Hi, thank you, Alba. Good afternoon, everyone, and a warm welcome to the Q1 FY27 earnings call of Avalon Technologies.

To take us through the results today, we have with us from the management: Mr. Kunhamed Bicha, Chairman and Managing Director; Mr.

Suresh VR, Chief Financial Officer; Mr. Shriram Vijayaraghavan, Chief Operating Officer; and Mr.

Venthy Venkatesh, Chief Sales Officer. Mr.

Bicha will give us an overview of the business performance and will be followed up by Mr. Suresh's remarks on the financial performance, post which we'll open up the floor for Q&A.

As we move forward, it is important to bear in mind that any forward-looking statements made during the call are subject to potential risk and uncertainties, both known and unknown. Now without any further delay, I'll hand over the floor to Mr.

Bicha for his initial remarks. Thank you, and over to you, sir.

Thank you, Tanay. Good afternoon, ladies and gentlemen.

A very warm welcome to Avalon Technologies' Q1 FY27 earnings call. I want to begin by thanking our investors for your continued trust and support.

Your confidence has enabled us to stay focused on what really matters: consistent execution, disciplined investment, and building a long-term profitable business. We are grateful for your trust, and our commitment to deliver has only grown stronger.

Q1 FY27 was another strong quarter. This marks our eighth consecutive quarter of improvement in performance and growth across key metrics.

What stands out is the quality and the breadth of this growth. Our revenue growth is well diversified across geographies and industry verticals.

Our profitability metrics have improved. ROCE has moved up to 23.4%, reflecting that we are scaling with discipline.

Net working capital has improved, and our order book continues to provide good visibility on quarters ahead. Our three growth engines—our existing business, new program wins, and our expanding opportunity pipeline—are all gaining momentum together.

Based on this strong momentum across our business and the visibility we have on programs ramping through the year, we are revising our FY27 revenue growth guidance upward from 24% to 27% to 26% to 30%. Moving to the financial highlights: Revenue for Q1 FY27 was ₹484 crores, up 50% year-on-year from ₹323 crores in Q1 FY26.

Q1 revenues are marginally ahead of Q4 FY26, a positive start for FY27. During the quarter, India contributed 41% of the revenue, and export business contributed 59%.

India business grew 53% year-on-year, and export business grew 48% year-on-year, with both geographies contributing to the growth. Now on industry vertical revenue contribution: Industrial contributed 32% of our revenues, growing 52% year-on-year.

Mobility contributed 25%, growing 36% year-on-year. Within mobility, rail accounted for approximately 15% and aerospace 8%, growing 30% and 47% respectively.

Clean energy contributed 29%. Our gross margins for the quarter came in at 34.7%, within our guided range of 33% to 35%.

EBITDA margins came in at 12%, up from 11.8% in Q4 FY26, reflecting continued operating leverage as revenues grow. Profit after tax was ₹35 crores with a PAT margin of 7.2%, a meaningful improvement year-on-year.

As of June 30, 2026, our order book grew 23.4% year-on-year to ₹2,208 crores with an average execution period of 14 months. Long-term contracts with execution timelines ranging from 15 to 36 months stands at ₹1,256 crores.

Order book growth remains well diversified across industry verticals and geographies. Net working capital days improved to 117 days in June 2026 to 142 days versus 142 days in June 2025, an improvement of 25 days year-on-year.

Within this, inventory days improved from 104 days to 94 days. Receivable days reduced by 13 days and payable days improved by 2 days over the same period.

Asset turns are at 9.9x, and return on capital employed stands at 23.4%. India manufacturing operations, which serves both domestic and global customers, accounted for 72% of our revenue in Q1 FY27, delivering healthy profitability at an EBITDA margin of 16.7% and a PAT margin of 11.1%.

US operations contributed the remaining 28%. Moving on to our US operations: Losses in US manufacturing has continued to narrow, coming in at approximately ₹4 crores in Q1 FY27.

Our US manufacturing plant has a clear and deliberate role. It is where new customers come in, validate our capabilities, and get comfortable with Avalon as a partner.

Once that comfort is established, production progressively transitions to India manufacturing, where customers benefit from our cost structure, depth of capabilities, and scale. Our manufacturing presence in both geographies gives customers the flexibility to start in the US or come directly to India, and we are well-positioned to support both.

As India manufacturing continues to scale over the coming years, we expect US manufacturing contribution to naturally settle around 20% of our total revenue. On revenue guidance: We had previously committed to double revenues from FY24 to FY27, a target of approximately ₹1,734 crores.

Our trailing 12-month revenue have already crossed that milestone, nearly a year ahead of our commitment. As highlighted earlier, reflecting on the strong Q1 performance, we are now focused on the next doubling from ₹1,603 crores in FY26 to approximately ₹3,200 crores in FY29.

The products we manufacture and the verticals we build are long term in nature. Program life cycles run for years, sometimes decades.

Our customer relationships deepen over time and our revenue compounds accordingly. We encourage you to evaluate our progress over a multi-year period.

That is how we manage this business, and that is the lens through which our strength, performance, and value will most meaningfully be perceived. Now moving to our key growth drivers: Our existing business continues to provide a strong and steady foundation with long product life cycles, mission-critical programs, and recurring revenues across rail, aerospace, industrials, clean energy, and communication.

On new business wins: The programs we have been building for the last two or three years are now progressing well. Aerospace cabin subassemblies are moving towards volume.

Production of locomotive engine subsystems is underway. The Kavach anti-collision system is on track for commercial production.

On semiconductor equipment: We have increased our allocation with one of our world-leading wafer fabrication equipment suppliers, expanding from power box and subassemblies into other products, with production ramping over the next few quarters. In aerospace, we have secured incremental box build business with a leading aerospace company, further strengthening our engagement in the export market.

On the opportunities pipeline: We continue to see a healthy, expanding set of opportunities across geographies and verticals. Southeast Asia and Europe continue to add a new dimension to our geographical reach.

All three growth engines are gaining momentum together. In our manufacturing footprint: Our new manufacturing plant focused on domestic demand in Chennai is now complete and will commence commercial production from Q2 FY27.

As we deepen our presence in semiconductor equipment and advanced electronics, the need for world-class infrastructure becomes increasingly important. We are in the process of acquiring a large parcel of land in Chennai that will support Avalon's growth over the next decade, catering to both domestic and export opportunities.

We shall share more details as it crystallizes. We are now building the organization for the next phase of growth.

We are investing in leadership, process automation, IT systems, and AI-enabled capabilities across functions. Some of these investments are being made now, ahead of the growth.

As I close, let me offer a broader perspective: Global supply chains are being realigned. Customers are looking for reliable manufacturing partners beyond traditional geographies.

India is emerging as a credible and competent destination. We are well-placed in this environment.

Avalon is building a global integrated electronics manufacturing business focused on complex box build solutions for mission-critical applications across high-growth industries. Our continued goal is to build an enduring institution that customers trust, that is deep in engineering capability, and that is built to last.

We remain committed to efficient capital allocation, strong governance, disciplined execution, and of course profitable growth. With that, I hand over to our CFO, Suresh VR, for a detailed overview of our financial performance.

Thank you.

Thank you, KB. Good afternoon, everyone.

Let me take you through the financial performance in detail. Revenue for Q1 FY27 was ₹484 crores, up 49.8% year-on-year from ₹323 crores in Q1 FY26 and up 0.9% sequentially from ₹480 crores in Q4 FY26.

Our average revenue growth over the last eight quarters has been 46%. Box build contribution has increased from 44.5% in FY22 to 59.9% in Q1 FY27, reflecting our continued focus on complex, high-value manufacturing.

Gross margin for Q1 FY27 was ₹168 crores at a margin of 34.7%, within our guided range of 33% to 35%, representing year-on-year growth of 46.3% from ₹115 crores in Q1 FY26. EBITDA for Q1 FY27 was ₹58 crores with a margin of 12%, up from 9.2% in Q1 FY26 and 11.8% in Q4 FY26, reflecting operating leverage as revenue scale.

Adjusting for the tariffs pass-through impact, our EBITDA margin would have been approximately 0.9% higher. PAT for Q1 FY27 was ₹35 crores with a margin of 7.2%, up 145.3% year-on-year from ₹14 crores in Q1 FY26.

We continue to invest in talent, capacity, and inventory to support upcoming growth in new programs. These initiatives strengthen our foundation for long-term growth and are expected to enhance operating efficiency as business volumes continue to scale.

Moving on to the balance sheet: Net working capital improved to 117 days in June 2026 from 142 days in June 2025, an improvement of 25 days year-on-year. Within this, inventory days improved from 104 days to 94 days.

Trade receivable days reduced from 87 days to 74 days. Trade payable days improved from 49 days to 51 days.

On a sequential basis, net working capital moved from 112 days in March 2026 to 117 days in June 2026. Cash flow from operations was positive at ₹32 crores in Q1 FY27, an improvement from ₹16 crores in Q4 FY26.

As of June 30, 2026, total debt was INR 195 crores with cash and investments of INR 171 crores, resulting in a net debt position of INR 24 crores. Net debt-to-equity ratio stands at 0.03, a comfortable position.

CapEx for Q1 FY27 was ₹16 crores. Asset turns remain strong at 9.9x.

Return on capital employed improved to 23.4% from 10% approximately two years ago, a consistent and meaningful improvement. With improved business visibility, we have revised our FY27 revenue growth guidance upwards to 26% to 30% from the earlier guidance of 24% to 27%.

To summarize, Q1 reflects continued progress across our key operating and financial metrics, demonstrating the strength of our execution. As we move forward, our focus remains on delivering sustainable, profitable growth, improving operational efficiency, and strengthening long-term customer relationships.

With that, I request the moderator to open the floor for questions. Thank you.

good evening, sir. Congratulations for a great set of numbers.

My first question is on long-term steady-state gross margins. We have been historically talking about 33% to 35% kind of margins.

Just as we think about some of these newer businesses like semiconductor equipment and the power modules and Kavach that we are working on, so as it scales up, how should we think about structural impact of these new businesses on margin profile? Do you think are these businesses inherently higher on the margin curve, and any scope for margin improvement?

That's my first question. I have a follow-up.

Thank you, Santosh. That's an interesting question.

If you look at the last five years or so, we've always maintained this range. Sometimes we're a little bit higher and sometimes a little bit lower, but this is a comfortable range.

Saying this, certain set of our industries and products have much higher margins and certain industries have lower margins. What you're seeing is a blended rate.

As you see the higher margin will kick in, you will see some difference. As of now, this right is at 33% to 35% with a few quarters being up or down.

Got it. There is scope for improvement in the long run, but as of now you are maintaining at 33% to 35%.

Is that the

takeaway? That's a right prediction as you very well know it.

Yeah.

Got it. My second question is on the cost structure below the gross margin line items.

Here we have been talking about roughly 50-50 split between fixed and variable costs. My question here is, given the strong revenue growth and the kind of ongoing investments that we have in the manufacturing footprint that you mentioned in the opening remarks, at what stage do you think some of these fixed costs become semi-variable in nature, and what would be the implication on operating leverage over the medium term, maybe for FY27 and FY28?

Hi, Santosh. Suresh here.

We maintained

that between 45% and 50% of the expenses below the gross margin are semi-fixed or fixed in nature. Most of the expenses are semi-fixed in nature.

What we believe is, with scale in revenue, with growth in revenue, we believe the operating leverage will continue to play out. If you look at our India manufacturing business, it has delivered an EBITDA of 16.7%.

It is a continuing delivery in terms of profitability over the last few quarters. We expect the operating leverage to play out.

We did not give any particular guidance per se for EBITDA margins, but otherwise I would add to what KB said that we consistently maintain our gross margin percentage in the range of 33% to 35%. We believe we can continue to do that.

Thank you. Just one last question.

Some of the peers have recently spoken about opportunities in the data center space and ramping up business starting from FY27. Could you share your perspective on this particular opportunity?

Are you currently in talks with any of the potential customers, and also where do you see yourself positioning within this value chain? Will it be mostly the servers or rack systems or power management?

Any thoughts on that?

As Santosh, though one piece is the world is going through a supercycle in power, we have the HVDC systems and all that. We are playing with some of the leaders in the starter production with a couple of them.

That's going to be a part of that. Saying that, we're also working with multiple customers who supply power, off-grid power into the data centers, okay, and that is bound to grow.

Also, now in the future, you will see us work more towards the rack and the cooling systems, okay, which we've not won the business yet, but we're still working towards that. Of course, all this growth comes with the semicon industry, okay, equipment industry.

We're well-positioned for that in the near future. We are not going to make server boards as of now.

Not saying that we won't do that in the future. Anything around it, which is probably the fastest-growing element, we intend to play, and we are playing in some of those areas.

Did that answer your question, Santosh?

Absolutely. Thank you very much, sir, and all the very best.

Thank you, Santosh.

Hi, sir. Thanks for the opportunity and congrats on a great set of numbers.

Sir, first question is on the two segments: HVDC and semi-SPE. Where are we in terms of the order win cycle?

When should we expect that to come through for us this year? Second is on the clean energy side, we did have seen a very strong growth in this quarter on a y-o-y basis.

Is there any new customer addition, or it is more from higher share of business from the existing customers? If you can throw some more light there.

Yeah. On the first piece, the full revenue is not started, but revenue has started for both the sectors, okay, for HVDC as well as semicon equipment.

Revenue has started, but it will gradually grow. It is not a switch on and off.

Because there are multiple systems, multiple products, it's started, okay? It started this quarter, and we'll see the ramp in the following quarters.

On your second part of your question, clean energy has been fluctuating for us over the years, and this has been a great quarter for that. We will continue to see the growth, but certain quarters you may see clean energy up.

That's why we are diversified. Certain quarters you will see the mobility up.

Certain quarters industrial has always been up, okay? It's not that it's because everything is growing and certain patterns and certain production happen at various time frames.

You will continuously see growth in all sectors. What we are happy is that every sector is growing, except for communication, we are exiting.

Got it. Will you be able to share the US loss for this quarter, have you already turned around, or where are we in terms of the plan?

In terms of US manufacturing, we've reported a PAT losses of approximately ₹4 crores in Q1 FY27. It has largely narrowed down.

Two years ago, it was approximately around ₹14 crores. One year ago, it was around ₹9 crores losses, and now it has narrowed down to ₹4 crores losses at PAT level.

Got it. Thank you, sir, and all the best.

Thank you, Siddharth.

Yes, thank you very much, and congratulations on another incredible quarter. I have a couple of questions here.

KB, I was really happy to see about how you spoke about bolstering your operations and leadership. Because usually, smaller companies grow at this pace and they've done a great job with execution, but at some point, things start to fall by the wayside.

If you can just talk a little more, provide a little more color about what you're doing, what sort of leadership positions you're hiring for. I think that would be really helpful.

Secondly, clearly historically most of your products have been PCBA and box build. Do you think you have an opportunity to go into new product categories, or you'd rather just service with these products, because demand obviously is there and you are executing on the pipeline?

Or maybe you'll tell me that Kavach and aerospace and all have different new products. I'd like to know more about the SKUs that you have.

Third question is, well generally, your business, the second half of the year, your business does better than the first half. With 50% growth in Q1, how should we think about the second half?

I know the guidance implies kind of 25% growth in the next three quarters, but if you can provide some clarity more around the second half versus first half dynamic. Thank you.

Hi, Sumit. Nice to talk to you again.

If I miss out any part of your questions, just remind me once. The first part was leadership.

See, as we grow each of our divisions and capabilities and verticals, we need leadership. We are growing from $200 million, however you want to look at it.

We have taken a dedicated or a very focused approach to get leadership. I believe the top-level leadership is there already with our CEO, CFO, CSO.

We're adding probably five or six new candidates at a VP level to either lead a BU or lead a capability, okay? That work has already started.

We're trying to plan for the next three years of growth at least, now with the right leaders. The same thing we did three years back when we started with the C-levels to get the company going in the right direction.

We are looking for the right candidate. We're not going to rush through it, because that candidate is very important to us.

Okay? Yeah.

You want to add something, Shriram?

Thanks, KB. Hey, Sumit.

Covering three pieces of fundamental building blocks, right, of growth: One is people, second, I think what KB touched upon, processes internally, and third is automation, right? The focus is to build the capability in all three areas, and that's work that's underway.

I think KB's given you the highlights on the leadership. I just want to make sure that you know it's across all three areas.

The second question, if you could remind me, Sumit?

It was more around the products. Historically, you've done PCBA, box build.

Got it. We are vertically integrated.

That's why you see our box build move from 43% to 59% in a year or so. We are building a lot more metal, we're building a lot more cables, we're building a lot more plastics, we're building a lot more magnetics to get into our own final product.

That's why you see our box build ratio going up. Saying that, there's one or two areas, actually one which we may announce, I don't want to preempt that we will enter into one area which is well within our capability.

That I think in the next two quarters we'll make that announcement. There's one area we'll add, because we see a lot of opportunity in that, and will add to our box build capabilities, Sumit.

Just to add to that, we are getting into newer industrial verticals as well as newer geographies like Europe, Southeast Asia. In terms of increasing our target market, the work is already underway and we will start seeing the results of that in the coming quarters.

Got it. The last question about the guidance?

Sumit, you know we are conservative. The problem we have, to be honest is, when we get into these large programs, for example, it may happen in February of next year, okay, or customer may delay it to April.

We try to be conservative. It cuts in in February, everything is well and good, okay?

If it cuts in in April, it's the next year thing. Look at us from a three-year lens, right, like we said.

Our business is not quarter-to-quarter, because our customers look at us over a multi-year period and are we a good partner over the next 10 years, right? Yes, we're trying to kind of get that all together and kind of give you a feel of what we can be.

In a three-year period, as we have done in the last time, we said we'll double within three years, we did it in two years. The aspiration is always to do faster.

You need to look at us from that rather than what's going to happen next quarter or the following quarter.

Got it. Thank you very much.

All the best.

You're welcome, Sumit. Thank you.

Good evening, sir. Thank you so much for the opportunities.

A follow-up on the previous participant on the guidance side. We are doing ₹50 to ₹60 crore annual CapEx with 10x 10x of asset turn.

It's a right way to understand every year ₹500 to ₹600 crore additional revenue? I think if we are adding that, it will comes nearly ₹3,200 to ₹3,400 crore top-line range by FY29.

Secondly, these sunrise sectors like clean energy and aerospace and defense and these also a same kind of 10x asset turns?

Hi, Suresh here, Bala. Firstly on the CapEx side, last year we did a CapEx of ₹56 crores, and Q1 we did ₹16 crores.

Like what KB highlighted in his opening remarks, we are looking at expanding our manufacturing footprint in Chennai. Whenever that happens, we will do it in a modular fashion, and that will involve incurring additional CapEx to an extent there.

Having said that, we are focused on capital efficiency. If you look at our ROCE couple of years back, approximately two two and a half years back, it was around 10%, today it is 23.4%.

Our goal is to improve that even further. New asset, new plant that comes into picture, it will take its own time frame for it to reach its optimum capacity in terms of utilization.

It will gradually get to that, but our focus is to improve our ROCE.

I'll add to this, as we go into this bigger box build solutions, space is a premium. We are building up land and buildings before we actually put machines, so that we are comfortable with that, and then we add the machines when required.

Hope

your question answered, Mr. Subramanian?

Yes, sir. On the qualitative aspects, it's been answered.

Sir, my second question: I think we have earned Q1 nearly 50% top-line growth, order book also increased nearly 23%, but if you look at our working capital days, it's came down to 142 to 117. Generally with growing order book and revenue, it leads to working capital strain, for example, building inventory for new programs.

I'm just trying to understand how we managed to improve our working capital days, and how do you look at incoming quarters?

Thank you for that, Bala. That was a consistent and continuous effort over the last two, three years on each bucket: inventory, receivables, and payables.

Inventory days, it actually improved to 94 days from 104 days, same is the case with the receivable and payable. Like again what we said in the opening remarks and the previous quarters, we are also having some new programs going parallelly.

For new programs, we may have higher net working capital at the start and we will find our efficiency over a period of time. For existing businesses, we would have already found our efficiency in net working capital.

Overall, what was our guided range in the previous quarters were around 120 to 130 days. We are well within that range.

Sir. Sir, my last questions: I think US loss is around ₹4 crore in this quarter, and last year it was ₹9 crore.

I'm trying to understand what is the minimum revenue run rate required to achieve a breakeven, whether we can expect by Q3 or Q4?

We've not given any particular quantum at which we will reach the breakeven, but what we've highlighted in the earlier calls also is, by the end of this fiscal year, we would like to see a steady-state EBITDA breakeven and then following year a PAT breakeven. What I would like to highlight here, Bala, is the important way to look at our US business is, US manufacturing operations is, that is that is our that is our plant to reel in the customers, make the customers comfortable, and then as it ramps up, transition it to India manufacturing.

It is our beachhead from that perspective. Hope that answers the question, Bala.

Sir. Thank you.

Thank you.

Hi. Thank you for opportunity.

My first question is related to the box build. As from the last three, four quarters, we are continuously seeing the increase in the contribution from the box build, and also you had highlighted today for all that, we will see this trend to continue.

How you are seeing the gross margin profile with this box build contribution to increase the way forward?

Yeah. See, our business model is to get to the box build, right?

We may start with the PCB, we may start with the metals, we may start with the cable, but our goal two to three years from where we start with the customer is to do the whole box, if he doesn't give it to us in the beginning. Of course, the gross margins are better on box build, okay?

Some of these, it takes time for the gross margins to improve. It's over a period of time, it's not as soon as you start.

When the program starts, the gross margin may be a little lower, okay? Over a period of time, it does increase as our processes and our quantum buys help.

The other piece is, with the tariffs, we are still maintaining gross margins, okay? It does have an effect.

Though not a big effect, it does has an effect. In spite of that, we have maintained the gross margins.

If you maintain this, the contribution of 60%, we may see the improvement in the gross margin, it's fair understanding?

The way to understand it is, if you ask, do we anticipate our box build percentage to go up, the answer is yes, because that is one of our strength points, building complex boxes. On one side, we will have new programs which will start maybe at a lower percentage, and another side, we will have existing business which may be at higher percentage.

What we see as a 33% to 35% is a blended mix of both of that. I think it is best to assume and estimate a gross margin percentage of 33% to 35% to continue.

Next question is related to the order book. Out of your ₹2,208 crore, can you give some indication that how has been mix of segments?

It's broadly based on the segments and the growth of the percentages we have kind of declared. It's across verticals.

Some, certain quarters, some may be higher than the others, and we always aspire to be around 25%. Industrial right now is around 30 32%.

Our total order book, if you look at it, we only look at a three-year window. We have orders from 3 to 15 years.

We don't count that. That itself is ₹3,465 crores.

In the short term, which is the order book for the next 12 months or so, is ₹2,208 crores. We're already comfortable on what we need to do in the near term, and we have long-term contracts which we don't count in this.

Right. Lastly, one clarification: In the international business, which now the US is 60% of your business, is that majority is from the clean and the mobility businesses?

No, it's across. A lot of the clean is done in the US, but the rest of it is done in India.

A lot of it is industrial. We don't have rail in the US.

Aero, industrial, communications, as well as clean, a big chunk is there because of the subsidies in the US. Again, sub-parts of these US build is done in India, okay?

It's a mix.

Praveen, even in US, we have a well-balanced and diversified growth across verticals.

Okay. Got it.

Thank you, sir. All the best.

Thank you.

Thank you, Praveen.

Hi, sir. Good evening.

Great set of results. Just two quick questions: Firstly, on the order book side, for last three quarters, your order book has been hovering around ₹2,000 crores.

This quarter also, it's around ₹2,200. In that sense, given that your revenue growth is exceeding order book growth, anything for that, why is this order book growth slow and or am I missing something?

Yeah. Sir,

if you look at it, right, it's always consistent. It has grown, but it's year-to-year it's grown 23.4%, okay?

We are very well covered for the next 12 months to 36 months, okay? In the sense of what we want to achieve, if you look at it, we are saying we're going to do ₹3,200 crores in 3 years.

More or less that order book is covered, right? If you look at it for ₹2,208 crores in 12 months and ₹1,256 crores in 12 months to 36 14 months to 36 months.

Again, we have 5-year contracts, we have 10-year contracts. It's easy to add them, but it's not the right message to give that these orders are there for years, right?

We'd like to keep it in this range, which is 14 months to 36 months, so that you get a realistic perspective rather than a hype perspective of what our order book's so much. Because some of this is, you multiply this into 10 years, what we do in 1 year, it's a huge number.

We don't want to put that out.

Another important perspective to have on this is, some of the new programs may be on pilot stage, and so whenever they move from pilot stage to ramp-up production, the larger sum of orders will come and fall in. For us, the benefit and advantage what we see in our business is the annuity style of orders what we receive, the long-term nature of the life cycle of the product as well as the customer relationship with that.

Hope that answers the question, Vipul. Oh,

sure, sir. Just a quick follow-up on this: Again, please correct me if I'm wrong, given that your current order book is around ₹2,200 crores and your average execution period is 14 months, so that it's very close to what the guidance you have given.

Is this understanding correct?

You already

finished one quarter.

Yeah. The way to look at it is our order book is executable over an average period of 14 months.

For some customers, it may be 3 months, some customers it can be 6 months, some customers it can be 14 months. It's not a straightforward straight line number over there, but yeah, you can have that as a benchmark.

Fair enough, sir. Last question from my end on the clean energy side: Obviously that has seen a very rapid growth in quarter one.

Going forward for FY27 and '28, obviously since the IRA incentives for solar projects in US ends on December 31, 2027, you expect such growth to continue for next couple of years, or you plan to offset that by onboarding new clients, new projects? Any thoughts on that?

Shriram here. Just a quick point here.

The subsidies and the support continues until 2032, because this is storage solutions. These have a longer sort of subsidy support in the US at this point.

Suresh? Just

like we have discussed in the last four, five quarters, we are not in the solar panel business. We are in the energy storage solutions business, that is number one.

Number two, if you look at the growth across verticals, industrial has grown by 52%, aero has grown by 47%, rail has grown by 37%, medical has grown by 15%. The growth is across verticals.

It's just that in some quarters, one vertical may have a lumpy growth and it goes on like that. For us, the comfort from where we derive is the long-term annuity style of business.

That's the kind of business what we are targeting.

Sure, sir. Just a quick follow-up on what Shriram sir said: Sir, you rightly mentioned that battery energy storage incentives is till 2032, but as far as I know, again please correct me if I'm wrong, majority of battery installations in US happens along with solar, it's not in isolation.

That's what the data says. Even if the incentive continues till 2032, if a panel is not being installed, what are your comments on the future of the battery energy storage industry?

We're happy to answer this offline here. There's a nuance to this situation.

We're happy to take this offline and

address it.

For us, over the last two years, even the vertical has grown along with all the other verticals.

Sure, sir. Thank you.

No, that's fine.

Thank you, sir.

Hi, thank you, sir. Just one question again going back to the guidance.

Obviously, after a very strong 1Q, one would assume that the guidance could have been upgraded to at least more than 20%, but given the range is more 26% to 30% right now. Just trying to understand what are the various scenarios you're baking into the guide.

Is this new guide like the worst possible outcome even if everything goes wrong, could you deliver on this guidance? This is like the worst-case scenario assumed, and there could be some upside to it if the other projects what you are hoping to convert comes through?

Bhavik, this is Kunhamed. The way we look at this, I know everybody loves quarter-to-quarter, but as a business, when we plan, we plan on a three-year horizon.

That's what we try to deliver, okay? Some quarters may be huge, some quarters will be lower.

Saying that, we are conservative, to answer your question. We are conservative.

We don't want to, because some of the reasons are when these new projects will kick in into volume, right? Like I explained before, it could be in February of this year or it could be in April of next year.

It's two months, it doesn't matter to the customer, but it does matter to us. We do have some conservatism in this.

That's what we're comfortable with, to be honest, rather than go out with flying numbers and chase that thing. We've demonstrated that in the last seven, eight quarters.

To add to that, Bhavik, Suresh here. To add to that, the kind of new programs what we've gotten, whether it is semiconductor equipment or in the mobility sector or in the power vertical, or in terms of new geography is getting into Southeast Asia or into Europe, that is an exciting phase for us, because it may not be fully reflected in the P&L today, but it is there either as a pipeline or a proto or waiting to get into a commercial ramp perspective.

Bhavik, just to kind of echo on what Suresh said, I think we have never been this excited on the possibilities. It may not show in the P&L, okay?

The type of products which are coming in and the type of geographies which's coming in, at least in 25 years of doing this, I've not seen that. We are very, very mid-term and long-term, we are very, very positive.

Got it. That's helpful.

Thank you.

Thank you, Bhavik.

Thank you for the opportunity, and sir, congratulations for the good set of results. Sir, just one question that the growth that we are seeing, the 40% growth, and the guidance that we are giving, is a fundamental question that is there any split, or is it the pricing growth because of the components' price that have increased so much, and tomorrow if they correct, or let's say if they remain stable, will our growth remain the same?

Will we still be able to beat the guidance that we are doing right now?

Hi, Suresh here. Our last eight quarters average revenue growth is 46%, and over the quarters, across verticals, across geographies, this growth has reached.

Even now if you look at this quarter, it is well-diversified in both the US market as well as export market as well as India market. If your question is if there is any one-off growth in this, the answer is no.

The answer has been the same over the past quarters also.

Just to add to that, Archit, this is Kunhamed. We don't have exposure to memory as much, okay, very little.

We're not in the consumer space, or we're not in the server space.

Okay. If let's say other components like let's say copper and PCB and everything, tomorrow if those prices continue to rise or increase, will it show higher growth in the numbers, and versus if they stay stable or maybe decline a bit, is that just that I wanted to understand?

Archit, Shriram here. All of these components you talk about form a part of the bill of materials, right?

You will have metals, you'll have cables, you'll have PCB, and you'll have a lot of other things. On the whole, we don't believe this is driving the increase in prices, right?

Ultimately, as Suresh said, right, this is broad-based growth. It's been driving for the last eight quarters, and the margins are holding between 33% and 35%.

This is sort of inherent business growth that you're seeing.

Yeah. That's what I was looking for.

Thank you so much, sir. Thank you very much.

Thank you, Archit.

Hi, Tanay, are you there?

Can we go to the next question?

Congrats team on a good set of numbers. I would just like to get some clarity on your exposure on an overall basis to the defense space, which seems to be the sunrise sector and the hottest sector at the moment.

At the moment, I think the medical and the defense combined forms close to 10% of your revenues as per Q1 FY27. We'd like to get some light on if you plan to foray into that space via the PCB, RDNA, the whole EMS ecosystem of the supply chain as a whole.

Do you have any plans to actively increase the focus there or what's your stance on it?

Thank you, Siddharth, for that question. We have nothing against the defense business, but it's a very lumpy business.

It's call a feast or famine is the right way I should say. Saying that, we do defense in India as well as in the US, okay?

It's one of the verticals we are looking at to focus. We have done the first set of hiring for looking at defense as a segment three years from now, okay?

Because that is the time frame we need to spend to get the larger chunks in, okay? Again, whether the whole world is out of ammunition, the defense will grow, and I'm pretty sure we'll be a part of it.

We're taking the first steps to look at it as a vertical, not saying that we are great in the vertical, we're starting to look at it. How do I expand to get into this space, yeah, in a meaningful way?

We are still doing quite a bit of it, but not in large numbers.

Understood, understood. Thanks for that clarity and wish you all the best.

Thank you, Siddharth.

Thank you, Siddharth.

Yes, sir. Am I audible now?

Yes, Tanay, you are, yeah.

Yes, sir. Sorry, there was some mix-up.

Sorry. Thank you so much for taking my question again, sir.

Sir, I have two questions, right? If we look at it over the last few quarters, we've steadily increased our US manufacturing, right?

Almost from 18% to 20% to now almost 28%. That's now in fact even sort of helped us, if I'm not wrong, almost reach a breakeven levels for our US manufacturing standalone on the EBITDA level.

Is it fair to say that this is a base which now helps us sort of build on and it becomes a base where we breakeven on the US, or do you think that this is just a quarterly fluctuation, and what would be the ideal split between the India versus US manufacturing?

Tanay. As we grow, as the top lines grow over the next few years, our goal is to keep US manufacturing around 20%, okay?

I'm not saying the best growth for us is made in India for export and made in India for India, okay? To get these margins in made in India, we need the US manufacturing.

In the short term, if you want to cap it at 20%, you'll have a few quarters which goes up and down, and most of the significant growth what we anticipate over the next two, three years is going to be made in India, okay? Saying that, we are also opening up two geographies, right, which we are very excited about, okay, which is Europe, which was a very small percentage of exports.

The next two years, we see that opening, growing in a very, very meaningful way. Southeast Asia, and that is a foray which I believe will take us to the next level.

You're basically competing with the best in the world with the best products you can make made in India. This comes with relatively very decent margins.

We're not doing commodity-type stuff, we are doing complex systems. Saying that, US will always be there, and again, it is a treadmill.

I feel bad for the US guys, because every time there's a good number coming there, it's always more profitable to move to India, okay? As a group, we tend to do that.

You'll see certain spikes, and that has helped us through the tariff situation, if you look at it, right? It has given a lot of solace to our customers that we are in the US.

If they want to launch there, they're more than welcome to launch there at a higher cost. Did that answer your question, Tanay?

Absolutely, sir. Absolutely.

That makes sense. Sir, and second question which I had is that we've seen a lot of supply chain disruptions, especially from the bare PCB board side, maybe for the raw materials or even the fiber glass, or the high-purity PP which is required.

Sir, any comments on that, that is it impacting our operations by any means, or do we expect any impact going forward, or are we well-covered here?

Hey, Tanay, Shriram here. See, there you have instances and you have different commodities that go up and down.

We are generally okay last quarter and this quarter. We've tried to stay a little ahead of the curve in terms of securing some of the supplies of the commodities that you mentioned.

For the time being, with the environment the way it is, we think we're okay. Obviously, we stay on high alert, and we'll move quickly where we have to if we need to.

Perfect,

perfect. Great.

Thank you so much for answering my questions and wishing you all the very best. Thank you.

Thank you, Tanay.

Hi, sir. Congratulations on a good set of numbers and thank you for taking my question.

I have two questions. Question number one is your asset turns: 9.9x.

Now with our ODM revenues going up to 60% of our total revenues, I would have expected that this would probably be a driver to move up the asset turns. Just want to get a theoretical understanding as to what would cause us to reach this level or put another way, what could be the maximum level that we can see on asset turns with the current asset base and the current sort of a growth that we're having?

That's question number one. The second question is on the ODM mix itself.

If you could just walk us through the segments that we have in the ODM mix and each of those segments if that's possible or what is the main driver, what segments are the main drivers for the ODM to grow further from these current levels? Those are my two questions.

Great. Thank you, Mayank.

First and foremost, we don't do ODM, okay? We do box build, which is custom-designed by a customer.

Even if we do the design for them, the IP is owned by the customer. We do build-to-print, and that is the reason why most of these complex systems are coming to us.

We don't want to have a situation where we can do our own products, okay? End of the day, even though we do design, it is done for the customer.

The ODM piece is not there. What you're referring to is our box build solution, which is where we do the whole product for the customer, okay?

We have always tried with our vertical integration to get this number as high as possible. I think we've been successful so far, and we continue to strive, and I think that portion of our business will grow, because we may start with one commodity and then we try to in 2 to 3 years get the whole box build as PCBA, cable, plastic, all in a box, yeah.

That's always been our aspiration as well as our goal. Did I miss anything?

Sir,

just want to understand it from a different lens. Can this go up to let's say 10x, 12x, 15x?

Or what would be the incremental CapEx required in that sense for this? We are,

probably when you look at a global market, the best in asset turns. What we always commit to is 8 to 10 times.

Sometimes it goes up and down when we do an investment in a building or so. 8 to 10 times is what we should look at, and we want to stay in that range, because we have to make investments also, right?

That's our goal. I think you should look at us 8 to 10 times.

We are looking to improve our ROCE

even

further. Let's see.

Answer that. Of course.

Sorry, I misspoke earlier on the ODM versus box build. It's my bad.

If you could just help me understand which of our segments have the highest percentage of box builds or how should we look at it from a segment-to-segment perspective?

I think most of the segments, except for aero, we can't build a plane, but we build boxes. It's

spread across various verticals,

all verticals.

It is not focused on just one industry vertical.

For example, railways, we do the interlocking systems, breaking systems, the complete box. In the clean energy, we make different type of inverters, battery storage, it's all complete boxes.

Only in the aero piece where we do subassemblies. Got it,

got it. Sir, just one last question: The ISM 2.0 scheme came out and I know you must have been getting a lot of questions on that, but any chance you see that we could be one of the beneficiaries from it, given that because it specifically calls out equipment suppliers and we might be part of that value chain now with your wins in that space?

Any possible benefits you see to Avalon from that scheme?

We believe so, but we are yet to look at the finer details of that ISM 2.0. Definitely semiconductor manufacturing equipment is one of the key verticals for us over the coming years.

When the finer details come, then we will have more details to share.

In short, yes, we're looking at it.

Right. Would you be open to incremental CapEx for that as a separate CapEx to that effect, or would you want to continue with the current business model?

In the opening remarks, we had highlighted about acquiring a large piece of land in Chennai for our future growth, for the next phase of growth, whether it is with respect to semiconductor manufacturing equipment or advanced electronics. Yes, the answer is yes.

Thank you. Thank you so much.

Thank you, Mayank.

Thank you, Mayank.

With a healthy order book, expanding customer engagement, and a flexible dual manufacturing model, we remain focused on delivering profitable growth. We thank our investors for the continued support and look forward to updating you in the coming quarters.

Thank you. Thank you very much.

Thank you.