Avalon Tech (AVALON)

FairStock Score: 23/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

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.

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Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer