Avalon's margin improves as revenue growth outpaces expense growth
Consolidated net profit rose 14.25% QoQ, though higher interest and depreciation offset part of the operating gain.
Filed 12 Nov 2026, 22:39 IST · after market close · Avalon Technologies Ltd (AVALON)
Key takeaways
- Consolidated revenue rose +8.47% QoQ while expenses grew +7.72%, widening operating margin by 0.61 percentage points.
- Net profit increased +14.25% QoQ, helped by a 1.36 percentage-point decline in the tax rate despite interest costs rising +19.94%.
- Avalon's 12.57% operating margin was 1.06 percentage points above the 11.51% median for 231 Industrials peers reporting the quarter.
Price around the results
Revenue growth translated into a wider operating margin
Avalon's consolidated revenue increased +8.47% QoQ to Rs 525.43 cr, while expenses grew +7.72% to Rs 459.40 cr. Since revenue grew faster than expenses, operating margin widened by 0.61 percentage points to 12.57%. The margin was 1.06 percentage points above the 11.51% median among 231 Industrials peers that had reported the quarter.
Higher below-operating costs limited the profit conversion
Interest expense rose +19.94% QoQ and depreciation increased +16.20%, partly offsetting the improvement in operating profit. Net profit still rose +14.25% to Rs 39.84 cr, with the tax rate declining by 1.36 percentage points to 27.10%. Other income was 5.00% of pre-tax profit, so it was a modest contributor to reported earnings rather than the main driver.
Order book and manufacturing expansion were the main business updates
Management said Avalon's order book stood at Rs 2,367 cr and was executable over an average period of 14 months. The company told investors that long-term contracts were executable over periods ranging from 14 months to three years. Management also said Avalon had signed an MOU with the Tamil Nadu government for 25 acres and had formed a strategic joint venture with Zollner Elektronik AG for advanced electronics manufacturing in India.
Quarterly trend shows an initial margin recovery
The operating margin improved from 11.96% in Q1FY27 to 12.57% in Q2FY27, while net profit rose from Rs 34.87 cr to Rs 39.84 cr. The results were filed after market close on 12 Nov 2026, so there is no market reaction to assess yet.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹525 cr | ₹484 cr | +8.47% |
| Other income | ₹3 cr | ₹3 cr | -3.19% |
| Expenses | ₹459 cr | ₹426 cr | +7.72% |
| Operating profit | ₹66 cr | ₹58 cr | +13.92% |
| Operating margin (%) | 12.57% | 11.96% | — |
| Interest | ₹4 cr | ₹3 cr | +19.94% |
| Depreciation | ₹10 cr | ₹9 cr | +16.20% |
| Profit before tax | ₹55 cr | ₹49 cr | +12.11% |
| Tax | ₹15 cr | ₹14 cr | +6.78% |
| Net profit | ₹40 cr | ₹35 cr | +14.25% |
| EPS (₹) | ₹5.96 | ₹5.22 | +14.18% |
Operating margin of 12.57% compares with a Industrials sector median of 11.51% across 231 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.77% | -2.16% |
Volume on the results session was 1.58× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Expansion
- Avalon signed an MOU with the Tamil Nadu government for 25 acres to support advanced electronics manufacturing growth.
New orders
- Avalon's order book was INR 2,367 crore and was executable over an average period of 14 months.
- Long-term contracts were executable over periods ranging from 14 months to three years.
New initiatives
- Avalon and Zollner Elektronik AG formed a strategic joint venture for advanced electronics manufacturing in India.
Competition
- Avalon describes itself as one of the leading EMS players in India.
What to watch
- Whether operating margin holds above 12.57% after the Q2FY27 improvement.
- Whether interest expense moderates from the Q2FY27 increase of 19.94% QoQ.
- Progress against the Rs 2,367 cr order book, including contracts executable over 14 months to three years.