Avalon Technologies Q2 FY27 Results Analysis: PAT Jumps 59.5%, Margin Expands 246 bps
Avalon Technologies Ltd's Q2 FY27 numbers came in strong, with revenue of Rs. 525.43 Cr (+37.40% YoY) and PAT growth of +59.50% YoY. Here's a quick read of what worked, what to watch, and what management said.
| Results date | November 12, 2026 |
|---|---|
| Revenue (Q2) | Rs. 525.43 Cr (+37.40% YoY) |
| PAT (Q2) | Rs. 39.84 Cr (+59.50% YoY) |
| EBITDA margin | 12.56% (+246 bps YoY) |
| EPS (Q2) | Rs. 5.96 (+58.90% YoY) |
Quarter Snapshot
Avalon delivered 37.4% YoY revenue growth with EBITDA margin up ~246 bps to 12.56% and PAT up 59.5%, tracking ahead of its FY27 +26-30% revenue guidance path with gross margin inside the guided 33-35% band. The Zollner JV and ~Rs.425 Cr warrant issue add a strategic catalyst, while the promoter reclassification removes a structural overhang. The offset is weak cash conversion (CFO/PAT 0.13x, FCF negative at Rs.(70.25) Cr) with growth funded by a 69.7% rise in borrowings and inventories up 28.7% since March.
Q2 FY27 Expectations vs Results
| Driver | Expected before results | What happened | Verdict |
|---|---|---|---|
| Revenue | "likely ahead (YoY), in line with the guided path" | +37.4% YoY to Rs.525.43 Cr | Played out |
| Gross margin % | "flat-to-slightly-compressing within the guided band" | 34.13% (Q1: 34.66%; Q2FY26: 34.32%) — slightly compressing, inside band | Played out |
| EBITDA margin | "supported by operating leverage" | 12.56% vs 11.97% QoQ, 10.10% YoY | Played out |
| Working capital / cash conversion | "117-day NWC… the differentiators to verify rather than assume" | ~124 days proxy; CFO/PAT 0.13x; inventories +28.7% | Partially |
| Tariff/input shock | "no fresh tariff step-up should be assumed" | Filing silent on tariffs; GM held in band; RM growth < revenue growth — on observable evidence | Played out |
| USD/INR translation tailwind | "translation tailwind for the ~62% US-customer mix" | Filing does not quantify FX contribution | Not observable |
Read our full results preview.
Management Guidance vs Delivery
| What management said | Where | What happened | Verdict |
|---|---|---|---|
| FY27 revenue growth +26–30% | Q1 FY27 earnings call (raised from 24–27%) | H1 +43.1% YoY; Q2 +37.4% | On Track |
| Gross margin 33–35% band | management guidance, Q4 FY26 / Q1 FY27 calls | 34.13% Q2; 34.4% H1 | Met |
| Capex Rs.50–60 Cr FY27 | Q4 FY26 & Q1 FY27 calls | H1: Rs.24.28 Cr PP&E/intangibles (+Rs.55.48 Cr ROU lease additions) | On Track |
| Net working capital 120–130 days | Q2 FY26 earnings call | ~124 days derived proxy (Sep-26); 117 days company-reported at Jun-26 — upper half of band | Met |
| New Chennai plant production from Q2 FY27 | Q1 FY27 earnings call | Not addressed in the filing | Too Early |
| Doubling to ~Rs.1,725 Cr by FY27 | doubling commitment (Q2 FY26 call); "a year ahead" per Q4 FY26 call | H1 Rs.1,009.85 Cr; needs Rs.715.15 Cr in H2 — already secured at the H1 run-rate | On Track |
| Doubling to ~Rs.3,200 Cr by FY29 from Rs.1,603 Cr | Q1 FY27 earnings call | Tracking ahead of the required path | On Track |
| Promoter reclassification considered Nov 12, 2026 | company filing Nov 12, 2026 | Board approved, subject to Reg 31A approvals | Met |
Key Numbers, Quarter by Quarter
| Metric | Q2 FY26 | Q3 FY26 | Q4 FY26 | Q1 FY27 | Q2 FY27 |
|---|---|---|---|---|---|
| EBITDA margin % | 10.10 | 11.5 | 11.8 | 11.97 | 12.56 |
| PAT margin % | 6.53 | 7.7 | 8.4 | 7.20 | 7.58 |
| NWC days | n/d | n/d | 112 | 117 | ~124 (derived proxy) |
| ROCE % | 18.4 | 18.8 | 20.6 | 23.4 | not disclosed |
Key Investment Insights
Key Positives
- Revenue grew 37.4% YoY to Rs.525.43 Cr and 8.5% QoQ; H1 FY27 revenue up 43.1% YoY to Rs.1,009.85 Cr
- EBITDA grew 71.0% YoY to Rs.66.02 Cr with margin expanding ~246 bps YoY to 12.56%
- PAT grew 59.5% YoY to Rs.39.84 Cr; basic EPS rose to Rs.5.96 from Rs.3.75
- Gross margin held at 34.13%, inside the guided 33-35% band, with raw material cost growth (+28.0% YoY) lagging revenue growth (+37.4%)
- H1 revenue of Rs.1,009.85 Cr means the ~Rs.1,725 Cr FY27 doubling target needs only Rs.715.15 Cr in H2, already secured at the H1 run-rate
- Zollner JV (Zollner 51% / Avalon 49%) incorporated Oct 19, 2026, with a ~Rs.425 Cr preferential warrant issue to Zollner pending EGM approval
- CFO turned positive at Rs.9.51 Cr in H1 FY27 vs Rs.(10.17) Cr in H1 FY26
Risk Factors
- CFO/PAT was 0.13x in H1 FY27 and FCF was negative at Rs.(70.25) Cr, with growth financed by Rs.129.52 Cr of current borrowings
- Inventories rose 28.7% since March to Rs.596.33 Cr and the working-capital proxy lengthened to ~124 days from 117 days at June 2026
- Borrowings rose 69.7% to Rs.311.28 Cr, lifting net debt/equity from 0.16 to 0.22
- Standalone PAT declined 15.1% YoY to Rs.21.02 Cr with standalone EBITDA margin at 9.96% vs 12.15%, as consolidated growth was subsidiary-led
- Effective tax rate rose to 27.10% from 25.62% YoY on a deferred-tax swing
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Disclaimer: This results analysis is published for educational and informational purposes only. It is not investment advice, not a recommendation to buy, sell or hold any security.