Avantel Q4 FY21 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
N/A
Order
Yes
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- The company expects continuous growth in sales and revenue over the next few years.
- Aim to achieve sales of around 100 crores annually for the next two to three years.
- Current order book stands around 150 crores, with additional orders expected by July-August.
- Turnover growth is expected, but revenue will be uneven across quarters: 30% of turnover early in the year and 60-70% in later quarters (Q3 and Q4).
- Long-term investments made 3-6 years ago are now yielding returns; growth expected to sustain for at least the next 3 years.
- Focus on expanding into new markets and sectors including medical electronics, IoT, cloud computing, and nanosatellites.
- Management continues active pursuit of acquisition opportunities and diversification to complement existing business.
- Profitability is expected to improve with emphasis on shareholder value without disturbing current company operations.
See what Avantel management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no mention of any current or future fundraising through debt or equity in the provided transcript of the AGM.
- The focus is on business expansion, identifying new opportunities, and sustaining profitability.
- Discussions revolve around operational challenges, order book, R&D, and diversification efforts.
- Cash reserves are mentioned (around 43 crores in cash and bank balance), but no plans for raising capital are indicated.
- The company is managing working capital and dealing with supply chain and raw material challenges without referencing any external fundraising.
- Overall, no specific plans or announcements related to debt or equity fundraising were disclosed in the meeting.
See what Avantel management said on order book — free account, 30 seconds.
Capex plans
Yes- The company is exploring investments in new areas such as medical electronics, IoT, cloud computing, and nanosatellites.
- Planned investments in these new areas are around ₹40-50 crores, possibly up to ₹60 crores.
- The investment decisions will be based on viability and expected returns over the next 5-6 years.
- Existing R&D spend is about ₹6-7 crores annually, with potential to increase depending on order inflow.
- Fixed asset base increased by around ₹5.5 crores recently to add capacity.
- No specific commitments to expansion projects yet; efforts are focused on diversification and complementing existing strengths without disturbing current operations.
- Cash reserves of approximately ₹43 crores are available, with options to invest in expansion or diversification.
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Margin guidance
Category 3- The company expects to do very well in the coming financial year (21-22) despite a volatile and uncertain market.
- Profitability and bottom line are projected to improve next year compared to the current year.
- Growth guidance beyond three years is difficult due to the volatile, uncertain, complex, and ambiguous (VUCA) market environment.
- The company aims for continuous growth, targeting around 100 crores in annual revenue in the next couple of years.
- Profit centers like CPS are expected to perform very well in the next financial year.
- New business orders and continued R&D efforts are expected to sustain and contribute to profitability.
- The focus remains on shareholder value without disturbing the company’s current status.
Order book
Yes- As of the latest update, Avantel has around ₹150 crore worth of orders on hand.
- The company expects additional orders soon, notably a prestigious order from the Indian Navy for HF communication systems worth approximately ₹100 crore.
- Orders include supply of 60 to 6300 locomotives for the real-time train tracking system project, in collaboration with L&T.
- Execution of the Indian Navy HF order is pending, with production expected to start after qualification testing completing around October 2022, aiming to finish by February 2023.
- The company is also anticipating initial development and production orders related to multiplayer helicopters for the Indian Navy, connected to Lockheed Martin.
- Discussion indicates continuous efforts to secure and execute large orders, with expected growth in order book over the next two to three years.
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