Motilal Oswal Initiates Buy Call on Avalon Technologies with Target Price of Rs 1490

Avalon Technologies Reports Robust 4QFY26 Performance

Avalon Technologies (AVALON) has released its results for the fourth quarter of fiscal year 2026, showcasing a strong performance across various segments. The company reported a revenue growth of 40% year-over-year (YoY), driven primarily by a significant increase in its US business, which grew by 64% YoY. The Indian business also demonstrated a healthy growth of 13% YoY. The growth was broad-based across segments, with notable increases in Clean Energy (up 76%), Mobility and transportation (up 35%), and Industrials (up 53%).

However, despite the overall strong performance, Avalon Technologies' EBITDA margins contracted by 20 basis points (bp) due to lower gross margins YoY. This decline was largely attributed to the impact of tariffs, which reduced gross margins by 110 basis points.

Raised Earnings Estimates and Buy Rating

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Factoring in the strong growth in fiscal year 2026, Motilal Oswal has raised its earnings estimates for fiscal years 2027 and 2028 by 2% and 8%, respectively. The research firm has maintained its buy rating on Avalon Technologies, with a target price of INR1,490. This recommendation is premised on a price-to-earnings ratio (P/E) of 40x for fiscal year 2028 earnings per share (EPS), which implies a PEG ratio of 0.8.

Note: The estimated earnings growth rates are based on the research firm's revised estimates.