Avalon Tech shares fall 6% after Rs 883 crore block deal; 3 promoter entities likely sellers
Around 40.5 lakh shares, equivalent to 6.06% of Avalon Technologies’ total equity, changed hands in the block trade. The shares were transacted at an average price of Rs 2,181 apiece, totalling Rs 883 crore, according to available data.
Media reports claimed that three promoter entities were selling up to 6% of Avalon Technologies’ existing outstanding equity through block deals, with the transaction estimated to be worth between Rs 861.9 crore and Rs 922 crore.
The sellers are Bhaskar Srinivasan, BBS Family Trust and KBS Family Trust, according to reports. The indicative price range for the deal was set at Rs 2,150 to Rs 2,302 per share. The sellers will be subject to a 180-day lock-up period on any further share sale.
As of the end of the June quarter, promoter entities collectively owned a 44.39% stake in Avalon Technologies. Bhaskar Srinivasan held 9.39%, while BBS Family Trust and KBS Family Trust each owned 3.02%, according to stock exchange data. Public shareholders accounted for the remaining 55.61% stake in the company, the exchange data showed.
Nomura on Avalon Tech shares
Earlier this month, Japanese brokerage Nomura raised its target price on the stock to Rs 2,767 from Rs 2,211 and maintained its Buy rating. The revised target implies 23% upside from current levels.
Nomura said Avalon entered a joint venture with Zollner Elektronic AG, an unlisted leading European electronics manufacturing services (EMS) company, for PCBA, box-build and system integration manufacturing in India. The JV 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 JV. However, 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.
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Nomura maintained its target P/E multiple of 45x and rolled forward its valuation to December 2027F from September 2027F earlier, resulting in the higher target price of Rs 2,767, implying 23% upside from current levels. The brokerage said the stock is currently trading at 35x FY29F EPS, which it says is attractive given the positive growth prospects.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his ‘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.
