Ladies and gentlemen, good day and welcome to the Avalon Technologies Limited Q4 and FY 2025 earnings conference call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Agarwal from Axis Capital Limited. Thank you, and over to you, sir.
Good afternoon, everyone, and a warm welcome to the Q4 FY 2025 earnings call of Avalon Technologies. To take us through the results today, we have with us from the management Mr. Kunhamed Bicha, Chairman and Managing Director.
I am sorry to interrupt, Nikhil. You are not audible. Ladies and gentlemen, the management's line has been disconnected. Would request you to stay online while I reconnect. Thank you. Ladies and gentlemen, the management has been reconnected. I now hand the conference over to Mr. Deepak Agarwal. Please go ahead.
Good afternoon, everyone, and a warm welcome to the Q4 FY 2025 earnings call of Avalon Technologies. To take us through the results today, we have with us from the management Mr. Kunhamed Bicha, Chairman and Managing Director, Mr. Bhaskar Srinivasan, President, Mr. Suresh V.R., Chief Financial Officer, and Mr. Shriram Vijayaraghavan, Chief Operating Officer, Mr. Venky Venkatesh, Chief Sales Officer, and Mr. Michael Robinson, Chief Operating Officer for the U.S. operations. Mr. Bicha will give an overview of the business performance and will be followed by Mr. Suresh's remarks on the financial performance, post which we will open the floor for Q&A.
As we move forward, it is important to bear in mind any forward-looking statements made during this call are subject to potential risk and uncertainty, both known and unknown. Now, without any further delay, I will hand over the floor to Mr. Bicha for any initial remarks. The CMD. Thank you, and over to you, sir.
Thank you, Deepak. Ladies and gentlemen, on behalf of Avalon Technologies, we extend a very warm welcome to our Q4 FY 2025 earnings call. I will quickly introduce Avalon Technologies, especially for the ones who are joining us for the first time. Avalon Technologies established itself as a key player in electronic manufacturing services with a global reach. We take pride in our leadership in high-mix, flexible volume manufacturing.
We currently operate across 14 manufacturing facilities in India and U.S. Our three key differentiators are: one, vertical integration. We offer a complete box build solution from PCB design, new product development, to final product manufacturing. Two, our global presence, both in terms of manufacturing presence and customer base. Three, optimal mix of established industries like industrial, rail, aerospace, communication, and emerging industries like clean energy. Now turning to our business performance.
I would like to begin by thanking all our investors for your continued trust and confidence in Avalon. As we celebrate our 25th anniversary, it is not only a time to reflect on our journey but also look forward. Over these years, India has evolved to be a well-established global manufacturing hub. With this shift, the outlook for electronics manufacturing service industry, and for Avalon in particular, is very encouraging. We believe the road ahead holds even greater opportunities. In Q4 FY 2025, our revenues grew by 58.1% year-on-year.
For the full year, we achieved 26.6% year-on-year revenue growth. This growth has been broad-based, well diversified across sectors and geographies and consistently delivered in a dynamic environment. We continue to see strong demand from our customers, both in India and the U.S., and remain confident in our strategy for sustainable and profitable growth. On gross margins, we are pleased to report that Q4 FY 2025 came in at 35.1% at the upper end of our guidance of 33%-35%. Supported by operating leverage, our EBITDA margins for the quarter stood at 12.1%. Profit after tax came in at INR 24.3 crore, marking a 244% increase over Q4 FY 2024.
As of March 31, 2025, our order book stood at INR 1,761 crore with an average execution period of 14 months. In addition, long-term contracts with execution timelines of 15-36 months grew by 18.3% year-on-year to INR 1,123 crore. Our year-on-year order book growth improved from 11% in FY 2024 to 29% in FY 2025. This order book growth has been well-balanced and diversified across industry verticals and geographies. We have also made meaningful progress in optimizing our working capital. Net working capital days improved from 161 days in March 2024 to 124 days in March 2025, an improvement of 37 days, better than our guidance of 10- 15 days.
This reflects our ongoing efforts to drive operational efficiency. in Q4 FY 2025, our U.S. manufacturing plant contributed 16.6% of total revenue. Meanwhile, our India-based operations, which cater to both domestic and global customers, accounted for 83.4% of revenue during this quarter. The India operations remains highly profitable, delivering an EBITDA margin of 14.8% and a PAT margin of 9.6%. We had previously outlined our three key drivers of growth, our existing U.S. business, new U.S. businesses, and our ever-expanding India businesses. We are encouraged by the traction across all three, which reinforces our confidence in growth opportunities ahead over the next decade.
At the same time, we are closely monitoring evolving global trade dynamics, including tariff negotiations and macroeconomic developments, which could influence manufacturing flows worldwide. India continues to benefit from strong industry tailwinds, and we are seeing sourcing decisions increasingly moving towards India's favor. Avalon's dual manufacturing presence in both U.S. and India positions us well to navigate these shifts. On one hand, higher tariffs on imports from select countries are driving opportunities to India to emerge as a preferred manufacturing hub, resulting in an increased engagement from global customers aiming to diversify their supply chains.
At the same time, our U.S. manufacturing facility offers strategic flexibility to support customers looking to localize production and meet regional requirements. On the other hand, policy uncertainty and its impact on U.S. economy call for continued agility and disciplined planning. Considering this, we are adopting a more measured outlook for the first half of FY 2026, with expectations of improved momentum in the second half as visibility strengthens. Accordingly, we are approaching FY 2026 with measured optimism, mindful of the macroeconomic environment influenced by policy decisions.
We are guiding for a revenue growth of 18%-20% for FY 2026, and will reassess this as the year progresses in line with market developments. Now, moving to our key wins. We are making meaningful progress towards volume production across several ongoing projects. These include products for global auto components, home electrification systems. We are also developing new products across industry verticals, including rail, industrial, infrastructure, clean energy, and communication segments. Some examples include backup power systems, transmission systems, aerospace cabin products, and locomotive engine systems.
Over the past year, we secured several new projects across industry verticals, which are progressing in line with our expectations. Moving from design of prototype stage to production, many of these are expected to ramp up during the current financial year and support our strategy of deepening customer engagement across diverse end markets. In addition, we are entering new sophisticated advanced technology segments that play a critical role in enabling next-generation electronics and digital infrastructure. While these initiatives are still at an early stage, we see encouraging potential and will share further updates in the coming quarters.
To support this series of new product introductions and the anticipated growth, we are scaling up our operations in advance of the project ramp. As a result, we expect the second half of FY 2026 to be stronger than the first. While FY 2025 has been a pivotal year in setting the foundation for growth, in FY 2026, we are going to focus on scaling capacity, deepening customer engagement, and building strategic partnerships. On the infrastructure front, we are pleased to share that our new export-focused manufacturing plant in Chennai is now complete and has fully commenced production.
In parallel, phase II of our brownfield expansion in Chennai aimed at addressing rising domestic demand has also been initiated. We continue to strengthen our capabilities and capacities. As part of this, we are enhancing our technical competence through strategic collaborations, including our partnership with Zepco Technologies. Zepco is involved in the design and manufacture of motors, drives, controllers, and power solutions, serving sectors as drones, electric vehicles, and defense. This collaboration supports our efforts to gradually build capabilities in select emerging technology areas. In summary, Avalon's unique business model
Anchored in its dual manufacturing presence across India and U.S., offers customers the flexibility. Our ability to serve diverse end markets, adapt to changing trade dynamics, and invest ahead of growth puts us in a strong position for the future. With that, I would like to hand over the call to our CFO, Suresh Veerappan, for a detailed overview of our financial performance. Thank you so much.
Thank you, K.B., and good afternoon, everyone. Thank you for joining the call today. FY 2025 has been a pivotal year for us, marked by profitable growth. Let me begin with our Q4 FY 2025 performance. We recorded revenue of INR 343 crore, year-over-year growth of 58.1% compared to INR 217 crore in Q4 FY 2024, and a sequential growth of 22.1% over the previous quarter. For the full year FY 2025, revenue from operations stood at INR 1,098 crore, reflecting a 26.6% year-on-year increase, exceeding the guidance we had provided earlier.
Our geographical revenue split for the quarter was 47% and 53%, with India contributing INR 160 crore and the U.S. contributing INR 183 crore. For FY 2025, our geographical revenue split was 43% and 57%, with India contributing INR 477 crore and U.S. contributing INR 621 crore. Our gross margin for Q4 FY 2025 stood at INR 120 crore, reflecting a 47.7% year-over-year increase from INR 81 crore in Q4 FY 2024. Sequentially, gross margin grew by 14.7%. For the full year, we delivered a gross margin of 35.8%, which remains among the industry's leading levels. EBITDA for Q4 FY 2025 stood at INR 41 crore, reflecting a 139.6% increase from INR 17 crore in Q4 FY 2024.
This resulted in an EBITDA margin of 12.1%, up by 410 basis points from 8% in the same period last year. For the full year, EBITDA stood at INR 115 crore, representing a year-on-year increase of 83.7%. EBITDA margin for FY 2025 was 10.5%, marking an improvement of 325 basis points over the previous year. PAT increased to INR 24 crore, a 243.8% year-over-year increase from INR 7 crore, with a PAT margin of 7%, up by 380 basis points from 3.2% in Q4 FY 2024. For FY 2025, PAT stands at INR 63 crore, an increase of 126.7% from INR 28 crore in FY 2024.
Our profitability continues to strengthen, delivering sustained growth. Net working capital days improved to 124 days in March 2025 from 161 days in March 2024, an improvement of 37 days, exceeding the guided reduction of 10- 15 days. Net inventory days improved to 86 days in March 2025 from 118 days in March 2024. Trade receivables increased slightly to 84 days in March 2025 from 79 days in March 2024. Trade payable days improved to 46 days from 36 days over the same period, reflecting better terms with our vendor partners.
For FY 2025, cash flow from operations reached INR 25 crore, up from INR 17 crore in FY 2024. The improvement is due to better working capital management and profitable growth. As of March 31, our total outstanding debt stands at INR 141.7 crore, with cash equivalents and investments at INR 134.7 crore, resulting in a marginal debt position of INR 7 crore. Our CapEx for Q4 FY 2025 and FY 2025 was INR 25.1 crore and INR 57.8 crore respectively. With a CapEx-light model, our asset turns are at 7.5x .
Building on FY 2025's revenue growth, we are approaching FY 2026 with measured optimism, mindful of prevailing macroeconomic environment. To conclude, we are encouraged by the consistent momentum across all three of our growth engines. Our continued focus on operational efficiency, working capital management, and strategic execution positions. We are well-positioned to capture the opportunities ahead and creating lasting value for our shareholders. Thank you. Over to you, Deepak.
Thank you, sir. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.
Hi, sir. Am I audible?
Yes, you are.
I just wanted to sort of understand, obviously, we've given a slightly measured guidance of 18%-20% given near-term uncertainty. Just wanted to understand both from a near-term perspective as well as from a medium-term perspective, is there any disruption in terms of orders shorter term are you seeing? Work getting stalled because of tariff uncertainty? Secondly, on the medium term, is that leading to more conversations of volumes sort of shifting, and who they want to do it in India or U.S. or any sort of commentary around both the shorter-term impacts as well as longer term conversations that we are having with our clients in respect to this tariff uncertainty that is there.
Thank you, Deepak, for your question. We are uniquely positioned in this scenario because we have factories in the U.S. as well as in India. I think either way, what we see is that taking India, for example, is a better position than most other countries as it stands today. It changes every day, but as it stands today. If customers want to make it in the U.S. before the transfer to India, the new customers, I mean, want to make in the U.S. before transferring to India in the mid or longer term, that is also possible. We are seeing different parts of this play out.
Customers are also cautious because they're not sure how the whole policy situation is going to play out. I think as of now, we are fairly confident. With all the news around, we want to be optimistically cautious, let me put it that way. But I think there's a lot of growth ahead for us with the programs which we have signed up for with customers, especially the new programs. Did I answer your question, Deepak?
Yes. For 2026, should we assume sort of a higher India percentage in terms of the overall mix? Because maybe one, two, there is uncertainty and then things gradually recover. Does India become like a 60% contributor this year? Is that what you are looking at in terms of order book, or that's not the case today?
If you go back three years, Deepak, we were an export-focused company where it was 30% India, 70% export. Our goal in the last 18 months is to have the 50/50 mix, 50% export and 50% domestic, which is India. As you can see over the few quarters, we have come to 47% India in the last quarter, and 53% export. We see the trend continuing. As India evolves, we are seeing lot of our customers in rail, we're seeing a lot of customers in the infrastructure side of things and industrial.
We are confident that the India number is going to go up, and that's where it's just not an export-focused, U.S.-focused. On the other side, we are seeing a lot of activity in our U.S. factory with customers requesting what it'll take for new programs to build in the U.S. With, of course, as there's a cost over time, and they see a easier path to India once the tariff situation settles down.
Maybe just one final thing. Is tariff an element that can be passed through customers in your contract? Or in a worst-case outcome, would we have to take some impact on our end, or is it mostly like a pass-through element for us once we get some certainty on tariffs?
It is 100% pass-through.
Okay.
In the U.S., we have also been dealing with the Chinese tariffs for U.S. customers, which is 35%-40%. For the last couple of years, we have been passing it through.
Sure. Sure, sir. Those are my questions, and best of luck for future quarters.
Thank you, Deepak.
Thank you. Participants, please restrict yourselves to two questions. If you have any more questions, you may rejoin the queue. The next question comes from the line of Praveen Sahay from P L Capital. Please go ahead.
Yeah, thank you for the opportunity. My question is related to the order book, which is you had shown 29% of a growth. If you can give us some more detail on that, how is the geographical mix in that order sector by certification? Also related to that, even after a 29% of a growth, you are talking about 18%-20% of a growth in revenue because the customers are little cautious. So you are seeing some delay in the order as well from the customers?
No, Praveen. We are cautious. The customers, so far, we don't see. It's not like what we have seen with the destocking situation. So we don't see too much of a slowdown from customers. But if the economy slows down, there could be some slowdown, is all that we are planning for. As you see last year, every quarter we had come back and revised our guidance. We'd like to follow through and do that as things progress.
On the first part of the question, Suresh here, on the order book mix, it closely resembles the revenue mix. India will be approximately 45%, and U.S. will be 55%.
Okay. Sector is also similar in the order book, sector-wise certification?
It will closely resemble the revenue.
If you actually look at what by sector, we have seen growth across every one of them, all the five sectors. These are significant growth across the board. That is why we are confident in projecting this. For example, clean energy is a 66% growth. Communication is 53% growth. Industrial is 35% growth. Mobility is 113% growth.
Okay. On your receivable part, which I just-
I am sorry to interrupt, Praveen. Those were your two questions. I would request you to rejoin the queue for further questions.
Okay.
Thank you.
Thank you, Praveen.
The next question comes from the line of Palaash Gandhi from Investec India. Please go ahead.
Hello.
Palaash, please go ahead.
Yes, please go ahead.
Hi, sir. This is Aditya from Investec. Sir, just wanted to confirm once again. So you're mentioning so far you haven't really seen any major slowdown. It's only going forward that you're fearing that the U.S. economy may slow down, and therefore, you are building in such a conservative estimate. But as far as April and whatever little we have seen in May is concerned, you're not seeing customers pushing back on deliveries or at this stage doing so?
No. Aditya, historically, we've been light on Q in the first half and heavier on second half, which we'll continue to go through. But to answer your question, we are not seeing anything significant happening. But it's just the news every day just throws it off a bit. But we just be cautious, but there is enough growth in the system. Okay? We are just not committed yet. And we are always committed for the last year or so that we will double in three years, and we are still sticking to that commitment. Okay? So it may be a one slow quarter, but it's still there in the pipeline. Some of the customers we are signing up are fairly large.
Sure. Understood, sir. Given that our capacity has also now increased, what does this 18%-20% growth mean in terms of capacity utilization? Do you think we would be left with this excess capacity and therefore a risk of unabsorbed overheads?
No. We have been planning for our growth in the sense of people and building earlier than it is coming. A good sign or bad sign, I am not sure. We built this new export facility, which is supposed to take care of us for 12- 18 months. But I am happy to say that in four months it is filled up. Different projects have started there. So we are building a newer facility or updating a newer facility.
The same goes with India. We are building up the buildings earlier and getting the people in for the projected projects to come in a bit earlier. There is going to be a couple of months of lag before the projects kick in. So that is going on. We are confident of the growth. You have seen us, we have managed 50%, 58% growth year-over-year quarter. We did not break a sweat doing that.
Perfect. Thank you so much, sir. Helpful.
Thank you, Aditya.
The next question comes from the line of Bhoomika Nair from DAM Capital. Please go ahead.
Yeah. Good afternoon, sir, and congratulations on a good set of numbers. Sir, my first question is on aspect of the new client additions that we've done in the last year and a half. How has that progress moving? Which clients are you seeing scaling up quite sharply, both in U.S. and in India, which has moved to now from a prototype to a mass production kind of a phase? And which areas are you seeing really new client additions happening per se? If you can just give some more qualitative color on which segments are seeing improvement in terms of the category. That's my first question.
Thank you, Bhoomika, as usual. It's broad-based, but let me just put it in perspective. The clean energy, for example, was slower last year, but year before, 2025. So you've seen a growth of 66% last year, and we'll continue to see that if there's addition of new customers. On the infrastructure side in India is where the larger growth piece is going to come in, and we are setting up for that, which is not yet coming. And we believe that will play out in, I think late part of Q2, if not earlier, or Q3 for sure.
We are seeing that piece. Rail, we've got six or seven new products in different types of NPI to production, which will kick in later part of this year. Industrial, multiple customers in both the geographies, we are seeing significant growth. It is a little bit lower than the other two, but it is broad-based. Most of these customers are Fortune 500 type customers, not startups or anything. Clean energy, I thought that we are going to see significant growth in the U.S. especially.
Okay. In the quarter, we saw very strong growth in terms of the mobility segment. Is this something now as a steady run rate that we should look at as we move into the next year? We have seen growth or new customer additions and a scale-up in both rail and aero. Should that kind of continue into the next quarter or next year as well at this run rate?
Yes. On yearly basis for sure, because there are multiple projects which are going to come in also. This is not including Kavach and all that. Okay? That is all in progress, progressing very well. Okay. On the aero side and rail side, multiple projects have kicked in, and some of which you see already playing out. We have few more coming in. I would assume that it is going to continue, and that is all India.
Sure. If I might just squeeze in one more question on the margin profile. India margins are doing quite well. You have reported about 14.5% kind of margin as such out there. Even the U.S. business to some extent remains a drag. How do we see that progressing, particularly when we are seeing perhaps, the trade tariffs, et c, a lot of clients actually looking to do more prototyping in U.S. Do you see that kind of turning around or will that kind of remain a drag? What kind of timelines, if any, should we look at?
We've always mentioned U.S. because we are present in the U.S. for the long term, and today this is a unique situation where it's just not cost, it's location. I think it'll play out well. The margins won't be as high as what we see in India, which is 14.8% EBITDA and 9.6% last quarter. But in 2026, I'm fairly sure that it is going to make a reasonable amount of money.
Sure, sir. Great. All the best , and I'll come back in the question queue. Thank you so much.
Thank you, Bhoomika.
The next question comes from the line of Meet Jain from Motilal Oswal Financial Services Limited. Please go ahead.
Hi, sir. Congratulations on the good set of numbers. My first question is regarding our order book and our revenue guidance. Seeing the order book, like we mentioned, the order book is an average 14-month order book. It comes to around, let's say, INR 1,500 kind of crore, but what we gave as guidance is far less than that. When you give a commentary segment-wise, we are estimating a very strong growth across segments. Just want to understand, is it a really optimism, like a conservative number? Or are we seeing an early sign in the U.S. slowdown what we have seen in the past two years because of the order book and everything? Can you just give some more color on that?
You used the exact two words, Meet. We are cautiously optimistic at this point, right? You used that. So that's what exactly we are. I think there's a lot more growth in the system. We are just making sure that things settle down with the macroeconomics, and there's enough new customers to fill the growth. So it is more of erring on the side of caution rather than going out and saying a number and chasing it. For us, see, we've never had a strong India position a couple of years back when we got into the U.S. slowdown, and that time India was probably around less than 30%. Today, India is 47% and growing. So between the two economies, we should be okay.
Understood. So, just as a differentiator, what mitigating factors will we have implemented in place to avoid that kind of the last two years if the U.S. goes into slowdown or something like that?
Look, we are seeing substantial pieces coming to India itself, and there are new customers coming to U.S. So even if there's a slowdown of existing customers, it's not going to be a stocking, restocking situation where they stop. So instead of taking 100 parts, they may take 80 parts. Okay? So it's not an alarming situation like what we went through a couple of years back. So we are just being cautious and not I think the orders are there. It's broad-based. It's exciting for us on both segments. And there are more coming. So that's the key.
Understood. The second question is on the margin part. Can we expect FY 2026 to show some positive bias on an FY 2025 level in terms of margin going ahead?
No, we will still continue to say 33%-35%. In certain quarters, you may see a little bit higher. Certain quarters, it will be in that range.
What about the EBITDA margin?
Suresh, you want to answer that?
We generally do not provide the guidance at the EBITDA level, PAT level, but like what K.B. said, we would like to reiterate that 33%-35% is a reasonable number for us to look at the gross margin level. Some quarters may be higher, some quarters may be at this range.
Okay. Also, just to clarify, like in this year FY 2025-
Sorry to interrupt, Meet. Those were your two questions. If you have any more questions, please rejoin the queue.
Understood. Follow up. Okay.
Thank you.
Thank you. Thank you, Meet.
The next question comes from the line of Jalaj from Svan Investments. Please go ahead.
Yes. Hope I'm audible.
Yes, Jalaj. Please go on.
Yeah. First of all, thanks for the opportunity, and congrats on a great set of numbers. Sir, my first question was, what exactly happened or what went through in the gross margins for this quarter in particular? Could you help us understand that? Because that will help us to project further going forward. There is a drop in the gross margin this quarter. What explains that?
The guidance range, what we mentioned earlier is 33%-35% of gross margins. We are there at the upper end of that guided range. The previous quarters may have been little higher because of the product mix. But we've always maintained that 33%-35% is a reasonable number to look at. From a full year perspective, we are at 35.8%. I think that is a reasonable number to look at, Jalaj.
Okay. Understood. Just harping onto it a little, considering the order book we have in hand and the product and the industrialized mix, 33%-35% looks a reasonable one. Is that my understanding correct going forward also?
Yes. In certain quarters, you will see an upside. I know where you are coming from. We have always said 33%-35%, but a few quarters we have been 37% and all. Of course, our endeavor is to be higher, and we will try to get there, but I think you should take 33% and 35% as your range.
Got it. That was it. Secondly, on your aspiration of double the revenue in three years, what year base are we considering, and what sort of mix should I see across U.S. and the India business across it?
One, it is from FY 2024- FY 2027. In terms of growth engines, like we mentioned earlier, we are seeing growth opportunities across India, existing business in U.S., the new projects in U.S. We are seeing growth opportunities on all three. The aspiration is to be 50/50 between India and U.S. Some quarters we may see some industry verticals growing a little faster, some geographies growing a little faster, but the aspiration is to be 50/50.
Today we are at 47%, India 53%. It is a little earlier than we expected.
Okay. Sir, I understand that India as an industry or the market is growing by itself.
I am sorry to interrupt, Jalaj. Those were your two questions. I would request you to rejoin the queue for any further ones.
Thank you.
Thank you.
Thank you, Jalaj.
The next question comes from the line of Chirag from KEYNOTE Capitals. Please go ahead.
Yes. Thank you for the opportunity. Sir, my first question is related to raw material sourcing. Could you make me understand, do we procure bare PCB from India or is it from another country? If you could provide the mix for the same.
Shriram, you want to answer that?
Yeah. So we source materials globally. So wherever available in India, we would source locally. Wherever sometimes it is required to import the materials, we would do that. So it depends on the commodity and depends on the particular building.
Also sometimes complexity and type of product.
Any ballpark number to understand if there is any dependence on a particular country at this moment?
No, it is all over the world, so it depends, right? A lot of it could be from India as well.
Yeah. Now with the PLI scheme for the PCBs coming out, our endeavor is to do more and more India. Only if we cannot do India, we go outside.
Perfect. Second question of mine is related to the collaboration that you had with the new company. I just wanted to know what different things as R&D they are bringing on table, and what are your future thoughts related to further income? Are you willing to increase the stake in the same company or not?
Our endeavor is always to do manufacturing. Zepco Technologies brings to us a design arm for our clean energy customers who are looking for doing more and more designs out of India. That helps us is a funnel to get our production. These are some of the large customers we already deal with. Some of the future products will be designed by us in association with Zepco.
Number two, they are into, I do not know the exact statistics, one of the key companies making drone motors and controllers. In the same case, we will be doing the manufacturing into the future. That is one of the reasons why we have this close association with them. They also have an EV solution for three-wheelers, which we completely made and designed in India, which we want to see if we can partner with some of the OEMs. Did I answer your question?
Yes, it was clear. I just have one last question. I will join back the queue. As you have said that you are being cautiously optimistic related to revenue guidance, is it possible for you to make us understand, is there any kind of seasonality in sales that takes place? Because from the perspective that last year Q1 was at around INR 200 crore run rate.
At this moment, we are almost INR 340 crore run rate on a quarterly basis. The ARR is almost about INR 110 crore per month. Just wanted to have a check, is there any kind of seasonality? Or else, achieving the 12-month or 14-month average order book guidance, we could have easily thought about doing a top line of INR 1,400 crore, INR 1,500 crore from just a number perspective. It would be great if you could throw some light on that.
Let me put it this way, the order book is strong. We anticipate growth which is there. You have seen in the last three quarters. In Q2, we grew 38% last year. Q3, we grew 31%. Q4, we grew 58%. We are just being cautiously optimistic. I think, and I believe that the growth is there, and like I said, every quarter we will try and update you as the big programs kick in. Some of these programs, there could be delays. We do not want to go out and say that it is going to kick in in June, let us say, it could be August. Because we burnt our fingers a couple of years back doing that. It is all there. We will update as we go.
Just to add a point, there is no seasonality per se , but H2 tends to be a little stronger than H1 [inaudible].
Thank you so much. I will rejoin the queue.
Thank you, Chirag.
A reminder to all participants, please restrict yourselves to two questions. If you have any further questions, kindly rejoin the queue. The next question comes from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Yeah, hi. Good evening, gentlemen, and thanks for the opportunity. Firstly, congratulations on your Q4 performance. The first question that I have is on your Chennai facility, which have become operational. Can you talk about the potential peak revenue that can come out of Chennai factories? Based on your thought on the capacity, et c, when do you think you will have to start think of adding more manufacturing? That's the first question.
Let's put it this way. Being cautiously optimistic on one side, but this factor is already spoken for also. Some of our products are larger in size. We believe that the capacity is getting utilized. But over the period of this year, you will see we always look for asset turns of, I would say 8%-10%, and we continue to be the asset-light model. You can do the math on that. I don't want to say Because it's not a specific product you're making there, it's a multiple set of products. Saying that, we are also setting up two more factories, okay, in the next 6- 12 months.
Okay. And where are you planning to set up these factories?
For export, we are looking at setting up in the same location, which is in Chennai. And the phase II is around 30 km from where we are for the domestic tariff unit. That's in Tamil Nadu also.
Okay. Fair enough. So you're well-sorted as far as manufacturing is concerned. My second question is-
Go ahead.
Yeah. My second question is on the segmental business. You have given a decent color on sector-wise, what to expect from industrial, clean energy, railway, et c. I want to know your take on communication, especially given that you have seen a drop. How do you see this particular segment do in the next year, based on the backlog or discussion visibility that you are having with customers in communication? Thank you.
Yeah, communication has also grown, but it is not grown at a rate like the others. And communication is primarily India. And we have grown at what? What is the number?
53%.
53% in Q4. So that speaks for itself, right? And it is going to grow further. And we are in the hour active communication for the India market, yeah.
I was actually looking it from a full year basis. You have done closer to INR 90 odd crore compared to INR 112. Though it is a small number, but I just wanted to know.
Yes. A lot of that will come in Q3 and Q4. I would say Q4 primarily. That will continue.
Okay. Sure. Thank you very much.
Again, this is in the 5G area, so you know what I mean.
Got it. Thank you very much, and all the very best.
Thank you, sir.
The next question comes from the line of Chetan Kumar from Avendus Spark. Please go ahead.
Good evening, sir. This is Uttam Kumar from Avendus Spark. Most of my questions has been answered, except for on the CapEx front. The first thing is, two factors is something which you had highlighted that it is going to be up and running over the next 6- 12 months. Just wanted to know what kind of CapEx amount are we talking about, because one side we are talking about doubling of revenue over the next three years. What is the overall CapEx which you are trying to set aside for this particular target?
We usually say our CapEx, everything including buildings, and that is around INR 40 crore- INR 50 crore. It could just go over a little bit to be, if like the previous example I said, our factories, what we planned for 12- 18 months was kind of sold off in four months. It may be just preponed a bit, but we still maintain that INR 45 crore- INR 50 crore in there.
These two new facilities which you have stated, is it on and above the brownfield capacity expansion which is happening right now, as mentioned in the PPT?
No, phase I is over. Phase II is what we are building in the brownfield.
Got it, sir. That is all from my side. Thank you.
Thank you, Uttam.
The next question comes from the line of Vipraw Srivastava from PhillipCapital. Please go ahead.
Hello.
Vipraw, we cannot hear you.
One second. Hello, I'm audible now?
Yes, you are.
Right. Sir, quickly on the transport mobility business, which has shown a very upward growth. So obviously, one of my question is that, does [inaudible] Indian business is similar to U.S. business from gross margin side?
Could you repeat? We couldn't hear the last part of your question. I know it's on mobility. Could you repeat the last part of it?
Sir, what I'm saying is the margin profile of your Indian business similar to U.S. business in gross margins?
There'll be some difference for sure, but since we are in mission-critical product lines in rail or in air, so they more than make up for it. So we're not doing consumer or communication that way, right? So that makes up for it.
Right, Sir. And Sir, one more question. Quickly on the clean energy business. Obviously, U.S., that segment, all the stocks in that space are not doing well. There has been IRA funds blocked by Trump. Do you continue to remain optimistic on the clean energy segment?
Yeah. Because we are in the right part of the clean energy business. We are not in rooftop solar. A small part of it is there, but mostly in storage, which is growing at 70% in the U.S. Okay.
So storage and inverters is the product mix, right, for clean energy?
Excuse me.
Storage and inverters. Am I right? That is the product mix for clean energy business.
Storage systems, and we have also got new customers in other. Because of the, what do you call, the data requirements and AI servers, there is a lot of clean energy going in the U.S. with the data centers coming up. So that is why you are seeing a lot of uptick in that, especially in storage.
Right, Sir. And Sir, lastly, the storage mix is for your. This storage which you cater to is for commercial partners. It is not for rooftop owners or homeowners. It is for industrial and commercial partners?
It is industrial and commercial. I mean, not commercial. There is home also, but that is where-
Okay.
...they can actually make use of the solar by storing it, because there's a different price tariff for different times of the day in the U.S.
Sure, Sir. Sure. That's all from my end. Thank you.
Thank you, Vipraw.
The next question comes from the line of Praveen Sahay from P L Capital. Please go ahead.
Thank you for the follow-up. First question is related to your receivable, which has increased to 84 days for a year. Where you are going to see this number to be? Because your mix change is like that, which has actually led to the increase in the receivable days increase. Will it be here or where you will see?
No. Our receivable days have slightly increased from 79- 84 days. But if you look at it, there is a decline in receivable days when you compare it to December 2024. I think between 75 days to this current 85 days is a reasonable range to look at. Depends upon the quarter it changes, but yeah. Overall, if you look at our net working capital days, there has been a marked improvement from 161 days in March 2024 to 124 days in March 2025.
We will try to maintain this.
We will try to improve it, but then nothing prevents the maintenance.
Maintain and internally to improve.
Okay. One clarification, Sir, because one on the expansion part. The new export plant and the brownfield domestic, those are operational or commenced apart from that two new you are expecting?
No, let me clear it. There is one export which is already functional. The brownfield, the second phase is getting started, and we are looking for starting on a new export.
Okay. Fine. Any utilization number if you can share right now?
No. We have always said anytime we hit around the 70% number, we will expand. We will build the buildings. We have got the longest lead time.
Thank you, Sir, and all the best.
Thank you, Praveen.
The next question comes from the line of Ashutosh Parashar from Mirabilis Design. Please go ahead.
Yeah. Hi, Sir. Thank you for the opportunity. Vipin Goel, from Mirabilis this side. Sir, I had two questions broadly on the current quarter only. First was on the mobility execution, since it's a strong execution that we've seen this quarter. I wanted to understand what is the nature of the project which is leading to such a strong execution. If you can give some qualitative commentary on either the nature of the product or the customer or the geography which led to this strong number.
Sir, a lot of this is India, okay? And a lot of this is in rail and aero.
In rail and aero?
Okay, multiple sides. We are in the cabin, we are in the engine and the aero side. Multiple different projects, multiple customers. On the rail side, again, we are in braking, we are in interlocking, we are in the engine controls. So it's well broad-based and diversified in the segment itself.
Got it. Okay. Also a similar commentary you can give on the order intake this quarter, which is about INR 500 crore order intake that we have got. If you could just highlight, I understand that you have already made a commentary that it is largely broad-based, but again, if you can just highlight, let us say, the largest two orders in this intake, either on basis the kind of product or are these for new customers or existing customers?
The largest intake, I would say, is in mobility.
Okay. This is not the two-wheeler EV?
No. When you talk mobility, it is more air and rail.
Okay. Sure. That is it from my side. Thank you.
Thank you, Ashutosh.
The next question comes from the line of Jalaj from Svan Investments. Please go ahead.
Yeah. Thanks for the opportunity again. So this was with regards to the India business specifically. If I understand, the industry itself is growing at somewhere around 30%-35% because of the migration from exports to domestically. But still, our growth has been lagging in that sense. Any specific reason for that? Or are we changing any outlook or the way we are working for at least India business?
India growth last quarter has been 70%.
I am talking more so from a year-over-year complete year. I was looking at those numbers. More so from a maybe a two-year perspective, if you could share your thoughts around that.
Yeah. See, what we are trying to equate is both export and India, and India is growing faster as far as we are concerned, because in the last three years we have worked in India to get these projects to come in. We also need the export. We want to have it, both geographies doing well. Apart from that, 24% of our business is with Japanese customers. Today, what we are looking into the future growth is Europe and GCC.
Does that answer your question, Jalaj?
Jalaj, is that-
Hello.
Yes. Did I answer your question, Jalaj?
Yes. Sir, the second question was on the margins. I understand that we usually talk about the gross margins, but on the EBITDA level or with flowing through, is there a possibility of eventually the operating leverage playing out? Because traditionally in these businesses of EMS, beyond a point we have not seen it playing out, the operating leverage. How should we understand that? Have we reached out to a peak wherein the shifting of from the U.S. facility to India has reached the level of maturity right now? Incrementally, no more shift will happen and the margins are stable, so they are going to be stable here or there is enough lever for there to grow that?
Jalaj, we always look at profitable growth and not growth at any cost. Certain businesses we actually do not do because we cannot achieve the profitable growth. That is why you will see us, even worldwide, we probably have one of the best gross margins there. Then as the top line increases, you will start to see some flow through below that. But today we are investing or getting ready for the future, where some projects, though it is kicking in three or four months later, we need to start training our people to get ready to do that. So there is a lag before the revenue comes through.
On the part of shifting from the U.S. to the India facility, margin keeper from that side, have we reached to an optimum level or there is more scope to it?
No. See, ideally when we sell or do our sales, the ideal situation for us is the U.S. customer, I am talking of export since you are talking on that, U.S. customer coming directly to India. But sometimes they want to stop over in our U.S. facility. The ultimate goal is to get everybody to India, and the U.S. facility is a beachhead.
But today, being in this unique situation, in case the customer is adamant to do it in the U.S., we can do that. But always our goal is to move the products to India. Last year it was a short-term thing where we had moved whatever existing product we did. Actually, we are lucky that we did that. So in case new projects come in the U.S., we can do that in the U.S.
Thank you, sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.
Thank you, Deepak and Nikhil. FY 2025 has been a pivotal year for Avalon, marked by strong revenue growth, margin delivery, and operational improvements, and strategic progress across markets and customer segments. As we step into FY 2026, we remain focused on executing with discipline, scaling responsibility, and investing ahead of growth to capture long-term opportunities. With a robust order book, diversified customer base, expanding infrastructure, and a clear roadmap supported by strategic partnerships, we are well-positioned to build on the momentum and continue delivering sustainable, profitable growth. We thank our investors for their continued support and look forward to updating you on our progress in the quarters ahead. Thank you. Thank you very much.
Thank you, sir. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. You may now disconnect your lines.