medium

    Operational guidelines for the GSAT ground station license from the Government of India are delayed, impacting the commencement of services.

    Management acknowledged

  • Short-term Growth Stabilization

    low

    After high growth in previous years, the company expects growth to stabilize for the next two fiscal years (FY26-FY27) before a steep increase from FY28.

    Management acknowledged

  • Competition in SDR Market

    low

    While there are few players (3-4) in the SDR market, Avantel aims to be in the top three, indicating competitive pressure.

    Management acknowledged

  • Promoter Shareholding Reduction

    low

    Promoter's overall shareholding reduced by 1-2% due to share sales for subscribing to rights issue and donations to Laxmi Foundation for hospital building.

    Analyst acknowledged

Areas of evasion (3)

  • AI risk
  • new employee count
  • new clients

Q&A highlights

2 direct, 1 evasive
SDR Development Status, Order Pipeline, and Valuation Direct
So first is on the SDR side. So I would like to understand whether all development related to SDR has been completed or what is the status on the development side... Second, on the order expectation side... So if you can clarify more on that regarding SDR per value so what is a tentative value one should look at...

This question covers critical aspects of the company's core defence business, including product development, order pipeline, and financial implications, directly addressing investor concerns about future growth and valuation.

Asked by Amit Indradaman Seth

Promoter Shareholding, Capital Allocation, and IMED Division Strategy Direct
On the right issue side... why not all the promoters they have participated in the right issue and eventually if I see the promoter holding is down... Any joint ventures are in the pipeline... Also on the EMS side of business... Lastly on the IMED part... how do we see management bandwidth overall in Defence and IMED...

This question delves into sensitive areas like promoter commitment, capital structure, and the strategic rationale and future of the IMED diversification, providing crucial insights into these areas.

Asked by Amit Indradaman Seth

AI Risk, Employee Growth, and New Clients Evasive
sir, i want to ask few questions. do we have any risk on our company because of AI. please tell about that... sir please tell about how many new employees hired sir. and please tell how many male and female employees there now sir. and any new clients sir?

While the analyst's tone is appreciative, the question about AI risk is relevant for a technology-driven company. The lack of a direct response from management on this and employee/client growth is a notable omission in the provided transcript.

Asked by Ramesh Shanker Golla

2 min read 6 chapters

Detailed narrative

Robust Financial Performance and Growth Outlook

Avantel demonstrated strong financial growth in FY25, with sales reaching ₹248 crores, a 300% increase from ₹77 crores in FY21. Net profit also saw a significant rise to ₹59.56 crores in FY25, up 400% from ₹15 crores in FY21. While the company anticipates a stabilization in growth for FY26 and FY27, a steep growth trajectory is projected from FY28 onwards, driven by ongoing R&D and strategic initiatives.

Strategic Focus on Defence and Satellite Communication

The company's future growth is anchored in innovation and developing niche products for Indian Defence services. Avantel is actively pursuing five iDEX projects from the Ministry of Defence, primarily focused on satellite communication, including sat phones, convoy management systems, and video receivers for the Indian Army, and Satcom-on-the-move for the Indian Navy. Four out of these five projects are expected to be completed within the next 12-16 months, with the fifth within 18 months.

Expansion of Infrastructure and Capabilities

Avantel has significantly invested in expanding its infrastructure, including the partially operational ECT facility in Hyderabad, which houses R&D for defence communication units and an Assembly Integration Test (AIT) facility for satellite manufacturing. VSAT services are slated to become operational by August 2025, and a new antenna manufacturing facility near Vijayawada, funded by an ₹80 crore rights issue, is also expected to commence operations by August 2025, a slight delay from the previously reported June 15th.

IMAX Division: Diversification into Med Tech

The IMAX division, focusing on medical equipment, represents a strategic diversification leveraging existing competencies in software, embedded firmware, and electronics manufacturing. Management projects significant growth for IMAX, with revenue potentially reaching ₹30-100 crores after an initial phase of ₹4-5 crores, and annual growth rates of 40-100% post-certification. The company has invested approximately ₹30 crores in this world-class facility, with certifications for five products expected by September.

Capital Allocation and Funding Strategy

The company has raised ₹80 crores through a rights issue for its new antenna plant and has utilized unsecured loans from promoters to manage working capital and fund immediate project needs, especially given delays in government receivables. Avantel is also in discussions with SBI and Canara Bank to secure working capital financing, with approval expected in a couple of months, supported by increased fixed assets of approximately ₹115 crores.

Order Book and Market Opportunities

Avantel currently holds an order book of ₹210 crores and expects to book at least ₹200 crores more in the current financial year. The company is actively participating in tenders for wind profile radars for the Indian Air Force and ISTRAC, with results expected in the coming months. The SDR market alone is estimated at ₹3000 crores annually, with Avantel positioning itself among the top players, having already delivered HFSDRs and completed trials for UHF SDRs.

This is an AI-generated summary of a publicly available earnings call transcript.
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