Hope you are doing well.
Often I have across a stock by the name of Avantel Ltd. While I have always liked the numbers, I couldn't pull the trigger because of a lack of understanding about the business and the potential.
Unfortunately for me, the stock has done quite well.
The company works in a niche space and primarily supplies to Aerospace and Defense sectors. Below, we have shared notes from the Brickwork credit rating report on the company.
Hope you find the details useful in your search of investment opportunities.
It's a minerals processing company, largest in its segment, has captive raw material sources, grown PAT by ~300% in the last few years, de-leveraging balance sheet, 2nd generation promoters and available at only ~6 times post-tax earnings.
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Avantel - Notes from Sep'22 Brickwork Credit Rating report
- The company has been listed on BSE since January 2001
- The company has its registered office, manufacturing and R&D facilities at Visakhapatnam, Andhra Pradesh
- Dr. A. Vidyasagar is the Chairman & Managing Director of the company
- The founder and present Chairman & MD, Dr. A Vidyasagar is technically qualified and has an extensive industry experience of over three decades
- The company provides customized wireless and satellite communication (SATCOM) solutions and products. The company manufactures wireless front-end, satellite communication, embedded systems, signal processing devices and provides network management, software development and related customer support services
- The company's SATCOM products are proprietary in nature
- The company mainly operates in Aerospace & Defense sector and holds Defense Industrial Licenses issued by government and its customers mainly come from the strategic sector such as space, defense, transport and telecommunications
- The company primarily supplies to defense and defense research organizations coming under Ministry of Defense which has over 80% of revenue share
- Furthermore, the company's primary revenue stream continues to be SATCOMs which contributes to almost 100% of the revenue and the revenue concentration is expected to continue over the short term
- However, the orders from the railways are expected to diversify the revenue stream going forward
- The company maintains healthy and long term relationships of over two decades with a reputed clientele that includes Indian Army, Indian Railways, Indian Airforce, Indian Navy, ISRO, DRDO, Goa Shipyard Limited, The Boeing Company, Larsen & Toubro Limited (L&T), etc.
- Avantel's business is tender based and hence the company remains susceptible to the inherent risk associated with such business. However, the established track record of the company and being the preferred supplier to the reputed clientele for the last many years, help to get repeat orders
- The company has an unexecuted order book of ~Rs 230 Cr to be executed over the next two years inclusive of a major order worth ~ Rs 125 Cr
- Company's growth plan includes the set-up of a new corporate office and a new manufacturing unit by FY 24
Disclaimer: This is not a recommendation to buy/sell Avantel. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
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Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No