Established track record of operations in SATCOM and electronics equipment business
Avantel was incorporated in 1992 by Mr. Dr. Abburi Vidyasagar. The management has three decades of experience in building wireless & Satellite Communication systems, RF systems design, Embedded systems & Digital signal processing, Network management & software development and Engineering & IT services. The company provides customized solutions through process oriented design, develop and manufactures RF subsystems, RADAR subsystems, Software depend radios and satellite communication systems. Established track record of three decades in electronic and telecom equipment business has enabled AL to offer a unique combination of embedded systems and related software used in defense and telecom sectors.
Established market position in telecom and electronic equipment industry
Avantel Ltd(AL) has been operating in niche defense supplies and provides customized wireless solution and satellite communications (SATCOM) solution and products. The company developed SATCOM products for data, voice& multimedia applications using INSAT 3C, GSAT-6 and GSAT-7 and company has long association with ISRO in development of terminal and SATCOM applications. AL is also involved in development and implementation of network systems for ships, submarines, surface vehicles and aircrafts.
Strong Research and Development
The company drives its core business strength from its in house R&D capabilities. Company’s research and development is recognised by the department of scientific and industrial research(DISR), ministry of science and technology, GOI. The Company could offer indigenous, customized strategic solutions to Indian defence services including Indian Navy, Indian Air force, Indian Coast Guard, ISRO and BARC. Company spends around 8 to 9 percent of its turnover on research and development expenditure.
Reputed clientele of strategic importance and positive industry outlook
The company mainly operates in Aerospace & Defence sector and holds Defence Industrial Licenses issued by government and its customers mainly come from the strategic sector such as space, defence, transport and telecommunications. The company maintains healthy and long term relationships of over two decades with a reputed clientele that includes Indian Army, Indian Railways, Indian Air force, Indian Navy, ISRO, DRDO, Goa Shipyard Limited, The Boeing Company, Larsen & Toubro Limited (L&T), etc.
Moderately healthy financial risk profile
Avantel Ltd’s financial risk profile is moderate marked by healthy capital structure and coverage indicators. Company’s net worth stood Rs.83.72 Cr as on March 31, 2022 as against Rs.66.24 Cr as on 31 March, 2021. Company’s total debt consists of only short term working capital debt of Rs 12.87 Cr. Interest coverage ratio stood comfortable at 19.27 times as on March 31, 2022 and 15.23 times as on March 31, 2021. The Total outside liabilities to Tangible net worth stood at 0.32 times for FY2022 as against 0.31 times in FY2021. Acuite believes the financial risk profile of the company will remain moderately high on account of steady net cash accruals.
Working capital intensive operations
Company's operations are working capital intensive marked by Gross current asset days (GCA days) of 239 days as on March 31, 2022. Company's inventory holding period stood at 80 days and receivable holding period stood to 126 days as on March 31, 2022 against 17 days and 61 days, respectively, a year ago. As such, conversion cycle improved to 239 days in FY22 against 302 days in FY21. AL primarily relies on non-fund based facilities for securing orders, and is judicious in utilization of its fund-based working capital facilities. The company assesses long term liquidity requirements on a periodical basis and manages them through internal accruals and committed credit lines.
Modest scale of operations
Though the company faces limited competition as it operates in a niche segment, the low scale of operations limits its bidding capacity to some extent. Nonetheless, there is significant improvement in the topline over the years, as marked by the CAGR of over 26.5 percent for the period 2019-22. Revenue from operations improved from 51.96 Cr in FY2020 to 105.03 Cr in FY2022.