Avalon Tech (AVALON)
Fast GrowerFairStock Score: 23/100 — RISKY
Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹1,940.8 |
| Market Cap | ₹12,966.83 Cr |
| P/E Ratio | 97.09 |
| ROCE | 12.76% |
| ROE | 11.84% |
| Dividend Yield | 0% |
| Profit Growth | 139.21% |
| Debt/Equity | 0.3 |
| Sales Growth | 181.09% |
| Promoter Holding | 44.43% |
| 52-Week Range | ₹777.3 — ₹2,422 |
| Sector | Electrical Equipment |
| Book Value | ₹108.03 |
Strengths
- Sales growth of 48.67% shows strong demand
- Low debt-to-equity of 0.25 provides financial stability
- Piotroski F-score of 7/9 indicates good financial health
- Promoter holding of 44.43% aligns interests with minority shareholders
- Recent quarter profitable with ₹33 Cr net profit on ₹418 Cr sales
Concerns
- Extremely high valuation at P/E of 70.82 and P/B of 10.62
- Moderate ROE of 11.84% and ROCE of 12.76% do not justify the premium
- Profit growth (35.89%) is slower than sales growth (48.67%), indicating margin pressure
- No dividend yield, so shareholders get no cash return while waiting
AI Analysis
Let me start with what I like: Avalon Tech is growing fast, with sales up 48.67% and profits up 35.89%. The balance sheet is conservative, with debt-to-equity at just 0.25, and a Piotroski F-score of 7 out of 9 tells me the company's financial health is solid. Promoters hold 44.43%, which aligns their interests with mine. But then I stop and look at the price. At ₹1,089.15, I am being asked to pay 70.82 times earnings and 10.62 times book value. For that premium, I expect a business with extraordinary returns on capital. Instead, ROE is 11.84% and ROCE is 12.76% – respectable, but nowhere near the level that justifies such a multiple. The latest quarter shows margins of just 7.9% (₹33 Cr profit on ₹418 Cr sales), and profit growth is lagging sales growth, a sign of inefficiency. The stock has fallen from its 52-week high of ₹2,001.45, but that does not make it cheap; it means the market is repricing enthusiasm. There is no dividend yield, so my returns depend entirely on this growth continuing. Even on a PEG basis, at 1.68, the growth is not bargain-priced. Graham would say there is no margin of safety. This looks like a fine company, but I cannot call it a fine investment at this valuation. I would wait for a much lower price or clear evidence that returns on capital are improving before committing my money.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer