Avalon Tech block deal: Promoters divest 6% stake worth Rs 871 crore

Avalon Technologies witnessed a Rs 870.6 crore bulk deal on the BSE on Wednesday, with three promoter entities selling a combined 40.08 lakh shares, or 6% of the company's equity. Kotak Mahindra Mutual Fund bought 24.02 lakh shares, representing about 3.6% stake, at Rs 2,171 apiece for Rs 521.38 crore, according to BSE bulk-deal data.

KBS Family Trust sold 13.36 lakh shares at Rs 2,173.35 apiece, while Bhaskar Srinivasan and BBS Family Trust each sold 13.36 lakh shares at Rs 2,171.03 and Rs 2,171.04, respectively. The three transactions together were valued at Rs 870.61 crore.

Avalon Technologies shares ended Wednesday's trading session at Rs 2,294.50 apiece, down 0.49% from the previous close of Rs 2,305.75. The stock traded in a range of Rs 2,171 to Rs 2,316.55 during the session.

The company's market capitalisation stood at Rs 15,346.14 crore at the close.

As of the end of the June quarter, promoter entities collectively held a 44.39% stake in Avalon Technologies, according to stock exchange data. Bhaskar Srinivasan held 9.39%, while BBS Family Trust and KBS Family Trust each owned 3.02%. Public shareholders held the remaining 55.61%.

Nomura retains Buy call, raises target price

Earlier this month, Japanese brokerage Nomura raised its target price on Avalon Technologies to Rs 2,767 from Rs 2,211, while retaining its Buy rating.

Nomura's revised target followed Avalon's entry into a joint venture with Zollner Elektronik AG, an unlisted European electronics manufacturing services company, for PCBA, box-build and system integration manufacturing in India.

The joint venture intends to serve customers across geographies and sectors including healthcare and life sciences, test and measurement, rail and other industrial verticals.

Zollner will initially hold a 51% stake in the joint venture. Three years after commercial production starts, Avalon will have an option to acquire an additional 2% stake, subject to certain conditions, which would make it the majority shareholder with a 51% stake in the JV.

For Avalon, Nomura said the partnership adds global customers, supports expansion into Europe and helps the company enter two new verticals — healthcare and life sciences, and test and measurement — which are characterised by high-complexity manufacturing and long lifecycle products.

Nomura retained its target P/E multiple of 45 times and rolled forward its valuation period to December 2027F from September 2027F earlier, resulting in the higher target price of Rs 2,767. The brokerage said the stock was trading at 35 times FY29F EPS.

About Avalon Technologies

Avalon Technologies is an electronic manufacturing services (EMS) company with more than 25 years of manufacturing experience. It provides end-to-end box-build solutions, spanning printed circuit board design and assembly to the complete box-build of electronic systems. The company has manufacturing facilities in India and the US and operates a global delivery model. Its customers span sectors including clean energy, transportation, industrials, communication and medical devices.

Disclosure: This article has been written by Kumar Gaurav, who is not a SEBI-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here
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