Avantel stock climbs 19% to hit new all-time high as investors cheer influx of orders

Avantel, a telecom product manufacturing company, witnessed a 19% spike in its shares during today's intraday trade, reaching a new record high of Rs. 168 apiece. The shares began their upward journey on May 30 after the company secured an order worth Rs. 109.76 crore from the Ministry of Defence, Government of India, for the supply of SATCOM equipment. 

This marks Avantel's third order in a month, following a ₹5 crore order from Mazagon Dock Shipbuilders and a ₹2.29 crore order from Bharat Electronics, both received in May.

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Investors have responded positively to the steady influx of orders, driving a 44% increase in the company's stock price so far this year. This momentum builds on a remarkable 340% rally in CY23 and a 113% gain in CY22. Over the past five years, Avantel's stock has soared from ₹4.22 to its current level of ₹165, reflecting an impressive 3800% increase.

The company specialises in designing, developing, and maintaining wireless and satellite communication products, defence electronics, radar systems, and network management software applications primarily for the aerospace and defence sectors. 

Since the early 2000s, the company has strategically repositioned itself to focus on providing system-based solutions across four key verticals: satellite communications, HF communications, electronic warfare, and radar systems.

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Achieved new milestones

In FY23–24, the company reached noteworthy milestones with a record turnover of ₹22,391.75 lakh, the highest in its history. The year was marked by the successful completion of several pivotal projects, including delivery of 6300 RTIS systems to Indian Railways, supplying MSS helicopter version units to Lockheed Martin, USA, providing MSS M II terminals to various ships and strategic vehicles, and installing S-band Hub stations and MSS terminals for ICG. 

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Moreover, the company designed, developed, and demonstrated 1 KW HF software defined radio (SDR) sets compliant with SCA 4.1 architecture for the Indian Air Force. Additionally, it secured a supply order from NSIL, ISRO for 30,000 MSS terminals for shipping boats to be delivered in FY 2024–25.

Outlook for the next year

Avantel is strategically positioned in the strategic electronics segment, particularly with its indigenous offerings in satcom, HF systems, and various types of software-defined radios. 

The privatisation of the space domain has opened new avenues, and the company is poised to capitalise on these significant business opportunities. It is actively planning to enter additional segments of space technology to provide unique, customised solutions to the Indian defence sector.

The company plans to introduce several new products, including SCA-compliant HF Software Defined Radios and MSS Xponders for fishermen, expanding its current product lines.

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It is also establishing a facility in E City, Shamshabad, Hyderabad, with a built-up space of about 70,000 square feet on approximately 4 acres of land. This facility, scheduled to be operational by October 2024, will feature state-of-the-art facilities and infrastructure for space technologies, the company said in its FY24 annual report.

In line with its diversification plans, the company has embarked on new initiatives and submitted proposals to IN-SPACe, ISRO, and the Government of India for the establishment of a ground station as a service (GSAAS) facility and SATCOM as a service through a dedicated satellite.

Additionally, it is also setting up a state-of-the-art R&D and production center on about 2 acres of land, with a built-up space of approximately 30,000 square feet. This center is expected to become operational by Q3 FY 2024–25, according to the company. 

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Over the last 10 years, the modernisation budget and the capital outlay on defence services have grown consistently. In BE 2024–25, an amount of Rs. 141,160.9 crore has been allocated under the modernisation heads. This represents an increase of 5.52% over the BE 2023–24 allocations under the same heads, which stood at ₹133,871.26 crore.

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