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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 25.00 | ACUITE A- | Stable | Assigned | - |
| Bank Loan Ratings | 12.00 | ACUITE A- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 40.00 | - | ACUITE A2+ | Assigned |
| Bank Loan Ratings | 57.50 | - | ACUITE A2+ | Reaffirmed |
| Total Outstanding | 134.50 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed its long-term rating of 'ACUITE A-' (read as ACUITE A minus) and short-term rating of 'ACUITE A2+' (read as ACUITE A two plus) on Rs. 69.50 Cr. bank facilities of Avantel Limited (AL). The outlook is 'Stable'.
Acuite has assigned the long-term rating of 'ACUITE A-' (read as ACUITE A minus) and short-term rating of 'ACUITE A2+' (read as ACUITE A two plus) on Rs. 65.00Cr. bank facilities of Avantel Limited (AL). The outlook is "Stable". Rationale for Rating The reaffirmation of ratings considers established market position, extensive experience of promotors and strong order book position as on Q1FY26. The rating factors in the steady scale of operations in terms of operating income in Q1FY26. However, there has been a decline in EBITDA and PAT margins during Q1FY26 primarily due to change in inventories resulting in execution of low margin orders. Consequently, the performance of the company will remain key monitorable. The company has plans for diversification into new segments which will help them to enhance their scale of operations. The financial risk profile is healthy marked by healthy networth due to capital infusion and reserves, gearing below unity and strong debt protection metrics. The liquidity position is strong marked by healthy net cash accruals against nil debt repayment obligations, moderate current ratio and high bank limit utilization. The rating is constrained by intensive working capital cycle due to inherent nature of business and customer concentration risk. |
| About the Company |
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Avantel Limited was set up in 1990 in Hyderabad as a private limited company by Dr. A. Vidyasagar along with his family members and was reconstituted as a public limited company in 1994. The company specialises in RF microwave subsystems, digital radios, and satellite communication systems, and offers related software solutions and services. It is listed on the BSE and National Stock Exchange. The company has its registered headquarters, manufacturing facility and R&D facility at Vishakhapatnam.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone business and financial risk profiles of Avantel Limited to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Established track record of operations and experienced management
The management has 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 provide customized solutions through process oriented design, develop and manufactures RF subsystems, RADAR subsystems, Software defined radios and satellite communication systems. AL majorly serves government organisations like Defence Research and Development Organization (DRDO), ISRO, Shipyards, defence Public Sector Undertaking (DPSUs), Indian railways and others. Additionally, the public listed companies such as L&T, NewSpace India Limited and others with numerous private firms operating in defence and space industries. the company has healthy relationship with its customers and suppliers. Acuite believes that the long track record of operations with extensive industry experience of the management and healthy orders in hand will benefit the company over the medium term. Steady scale of operations The operating income stood almost stagnant at Rs.248.48 Cr. in FY25 as against Rs.223.92 Cr. in FY24. This is due to slower execution of order book and delays by government in expediting Request For Proposal (RFP). Further, the revenue stood stable at Rs.51.84 Cr. in Q1FY26 as against Rs.51.65 Cr. in Q1FY25. The current order book stood at Rs.210.00 Cr. as of 30th June 2025 with fresh infusion of orders which provides revenue visibility over the medium term. The EBITDA margin stood at 38.61 percent in FY25 as against 37.95 percent in FY24 due to lower cost of goods sold as a result of unsold inventory. Additionally, raw material costs experienced volatility depending on orders, and some orders required external procurement of specialized subsystems. The company has expensed towards Employee Stock Options Plan (ESOP) and Employee Compensation Expenses of Rs.14.57 Cr. as on March 31st, 2025. Further, the EBITDA margin stood 21.91% in Q1FY26 as against 28.60% in Q1FY25. The decline was due to spike in change in inventories resulting in execution of low margin orders. The PAT margin stood on similar levels at 24.11 percent in FY25 as against 24.76 percent in FY24 due to depreciation. Further, the PAT margin stood at 8.92% in Q1FY26 as against 15.65% in Q1FY25 mainly due to decline in EBITDA margin and increase in depreciation on account of capex completion. Acuite believes the scale of operations will remain on similar lines backed by order book over the medium term. Healthy Financial Risk Profile The financial risk profile of the company is marked by healthy networth, gearing below unity and strong debt protection metrics. The tangible networth stood at Rs.248.01 Cr. in FY25 as against Rs.171.41 Cr. in FY24 due to accretion of reserves and ESOPs converted into equity shares. The rights issued are fully subscribed of Rs.80.90 Cr on 7th May 2025. The gearing stood below unity at 0.09 times in FY25 as against 0.07 times in FY24. The debt protection metrics marked by Interest Coverage Ratio (ICR) and Debt Service Coverage Ratio (DSCR) stood at 32.01 times and 24.49 times respectively in FY25. Acuite believes the financial risk profile will continue to remain healthy supported by healthy networth, no debt funded capex plans and absence of long-term debt. |
| Weaknesses |
| Intensive Working Capital Cycle
The working capital cycle was intensive marked by GCA days of 234 days in FY25 as against 213 days in FY24. The inventory days stood at 144 days in FY25 as against 120 days in FY24 primarily due to imported and integrated LRUs (Line Replaceable units) with their value additions, resulting in higher inventory levels. The debtor days stood at 104 days in FY25 and FY24. The company receives most of its payments upon project delivery, with a small portion of payments received in advance. Against this, the creditor days stood at 11 days in FY25 as against 27 days in FY24. Acuite expects the working capital cycle remains intensive over the medium term due to inherent nature of business. |
| ESG Factors Relevant for Rating |
| The company has established a Risk Management Committee that oversees environmental and sustainability-related matters. As part of its Corporate Social Responsibility (CSR) initiatives, the company regularly contributes towards healthcare activities, in line with the recommendations of its CSR Committee. In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, the company has constituted several committees including the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Governance and Management Committee, and Stakeholders’ Relationship Committee, thereby ensuring adherence to corporate governance practices. |
| Rating Sensitivities |
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Movement in operating income and profitability margins
Working capital cycle |
| Liquidity Position |
| Strong |
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Avantel Limited’ liquidity position is strong marked by healthy net cash accruals (NCA) of Rs.71.31 Cr. on March 31, 2025, against nil debt repayment obligations. Although the company does not have any debt funded capex plan, it plans to undertake a capex of Rs. 65.00 Cr out of own sources. The cash and bank balances stood at Rs.1.88 Cr. as on March 31, 2025, as against Rs.0.11 Cr. as on March 31, 2024. The current ratio stood at 4.89 times during FY25. The average month end limit utilization for fund-based facility was ~81.00% for last eight months ended March 2025. Acuite believes that liquidity position of the company will remain strong in the medium term on account of sufficient accruals and moderate current ratio.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 248.48 | 223.92 |
| PAT | Rs. Cr. | 59.92 | 55.45 |
| PAT Margin | (%) | 24.11 | 24.76 |
| Total Debt/Tangible Net Worth | Times | 0.09 | 0.07 |
| PBDIT/Interest | Times | 32.01 | 20.53 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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