| Avalon Technologies Limited | ||||||
| 'Crisil A / Stable / Crisil A1 ' assigned to Bank Debt | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has assigned its ‘Crisil A/Stable/Crisil A1’ ratings to the bank facilities of Avalon Technologies Ltd (ATL).
The ratings reflect the company's robust business risk profile, driven by its established position in manufacturing electronic systems, diversified product portfolio with long lifecycles, extensive promoter experience, and strong relationships with reputable clients, resulting in stable revenue.
The company's revenue is primarily driven by box build solutions, which account for approximately 50% of its total turnover while the remaining 50% comes from a range of other components, including Printed circuit boards (PCBs), cable, wire harness, metal, plastic, and magnetics. In the first three quarters of the current fiscal, revenue was Rs 1,140 crore, representing 48% year-on-year growth, aided by healthy execution and a growing order book across three major verticals: clean energy, industrial, and mobility. The operating margin has remained stable at around 11%, consistent with fiscal 2025 levels. Crisil Ratings notes the shift towards US manufacturing in fiscal 2026 to meet in-house requirements from customers and prototyping needs.
The ratings also reflect ATL's proven track record and the extensive industry experience of its promoter, vertically integrated solutions with long product lifecycle and dual shore model, diversified end-user industry base and growing order book, and strong financial risk profile arising from healthy capital structure and debt protection metrics. These strengths are partially offset by the company's working capital-intensive operations, import dependence for essential raw materials and sensitivity to exchange rate fluctuations, along with vulnerability of its operating margin to end-customer segment. |
Analytical approach Crisil Ratings has combined the business and financial risk profiles of ATL and its subsidiaries.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Proven track record and extensive industry experience of the promoter: With over three decades of experience in the electronics manufacturing services (EMS) industry, ATL has established itself as a seasoned player with a proven track record. The company has built strong relationships with reputable original equipment manufacturers across the US and India, providing a stable foundation for its business. A diverse product portfolio with long lifecycles has enabled ATL to secure a steady stream of repeat orders and recurring revenue. The customer base is well-diversified, with the top three clients accounting for less than 25% of the open order book as of December 2025. The promoter’s experience of over three decades in the EMS industry has been a significant factor in the company’s success as it has provided ATL with a deep understanding of market dynamics, allowing the company to establish enduring relationships with both suppliers and customers.
Vertically integrated solutions with long product lifecycle and dual shore model: The company offers a comprehensive, one-stop-shop solution for box-build manufacturing, encompassing a wide range of services, including PCB design and assembly, new product development, cable assembly, wire harnessing, sheet metal fabrication, injection-molded plastics, magnetics, testing, and logistics. This integrated approach enables seamless execution and accelerates time-to-market for customers. The products are designed to have a long lifespan of 10-15 years, fostering strong customer retention that is reinforced by the average business relationship of around 9 years with its top customers.
The company's strategic dual-shore manufacturing presence, with a majority of operations in India (77-80%) and a sizeable presence in the US (20-23%), provides customers with the flexibility to localise production. This flexibility allows customers to optimise costs, be closer to end markets and comply with regulatory requirements. ATL's business model ensures agility, scalability, and rapid response times, catering to both global and domestic demand. By balancing its manufacturing footprint across two geographies, ATL is well-positioned to respond to evolving customer needs while navigating potential margin pressures, which remain monitorable.
Diversified end-user industry base and growing order book: ATL has longstanding relationships with its customers and suppliers. It caters to a diversified end-user industry base that includes mobility, transportation, industrials, communication, clean energy, and medical. This allows the company to overcome the risk of slowdown in a particular industry and achieve higher growth. Order book of ~Rs 2,016 crore as on December 31, 2025, to be executed over the next 12-14 months, provides revenue visibility for the medium term. Capital structure has been healthy due to lower reliance on external funds, yielding gearing of 0.23 time and total outside liabilities to adjusted networth ratio of 0.68 time as on March 31, 2025. This, along with high profitability, led to robust debt protection metrics, with interest coverage and net cash accrual to total debt ratios of 7.21 times and 0.65 time, respectively, for fiscal 2025. The metrics are expected to remain at similar levels over the medium term. |
Key Rating Drivers - Weaknesses Working capital-intensive operations: Gross current assets were 226-259 days in the three fiscals ended March 31, 2025, due to high receivables and inventory levels, which remain monitorable. Receivables increased from 80 days as on March 31, 2023, to 105 days as on March 31, 2025, while inventory reduced from 140 days to 126 days.
Import dependence for essential raw materials and sensitivity to exchange rate fluctuations: The company has significant reliance on imports to meet its raw material requirement, with 65-70% sourced from South East Asian countries. This exposes its operations to supply chain disruptions caused by any bottleneck or geopolitical risk. Raw material accounts for a sizeable chunk of the production cost and any sharp fluctuation in foreign exchange rates could impact profitability.
Vulnerability of operating margin linked to end-customer segment: In fiscal 2024, operating margin declined to 7.7% from 12% in fiscal 2023 due to customer destocking and rebalancing of their inventory. This impacted ATL’s topline in fiscal 2024 at its US operations where it also faces higher production costs compared to its Indian operations. Margin was also impacted due to higher employee costs. To mitigate the softness in US demand witnessed in fiscal 2024, the company had shifted its focus towards Indian customers in fiscal 2025. Presently, ATL is also expanding its geographical footprint across South East Asian nations. Slowdown in any of the end-customer segment, as seen in the past, or delay in capital expenditure (capex) by one or more of the top five clients, could significantly impact growth prospects. While the company recovered its operating margin in fiscal 2025 to 11%, resilience to customer-driven decisions remains monitorable. |
Liquidity Adequate Utilisation of working capital limit of Rs 230 crore averaged 23% in the past 12 months. The limit comprises packing credit limit with 60-65% cash credit interchangeability feature. Cash accrual is expected to be over Rs 125 crore in fiscal 2026 and will aid liquidity in the absence of any term debt obligation over the medium term.
Current ratio was healthy at 2.22 times as on March 31, 2025. Moderate unencumbered cash (in the form of cash and mutual funds cumulatively) stood at Rs 100 crore as on December 31, 2025. Strong gearing and moderate networth support financial flexibility and provide the financial cushion against any adverse condition or downturn in the business. |
Outlook Stable Crisil Ratings believes ATL will continue to benefit from the extensive experience of its promoter and established relationships with clients. |
Rating sensitivity factors Upward factors
Downward factors
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About the company ATL (formerly, Avalon Technologies Pvt Ltd) was incorporated in 1999 in Chennai, Tamil Nadu. Subsequently, the company was converted from private limited company into a public limited company in July 2022. The company has three subsidiaries, two of which are incorporated in India and one in the USA. ATL is promoted by Mr Kunhamed Bicha (Chairman and Managing Director). The company is an EMS provider that assembles PCBs, manufactures custom cable, wire harness, metal, plastic, and magnetics components, and provides end-to-end box-build solutions.
The group has 15 manufacturing units across India and USA (12 in Chennai, 2 in Bengaluru, and 1 in Atlanta, USA). ATL’s equity shares are listed on both National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). |
Key financial indicators Consolidated numbers
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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Criteria Details
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