Avalon Technologies Q2 FY26: Revenue up 39%, margin dips

Key takeaway for investors

Avalon Technologies Ltd (NSE: AVALON) reported a strong year-on-year increase in Q2 FY26 revenue and profit, but operating profitability softened on margins. The company reported EBITDA of ₹38.6 crore for Q2 FY26, up 28.23% from ₹30.1 crore in Q2 FY25, while EBITDA margin declined to 10.1% from 11% a year earlier. Profit after tax (PAT) for Q2 FY26 was ₹25.0 crore versus ₹17.5 crore in Q2 FY25, a 42.9% increase.

Q2 FY26: headline numbers

For Q2 FY26, Avalon reported revenue from operations of ₹382.5 crore compared with ₹275.0 crore in Q2 FY25, a 39.1% rise. EBITDA grew but trailed revenue growth, which explains the year-on-year margin compression. PAT also grew faster than EBITDA in the period, taking PAT margin to 6.4% for Q2 FY26.

The company’s update highlights that while growth remained healthy, profitability did not expand at the same pace as topline, reflected in the lower EBITDA margin. Investors typically track this closely for electronics manufacturing services businesses where mix, ramp-ups, and operating leverage can influence quarter-to-quarter margins.

Q4 FY25 earnings call: profitability and mix details

In the Q4 FY25 earnings call dated May 7, 2025, management discussed margins, geography mix, and FY26 positioning. Avalon said Q4 FY25 gross margin came in at 35.1%, at the upper end of its 33% to 35% guidance. It also reported EBITDA margin of 12.1% for the quarter.

Management indicated that the US manufacturing plant contributed 16.6% of total revenue in Q4 FY25, while India-based operations accounted for 83.4%. India operations were described as highly profitable for the quarter, delivering an EBITDA margin of 14.8% and a PAT margin of 9.6%.

FY25 performance and FY26 revenue growth guidance

During the same call, Avalon reported Q4 FY25 revenue of ₹343 crore, up 58.1% year-on-year versus ₹217 crore in Q4 FY24, and up 22.1% sequentially. For the full year FY25, revenue from operations stood at ₹1,098 crore, reflecting 26.6% year-on-year growth and exceeding earlier guidance, according to management.

For FY26, the company guided for revenue growth of 18% to 20%, while also stating it would reassess as the year progresses in line with market developments. Management also flagged policy uncertainty and its impact on the US economy, leading it to adopt a more measured outlook for the first half of FY26, with expectations of improved momentum in the second half as visibility strengthens.

Geography split: India and US contributions

Avalon disclosed geography splits for both the quarter and the full year in its Q4 FY25 commentary. For Q4 FY25, it shared a split of India ₹160 crore and US ₹193 crore. For FY25, it reported India ₹477 crore and US ₹621 crore.

These numbers are important because management separately highlighted the profitability of India operations in Q4 FY25, while also discussing a more cautious near-term stance on the US macro environment.

Working capital, debt, cash and capex markers

In its FY25 commentary, the company reported trade receivables at 84 days in March 2025 versus 79 days in March 2024. Trade payable days improved to 46 days from 36 days over the same period.

It also reported cash flow from operations of ₹25 crore for FY25, up from ₹17 crore in FY24, citing better working capital management and profitable growth. As of March 31, total outstanding debt stood at ₹141.7 crore, with cash equivalents and investments of ₹134.7 crore, resulting in a marginal net debt position of about ₹7 crore. Capex was reported at ₹25.1 crore for Q4 FY25 and ₹57.8 crore for FY25.

Snapshot of quarterly standalone trend (Dec 2024 to Dec 2025)

Standalone quarterly numbers provided show net sales rising across the period, with profit after tax peaking in Sep 2025 among the listed quarters.

Annual P&L trend (FY21 to FY25)

Annual profit and loss data (in ₹ crore) shows net sales of ₹631.78 crore in FY25, up from ₹441.68 crore in FY24. Over the same period, operating profit improved to ₹49.40 crore from ₹31.81 crore.

The data also shows other income rising to ₹26.97 crore in FY25 from ₹19.24 crore in FY24, while interest cost remained low at ₹2.80 crore in FY25 compared with ₹2.59 crore in FY24.

Table: Q2 FY26 vs Q2 FY25 (consolidated)

Market impact: what changed, and what to track

The Q2 FY26 update points to a familiar pattern for investors: strong growth with margin pressure. With EBITDA margin down to 10.1% year-on-year in Q2 FY26, the key question for upcoming quarters becomes whether operating leverage and mix can support margins even as revenue scales.

From the FY25 earnings call, management’s stance on FY26 was explicitly “measured” in the first half, tied to policy uncertainty affecting the US economy, alongside an expectation of better momentum later when visibility improves. That combination makes order conversion, project ramp-ups, and regional mix important markers to track through FY26.

Analysis: why these numbers matter

The set of disclosures provides a consistent picture across periods: FY25 delivered higher revenue, higher EBITDA, and a sharp year-on-year rise in PAT in Q4 FY25, while Q2 FY26 extended the growth trend but showed margin compression. The working capital metrics add context on how growth is being funded, with receivable days slightly higher year-on-year in March 2025, but payable days also improving.

The balance sheet note on debt and cash equivalents suggests the company ended FY25 close to net debt neutral, based on the disclosed ₹141.7 crore debt and ₹134.7 crore cash equivalents and investments. Alongside FY25 capex of ₹57.8 crore, this helps investors frame both expansion and financial flexibility.

Conclusion

Avalon Technologies’ Q2 FY26 results showed 39.1% growth in revenue from operations and a 42.9% rise in PAT, while EBITDA margin slipped to 10.1% from 11% a year earlier. Management has guided FY26 revenue growth at 18% to 20%, while indicating a measured first-half outlook and improved momentum expectations in the second half as visibility strengthens.