Avalon Technologies proposes Rs 425 crore Zollner warrants

Avalon Technologies Limited has proposed up to Rs 425 crore of preferential warrants to Zollner Elektronik AG while forming an Indian joint venture in which Avalon Technologies will hold 49% and Zollner will hold 51%. The warrants, priced at Rs 2,193.20 each, require shareholder and applicable regulatory or statutory approvals.

What is Avalon Technologies' joint venture with Zollner?

Avalon Technologies will own 49% of Zollner Avalon Private Limited, while Zollner will own 51%, under the joint venture agreement approved by Avalon Technologies' board on September 3, 2026. The company was incorporated on October 19, 2026, after the September 30, 2026 reporting date.

The venture is intended to undertake electronics manufacturing and services in India, focused on printed circuit board assembly, or PCBA, box-build, system integration and related services. The filing does not state an initial investment amount, factory location, production capacity, customer programme, operating start date or revenue target for Zollner Avalon.

Avalon Technologies reports a single business segment, electronics manufacturing services, or EMS, which includes PCBA, custom cable and wire harness capabilities. The stated scope of Zollner Avalon therefore overlaps with the activities within Avalon Technologies' only reportable EMS segment as disclosed for the quarter and half year ended September 30, 2026.

Because Zollner Avalon was incorporated on October 19, 2026, it did not form part of Avalon Technologies' consolidated balance sheet at September 30, 2026. At that date, Avalon Technologies reported total assets of Rs 1,560.663 crore and total equity of Rs 797.280 crore.

How much does Avalon Technologies propose to raise from Zollner?

Avalon Technologies proposes to issue up to 19,37,808 preferential warrants to Zollner at Rs 2,193.20 per warrant, aggregating to approximately Rs 425 crore. The board approved this proposed issue on October 27, 2026, eight days after Zollner Avalon's October 19 incorporation.

Each warrant is convertible into one fully paid-up Avalon Technologies equity share under the proposed terms. The filing gives the number of warrants and issue price, but does not disclose a conversion period, payment timetable, use of proceeds, post-conversion ownership percentage or the resulting dilution for existing shareholders.

The proposed Rs 425 crore is not cash reported in the September 30, 2026 accounts. Avalon Technologies explicitly says the issue remains subject to shareholder approval and other applicable regulatory or statutory approvals, so the disclosure describes a maximum proposed issue size rather than a completed allotment or funding receipt.

The proposed amount is larger than Avalon Technologies' Rs 13.376 crore paid-up equity share capital at September 30, 2026. That share capital reflected a nominal value of Rs 2 per equity share, while cash and cash equivalents stood at Rs 134.797 crore on the same date; the filing does not connect warrant proceeds to a specific debt, capital-expenditure or working-capital purpose.

How did Avalon Technologies perform before the proposed transactions?

Avalon Technologies reported revenue from operations of Rs 525.434 crore for the quarter ended September 30, 2026, compared with Rs 382.464 crore for the quarter ended September 30, 2025. Profit before tax increased to Rs 54.644 crore from Rs 33.584 crore, and profit after tax rose to Rs 39.836 crore from Rs 24.979 crore.

The September 2026 quarter also improved on the preceding June 2026 quarter. Revenue rose from Rs 484.414 crore in the quarter ended June 30, 2026, while profit after tax increased from Rs 34.869 crore and profit before tax from Rs 48.739 crore.

For the half year ended September 30, 2026, Avalon Technologies recorded revenue from operations of Rs 1,009.848 crore, against Rs 705.772 crore in the half year ended September 30, 2025. Half-year profit after tax was Rs 74.705 crore, compared with Rs 39.193 crore a year earlier, and basic earnings per equity share, not annualised, were Rs 11.18 versus Rs 5.89.

Working-capital balances increased between March 31, 2026 and September 30, 2026. Inventories rose to Rs 596.325 crore from Rs 463.289 crore, trade receivables increased to Rs 422.119 crore from Rs 381.273 crore, and current borrowings rose to Rs 303.385 crore from Rs 172.262 crore.

What cash-flow and equity changes were reported by Avalon Technologies?

Avalon Technologies generated Rs 9.511 crore of net cash from operating activities in the half year ended September 30, 2026, compared with net cash used in operating activities of Rs 10.174 crore in the half year ended September 30, 2025. Cash generated from operations was Rs 29.190 crore, but income tax paid was Rs 19.679 crore.

Investing activities used Rs 59.375 crore in the 2026 half year, compared with Rs 25.402 crore generated in the prior-year half year. The 2026 investing outflow included Rs 55.480 crore for acquisition of right-of-use assets and Rs 24.277 crore for property, plant, equipment and intangible assets.

Financing activities generated Rs 113.135 crore in the half year ended September 30, 2026, compared with Rs 28.300 crore used a year earlier. The principal disclosed movement was Rs 129.522 crore of proceeds from current borrowings, and cash and cash equivalents consequently rose to Rs 134.797 crore at September 30 from Rs 71.222 crore at the start of the period.

Avalon Technologies allotted 70,545 equity shares during the September 2026 quarter on exercise of employee stock options. At September 30, 2026, it had 3,48,257 outstanding options from 20,93,321 options granted; these instruments are separate from the proposed 19,37,808 Zollner warrants.

Conclusion

Avalon Technologies has disclosed two linked post-quarter developments: a 49%-owned Indian manufacturing venture in which Zollner holds the majority stake, and a proposed Rs 425 crore preferential warrant issue to Zollner. The venture's PCBA, box-build and system-integration remit sits within Avalon Technologies' disclosed EMS activities, while the company entered the period after reporting higher September-quarter revenue and profit than both the June 2026 and September 2025 quarters.

Next, shareholders and regulators must approve the October 27, 2026 warrant proposal before any allotment can occur. Further disclosures to watch include the warrant conversion terms and intended use of proceeds, as well as Zollner Avalon's capitalisation, operating timetable, capacity, customers and financial contribution following its October 19, 2026 incorporation.