Avalon Technologies Ltd (NSE: AVALON) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
Kunhamed Bicha — Chairman and Managing Director
Suresh Veerappan — Chief Financial Officer
Analysts:
Ravi Swaminathan — Analyst
Rahul Gajare — Analyst
Meet Jain — Analyst
Praveen Sahay — Analyst
Dhananjai Bagrodia — Analyst
Renu Baid Pugalia — Analyst
Chirag Maroo — Analyst
Vineet — Analyst
Sumit Kumar — Analyst
Deepak Krishnan — Analyst
Bhoomika Nair — Analyst
Karan Sanwal — Analyst
Jeetu Panjabi — Analyst
Ashutosh Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Avalon Technologies Limited Q3 and Nine-Month FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Ravi Swaminathan from Avendus Spark. Thank you, and over to you, sir.
Ravi Swaminathan — Analyst
Thank you. Thanks, Dorwin. Good afternoon, everyone, and a warm welcome to the Q3 FY ’25 earnings call of Avalon Technologies. To take us through the results today, we have with us from the management, Mr Kunhamit, Chairman and Managing Director; Mr Baskar Srinivasan, President; Mr Suresh VR, Chief Financial Officer; Mr Sriram; Chief Operating Officer; Mr Vinki Venkatesh, Chief Sales Officer; and Mr Michael Robinson, Chief Operating Officer from US Operations. MR. Will give us an overview of the business performance and will be followed by Mr Sure’s remarks on the financial performance, post which we will open the floor for Q&A. Thank you.
As we move forward, it is important to bear in mind that any forward-looking statements made during this call are subject to potential risks and uncertainties, both known and unknown.
Now without any further delay, I will hand over the floor to Mr for his initial remarks, the CMD. Thank you, and over to you, sir, your line is unmuted. You may proceed.
Kunhamed Bicha — Chairman and Managing Director
Thank you, Ravi. Ladies and gentlemen, on behalf of Avalon Technologies, I extend a very warm welcome to our Q3 FY ’25 earnings call.
I will quickly introduce Avalon Technologies, especially for the ones who are joining us for the first time. Avalon Technologies established itself as a key player in electronic manufacturing services with a global reach. We take pride in our leadership in high mix flexible volume manufacturing. We currently operate 14 manufacturing facilities in India and the United States. We are also adding a new manufacturing facility in India. Our key differentiators are, one, vertical integration. We offer a complex box built solution right from PCB design, new product development to final product manufacturing to global presence, both in terms of manufacturing presence and customer-base. Three optimal mix of established industries like industrial, rail, aerospace, medical, communications and emerging industries.
Now turning to our business performance, we are pleased to share that we remain on the growth path that we guided earlier. Momentum continues to accelerate this year, driven by the recovery of our US customers and our expanding presence in the Indian market. This strengthens our confidence in the growth ahead. We see this year as a pivotal moment, laying the foundation for a significant growth over the next decade. Initially, we guided 14% to 18% revenue growth and later revised it to 16% to 20% in our earlier earnings call.
Now we are further increasing our FY 2025 revenue growth guidance to 22% to 24%. We built mission-critical long-life cycle products and aim to be a trusted partner for our industry-leading customers. By focusing on long-term profitable growth opportunities, we have maintained industry-leading gross margin, staying away from the short-term. We have initially communicated 33% to 35% as a reasonable gross margin range in the medium-term. Given our progress this financial year, we are now increasing our FY 2025 gross margin guidance to 34% to 36%.
Moving to our Q3 FY ’25 performance. As discussed in previous calls, key highlights for this quarter include our growing sales, increasing order book and improved profitability driven by operating leverage. In Q3 FY ’25, our revenues grew by 31.1% year-over-year. Our gross margin percentage improved from 36.8% in Q3 FY ’24 to 37.3% in Q3 FY ’25. As we anticipated, the benefits of operating leverage are now evident EBITDA margins rising to 12.3% in Q3 FY ’25. Absolute EBITDA grew by 109.5% year-over-year. Our PAT stands at INR24 crores, reflecting a 264.9% year-over-year increase with PAT margins of 8.2% in Q3 FY ’25. Our order book grew by 25% year-over-year, reaching INR1,594 crores as of December 31, 2024 with an average execution period of 12 to 14 months.
Additionally, our long-term contracts, which extend beyond 14 months and span an average execution period of two to three years increased by 32% year-over-year to INR1,11 crores. Our net working capital days improved from 161 days in March 2024 to 150 days in December 2024. We had initially targeted an improvement of at least 10 to 15 days by March 2025. Despite a temporary increase in our net working capital days from 134 days in September 2024, we remain confident in meeting our original guidance of 10 to 15 days improvement by the end of this fiscal year. Revenue-share from our US manufacturing plant now accounts for 12% of our revenue in Q3 FY ’25, reporting a net loss of approximately INR3.4 crores, an improvement from the INR14 crore loss reported in Q1 FY 2025. Meanwhile, manufacturing at our India plants, which serve both our domestic and global customers represent 88% of our business in Q3 FY ’25, remains highly profitable with an EBITDA margin of 15% and a PAT margin of 10.8%.
We have previously outlined our three key drivers of growth. Our existing US business, new US business and expanding Indian business. The recovery of our existing US customer-base highlights the strength of our long-standing customer relationships. We believe the US market is continuing to gain traction and we are optimistic about the growth potential in this large addressable market. To our recent successes in the industrial, automotive and aerospace sectors with leading US companies are progressing for design and prototype stages to commercial production. With ramp-up expected in the upcoming quarters, we are seeing increasing momentum with new wins in the US, which reinforces our vertically-integrated capabilities and strong market.
In the rapidly-growing Indian market, our focused efforts over the past two years have resulted in key wins in industrial, rail and communications sectors. These wins are transitioning to commercial production and are expected to ramp-up significantly — significantly over the next few quarters. We are encouraged by the traction across all three growth engines, which strengthens our confidence in the growth opportunities available to us over the next decade. Turning to key deal wins, we continue to see strong traction across multiple sectors in both India and the US.
We are moving from prototype to volume production this quarter for a global auto component company specializing in motion control systems and our long-standing presence in the aerospace industry over the past eight to 10 years is now translating into significant new business wins as we advanced through the prototide stage in FY 2025, we will provide further updates in the coming quarters. In India, our rail business is scaling up well with customer performance, stronger performance expected next year. Additionally, we are actively working with our customers on anti-collision cover systems, which we believe offers significant business potential in the future.
On the infrastructure front, we are pleased to announce that the plant in Chene dedicated to export is now complete and has started production. Additionally, Phase-1 — Phase-1 of our brownfield expansion in Chennai designed to meet the growing demands of our domestic market is finished. Phase-2 is expected to begin within the next quarter. This positions us well to manage the increased demand expected in the coming periods. With the expected revenue growth in the coming years, combined with our established team and infrastructure, operating leverage will be a key advantage.
In summary, we are seeing strong signs of growth, which we expect to sustain and accelerate in the future. I would like to thank each of you for being part of our journey. This has been a pivotal year for us and marks one of the many years of strong performance ahead. Avalon remains committed to building a business focused on long-term profitable growth rather than short-term gains.
With that, I would like to hand over the call to our CFO, Suresh for a detailed overview of our financial performance. Thank you so much. Thank you.
Suresh Veerappan — Chief Financial Officer
Thank you,, and good afternoon, everyone. Thank you for joining the call today. As KB mentioned, all three of our growth engines are advancing at distinct but accelerating rates. The US market is gaining traction and our presence in the Indian market continues to strengthen. Reflecting this positive trajectory, we are further increasing our FY ’25 revenue growth guidance to 22% to 24%. In Q3 FY ’25, we recorded our highest-ever party revenues of INR281 crores. This reflects a 31.07% year-over-year increase from INR214 crores in Q3 FY ’24. In nine months FY ’25, our revenue from operations is INR155 crores, an increase of 16.1% year-on-year. Our geographical revenue split for the quarter was INR455 with India contributing INR125 crores and the US contributing INR156 crores.
For Nine-Month FY ’25, our geographical revenue split was 4258 with India contributing INR319 crores and US contributing INR437 crores. Our gross margin for Q3 FY ’25 reached INR104.8 crores, reflecting a strong 33% year-over-year increase from INR78.9 crores in Q3 FY ’24. Our Q3 FY ’25 gross margin was at 37.3%, up by 48 bps from 36.8%. For Nine-Month FY ’25, our gross margin stands at 36.1%. We continue to maintain industry-leading gross margins.
EBITDA for Q3 FY ’25 stood at crores, reflecting a 110% increase from INR16.5 crores in Q3 FY ’24. This resulted in an EBITDA margin of 12.3%, up by 462 basis-points from 7.7% in the same-period last year. For nine months FY ’25, EBITDA stands at INR23 crores, reflecting an increase of 55% year-on-year. EBITDA margin for Nine-Month FY ’25 stands at 9.1%, marking an improvement of 245 basis-points year-on-year.
PAT rose to INR24 crores, a 265% year-over-year increase from minus 6.64% with a PAT margin of 8.2%, up by 521 basis-points from 3% in Q3 FY ’24. For nine months FY ’25, PAT stands at INR39 crores, an increase of 87.2% from minus INR21 crores in nine months FY ’24.
Our profitability continues to strengthen, delivering sustained growth. Our operating leverage becomes increasingly evident as revenue grows, translating into enhanced profitability, given that a significant portion of our cost structure remains fixed. This phenomenon is reflected in our Q2 and Q3 results.
Moving on to the balance sheet. Net working capital days improved from 161 days in March ’24 to 150 days in December ’24. Net inventory days came down from 118 days in March ’24 to 103 days in December ’24. Trade receivables increased from 79 days in March ’24 to 94 days in December ’24. Trade payable days increased from 36 days to 46 days over the same-period. However, net working capital days have increased from 134 days in September ’24 to 150 days in December ’24 due to increase in receivable days from 80 to 94 days during this period. We remain confident in our ability to reduce net working capital days by-10 to 15 days in FY ’25, in-line with our earlier guidance.
As of December 31st, our total outstanding debt stands at INR156 crores with cash equivalents and investments at INR129 crores. Our capex for Q3 FY ’25 and nine months FY ’25 was INR11.3 crores and INR32.7 crores, respectively. With the capex-like model, our asset turns are strong at 8.8. The budget for FY ’26 is currently in-progress and we will be in a better position to provide detailed insights about our FY ’26 outlook in our next call.
To summarize, the momentum across our three growth engines along with improved profitability and a strong financial position strengthens our confidence in achieving long-term sustainable growth. With a continued focus on operational efficiency, working capital management and strategic execution, we are well-positioned to capture the opportunities ahead. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. We have the first question from the line of Rahul Gajari from Haitong Securities India Private Limited. Please go-ahead.
Rahul Gajare
Yeah, hi. Thanks for the opportunity and congratulations on the strong performance that we’ve seen during the 3rd-quarter? And also, I think I should congratulate you for very elaborate opening remarks, which covered many of my questions. So to start the questions, the first question I want to ask you is on the margin front. Given we’ve seen significant ramp-up in both the geographies, what do you think is more sustainable margin both in India and US, given some of the business will transition from prototyping to full-fledged manufacturing? Thank you.
Kunhamed Bicha
Hi, Rahul, thank you for your question. We believe that we have always maintained between 33% and 35% as the margin we target, but certain years we may be higher like this year. We hope to do better than that, but we target between 33% and 35% average gross margin between the two geographies.
Rahul Gajare
Yeah. And you know, at EBITDA level, how different will that be given significant operational cost in the US operations?
Kunhamed Bicha
So actually, we have like we mentioned in the last few quarterly calls, we have reduced our operating costs, but there is a good opportunity in the US today. We have to see how the politics of that plays out. So we intend to maintain the same margins going-forward because we can always increase price.
Rahul Gajare
Okay. My second question is on your expansion plan. And you’ve indicated the Phase-2 will start — Phase-2 work on Phase-2 will start in a couple of quarters. So I want to know when will that be ready? And what could be the peak revenue once the Phase-2 is completed?
Kunhamed Bicha
So we usually build-up space six months-to a year before we need it. So the key for us is now we built the export facility and that is ramping-up as we speak. So this will take at least six to nine months to complete. And then from that point, we’ll have enough space in capacity for the following year. And we’ll continue to do this as we go-forward. Yeah. Because our longest lead-time for setting up factories is the infrastructure itself anything else?
Rahul Gajare
Yeah. And my last question is on — I think you probably just touched on that. With Trump at the helm in the US and his view, which are not very favorable towards clean-energy, renewable, et-cetera, how do you think your overall business could shape up, given we have sizable business coming from the clean-energy vertical? Thank you very much.
Kunhamed Bicha
So let me — I think there’s always been confusion that we are in the solar side, a very small portion of our business is in the solar side, which could get affected in the US. But we are on the storage side, which is — which is storing the energy. So that is growing between 50% and 70% in the US year-over-year and we are also in different other clean-energy products apart from solar. So I explain that it’s not — it’s not rooftop solar that our main piece of businesses. So the other piece is actually seeing significant growth.
Rahul Gajare
Okay. Fine. Thank you very much and all the very best.
Kunhamed Bicha
Thank you, Rahul.
Operator
Thank you. The next question is from the line of Jain from Motilal Oswal. Please go-ahead.
Meet Jain
Hello, sir. Thanks for the opportunity and congratulations for a very strong set of numbers. Sir, my first question is regarding our product and mix. As you can see, our industrial segments this quarter has seen a very good jump. Can you elaborate on that which segment or which product categories and which you have you seen such kind of growth?
And my second question is on the receivable days. So is this a passing kind of increase like normal operational or there is some kind of delay in receivables. Thank you.
Kunhamed Bicha
Let me address the first part of it. We are seeing growth in multiple industries and because we are well-diversified, if one industry slows down, it doesn’t affect us as much. We have seen a very strong growth in industrial, okay. We’ve seen a little bit of slowdown in communication, but that doesn’t mean that the whole thing is slowed down, but it’s coming next quarter or the following quarters. So we are seeing good traction in industrial, mobility and clean-energy sectors and in Q3, if you look at clean-energy, we have grown 53% year-over-year, mobility and industrial 57%.
Suresh Veerappan
Onto the second part of the question on the receivable days, this is more a temporary phenomenon. We were maintaining our receivable days around the 80 days mark, which is what we even saw in September ’24 quarter. So what we see as 94 days in December ’24 is more a temporary phenomenon. Like we said in the opening remarks, we are confident of reducing our overall net working capital days by-10 to 15 days as like what we had guided for the beginning of the year.
Meet Jain
I have one more question on our manufacturing ship, now we are almost 88% of the manufacturing in India. And earlier when we used to have almost 25%, 30% of manufacturing in USA, our pitch was making — made in USA will be a theme which will need some substantial value addition in US. So is that theme still valid because majority of the manufacturing will be shifted to India and very minimal manufacturing. So our clients in the US, will they — I mean, are this — will they see any impact on this because of that?
Kunhamed Bicha
Sumit, I don’t believe there’ll be an impact. The way we look at it is the customers got both options. We can pay a higher price in the US if they want to do it in the US. But today with India’s emergence as EMS location, we are seeing customers come directly rather than what it was 10 years back, you needed to have a stop in the US and then come here. We are seeing customers come directly and start production here. But there are certain type of products, which are large in nature, which we intend to continue making in the US because that is you can’t — the transportation costs cannot — it’s not affordable to make in India. Did that answer the question me?
Meet Jain
Yes, sir. Thank you. And on the margin side, we did almost 12.3% kind of margin this quarter. What will be a sustainable margins going ahead? Will we be able to achieve this because we’ll see increasing operating leverage also and when we say our gross margin will be in the range of 33% 35%, so can we see this margin to be sustainable or even if improvement is possible, a sustainable margin of 12.12% will be good assumption?
Kunhamed Bicha
I think that’s a decent assumption. We always strive to do better, but for the sake of this call, I think you can assume it will be close to that.
Meet Jain
Thank you. Thank you so much all the best.
Kunhamed Bicha
You’re welcome. Thank you.
Operator
Thank you. The next question is from the line of Pravin Sahay from PL Capital, Prabhudas Lilladher. Please go-ahead.
Praveen Sahay
Yeah. Thank you for opportunity. The first question is related to the ’25 guidance of 22% to 24% of a growth that tells that the 40% to 48% of growth for Q4 you are expecting. So can you give some more color on the — from which segment or the order book you have in-place, which led to a significant growth in the Q4?
Kunhamed Bicha
Thank you, Praveen for the question. So we are confident of doing this and it’s a broad-based growth as you’ve seen in the last two quarters. To remind you, we were last — a year back, we are saying customers had slowed down in the US, so a lot of our existing business has slowed down across industries. We are seeing a lot of that come back not only at the present levels, but better than the present levels and some new customers will also start this year — this quarter. So we are fairly confident if we’re looking for that.
Praveen Sahay
Yeah. Related to that, you know, for a quarter definitely there is some up-and-down in the contribution but one in the opening remarks you had mentioned related to the auto you are focusing on the volume product and motion control system you are getting in an order. So can we assume that the auto is going to one of the big driver for FY ’26 for your revenue?
Kunhamed Bicha
No, I wouldn’t completely, it’s one of our sectors, okay. It is a part of what we do, but we are doing a lot of the auto for export. So it’s not a margin streng. It will be like rail or air, it will be one of our sectors. So it’s not a — our business is not based on auto. Auto is just one of our sectors.
Praveen Sahay
Okay. So you’re able to maintain the contribution where you are even after all?
Kunhamed Bicha
Yes. Yes, very much.
Praveen Sahay
Yeah. And related to the Chennai plant, the Phase-1 has been completed. So how much is the contribution so-far you had received from the channel, like that’s started contributing in the revenue or we will see the major revenue contribution from the FY ’26.
Kunhamed Bicha
The export plant is fully operational. We are already starting to see revenues. So that’s why we always said that year to year for a couple of years, we need INR40 crores to INR45 crores of capex and explained the numbers to you. And this revenue from this plant is only going to increase. So that’s why we are confident even if the rate of growth is higher, we can meet that with our capacities.
Praveen Sahay
And two questions. Last one is if you can give any color on your order book, domestic and international and reason for increase in other income? Thank you.
Suresh Veerappan
So on the first part, the order book proportion also is very similar to what you see in the revenue proportion of between 45% and 55 what we see on India and US, it’s on the order book. The second part on other income, one component of that is the returns that we have generated from our investments. The second component is on the forex income.
Praveen Sahay
Okay. Thank you. Thanks a lot. All the best.
Suresh Veerappan
Thank you.
Kunhamed Bicha
Thank you.
Operator
Thank you. The next question is from the line of Bagrodia from ASK. Please go-ahead.
Dhananjai Bagrodia
Hi, sir. Congratulations on a very good set of numbers. So I just wanted to understand now, obviously, so our benefit is that we are present in globally in terms of we have a good facility in US and are we seeing any intake in terms of new clients coming in or how is the pipeline that see that as a factory which we have ample capacity and which can ramp-up significantly. Any thoughts on how that’s coming along?
Kunhamed Bicha
Thank you for the question. The — for us, US is always a bleacher. We need it to bring business into India. Our goal, 88% of what we do delivers 15% EBITDA 10.2% PAT today. So the best business for us is to have US clients who can make in the US, but to make sure that they come directly if you have a plant in the US factory in the US that eases the process because there are multiple ways customers look at because they have service levels in the US itself when things — when they have changes or when they need something expirited. So it is just a plus point. Our goal is always to make in India, but make in India for the world. And saying that, our India business, which we technically got into two to three years back is starting to pay dividends or order book as well as production is increased.
Dhananjai Bagrodia
Okay. Hello? Hello.
Kunhamed Bicha
Yes.
Dhananjai Bagrodia
So are you all seeing a thing like now with your customer interaction now Trump has come in all, but seen lot of customers who are coming in to want to diversify from other regions to US because see no one wants to lose sales. So are we seeing a big uptick in that in our pipeline?
Kunhamed Bicha
We’re seeing. Yeah, we’re seeing a lot of activity. Actually, we have seen a lot of activity in customers moving products from Mexico to us and that’s only because we have a factory in the US in the sense not US, but directly to India, okay. There are some — so there are some — they look at the risk profile, which country to be, the US is expensive. So then we move to India. So we’re seeing some of that activity and I think that is a pleasant surprise for us also.
Dhananjai Bagrodia
Okay. So and how should one look at US in terms of — how should we look at our US segment as growth or how much growth could we look at that? Or is it too early days right now?
Kunhamed Bicha
No, because with Trump, you don’t know what — what can happen, but we are there in both locations. So if a customer wants to make in the, he makes it a higher price. But our goal is to move that to production in India. So I think we are covered both ways if any of the come into play, I think we are very much ready for it either way.
Dhananjai Bagrodia
Okay. And any other risks we are seeing along those lines?
Kunhamed Bicha
We don’t see anything as of today. I mean, it is a positive time in the evolution of our company. And so what we’ve been kind of telling over the last six quarters is the slowdown and last two quarters we’ve seen growth and we will see sustained growth for the — for the pre mid-term period also.
Dhananjai Bagrodia
Okay, right. Sure. Thank you, sir. Thank you so much. And best of luck.
Operator
Thank you. The next question is from the line of Renu from IIFL. Please go-ahead.
Renu Baid Pugalia
Yeah. Good evening, team, and congrats for the good performance. My first question is on inflows. I see broadly inflows have been flattish for last couple of quarters and order backlog is in the INR1,400 crore range. So how should we look at the execution timeline of the orders in-hand after the upward division in revenues for fiscal ’25? And how does the growth pattern look at this point in time-based on the order inflows and pipeline that we have for fiscal ’26?
Kunhamed Bicha
That’s the first question value, for your question. So like I said in my opening remark, for the 12 to 14 month period, okay, which we have confirmed POs of INR1,594 crores. For the 14 months-to three years, we’ve got INR1,11 crores, which is a year-over-year increase of 32% on the second. And we don’t count anything. We have contracts for 15 years in certain cases. We don’t count those contracts in these numbers. So we are looking at a short-term to mid-term picture where executable orders are there and we intend to increase this. So there’s a clear revenue guideline that this is there and more increasing as we speak. Year-over-year, we’ve seen a 25% growth and we’ll continue to see that in the coming quarters.
Renu Baid Pugalia
Sure. Second is, would — would — yeah. Second, will it be possible for you to share any updates with respect to where are we in terms of completing the prototyping and the pipeline for — of new products with our large US clean-energy customers there, be it Lunaro and Arka, any updates on how are we those are all ramp-up with them?
Kunhamed Bicha
Yes. So like I said, I think in our lives, we are past that. That’s a small part of what we do going-forward. Two years back, it was a big pass. But to say that we have started production. We have started production.
Renu Baid Pugalia
Okay. And we are seeing the ramp-up as scheduled or as planned or it’s slightly softer?
Kunhamed Bicha
No, I think as per plan, but we have taken a very conservative number on it.
Suresh Veerappan
So it is progressing as planned. In the last call, we had mentioned that in Q4, the commercial will happen in Q1 is when the ramp-up is going to start. So it is progressing as plan.
Renu Baid Pugalia
Got it. And lastly, within the autos, would it be possible for you to share what are we doing to improve our exposure to the EV portfolio and simultaneously any investments in R&D to step-up capabilities on this side?
Kunhamed Bicha
So we are looking at as one of the sub-verticals like an air or rail, it’s not something which is not a do-or-die for us. And we are looking at it globally. So it’s going to be just not EV. We are in the — the what we call the normalized engine also. So it’s just not EV related. So especially outside India.
Renu Baid Pugalia
Got it. Got it. Thanks much and best wishes team. Thank you.
Kunhamed Bicha
Thank you.
Operator
Thank you. The next question is from the line of Chirag from Keynote Capital. Please go-ahead.
Chirag Maroo
Yeah. Thank you for the opportunity. Sir, I just want to know that as we are growing at a high double-digit rate, I just wanted to understand what is our current capacity utilization and what are our capex going-forward as we might be already reaching INR300 crores INR350 crores top-line on a quarterly run-rate?
Kunhamed Bicha
Chirag, I think we have enough capacities that we’ve always said that we have planned this for doubling our growth in three years. So we are not too concerned on the capacities. Of course, there are some issues here and there, but it’s all solvable. Mostly it is how fast we can get space organized. And we’ve always said for the next couple of years, we’ll need a capex of around INR40 crores to INR45 crores and we are maintaining that because we have always believed that we should operate in a asset terms of 8% to 10%. That’s always been our goal.
Suresh Veerappan
10 times.
Kunhamed Bicha
10 times, sorry, 8 to 10 times.
Chirag Maroo
Right. Yeah, I got that. And as we are almost each a cash-flow company, which is going to give almost INR100 crores cash-flow on an annual basis. So it would be just 50 percentage of that would be in capex and another 50 percentage we are keeping it for some kind of inorganic growth or we are going to provide some dividends to the shareholders. Any thoughts on that?
Kunhamed Bicha
Sure. So my thought on that is very clear. We are hoping to see some substantial business — we are hoping, I’m not saying we have and we’ll need the cash at that point of time, okay. So we hope that it comes through in the next year or so. So we still maintain the capex will be INR45 to INR50 sorry, INR40 crores to INR45 crores a year, at least for the foreseeable future. There’s something substantial breaks, of course, we’ve got to look at it differently.
Chirag Maroo
Fair enough. After just one clarification, you have also given to the earlier participant, I might have missed it. But once the second phase of the capex is getting completed, what kind of revenue we can actually expect at optimum utilization.
Kunhamed Bicha
So, like I mentioned, we build-up buildings ahead of the business, right? So we — what we’re doing is this building will be utilized nine months from now. So there’s a lot of business coming in. So we just need space to operate. So we are building the building and deciding what to put in there three to six months from now. So we are always ahead by nine months-to 12 months.
Chirag Maroo
Fair enough, fair enough. And sir, as our revenue from is inching up again to 50 percentage, if I’m not wrong. Can we expect that the margins from current level can even go further up as revenue from box improves.
Kunhamed Bicha
And I think our commitments of margins, of course, we are pushing for higher box build and more complex box builds. We will strive towards that, but we want to guide lower.
Chirag Maroo
Okay. Okay. And last from my side. Sir, as you just mentioned in my initial comments that still the US plant is still making losses on PAT levels. Any clarity on that? Because as you said, new orders and new order book is being coming from US from the — from at this moment and there are few of the few of the products that can’t be built over here. The larger products has to-be-built in US-only, right? So what is your — what is your guidance towards this that will it become PAT positive in the next year itself?
Kunhamed Bicha
I believe it could, but it’s also an insurance policy for us, right? If there is something the political situation right towards US, we can always make some of the products in the US. So I think we stand-in good ground in that sense and that the business does not move anywhere in case there is anything coming up. We feel very good having that facility there. And today as it — as the losses are reduced, I think it’s in a the mistake where I think in the next 12 to 18 months, you could possibly see some positive numbers out of there.
Chirag Maroo
Just last one to squeeze in. So is it fair to assume that we have almost reached a monthly order book in of IN INR125 crores to INR130 crores now?
Kunhamed Bicha
Monthly order book intake at what is this quarter 40 only 350 to INR400, you’re correct.
Chirag Maroo
Right. Fair enough. Okay. Okay, sir. Thank you.
Kunhamed Bicha
Yes, you’re welcome.
Operator
Thank you. The next question is from the line of Vineet, an individual investor. Please go-ahead.
Vineet
Hello.
Kunhamed Bicha
Hello, Vineet.
Vineet
Good evening, sir., I just wanted to give my question on our subsidiaries how they have been structured? Like what is the word we are undertaking in our subsidiaries as the and I mean, how is the business flow over there? Could you please throw some light on it?
Kunhamed Bicha
Could you repeat it? I didn’t hear you really well in the beginning. I heard subsidiaries.
Vineet
I just want to understand on the subsidiaries part, like how are we positioning them? I see some design elements in the ECAD division. So if you…
Kunhamed Bicha
Okay. So ECAD, we all operate as one subsidiaries for a reason. So CNI ECAD is a design company who where we do design as a service. CNN, which is in the US is our US company, which is 100% owned subsidiary, which we do production in the US and ATS is where we do our metals and certain other products, which are not proceeding related. Did I explain what we’re looking at?
Vineet
Yes, yes. Are we looking at any chip design sort of ventures from these subsidiaries going-forward?
Kunhamed Bicha
Yeah, we — in a lot of cases, we do design, but we do — we don’t create the IP. We create the IP for the customer for our service fee.
Vineet
Okay, okay. Any plans to move forward to this — into the sense of design IT, owning the IT?
Kunhamed Bicha
No, it’s sometimes it’s very counterproductive because let’s say we are doing five different type of inverters for the sake of argument for the best guys in the world. And if we have our own inverter design, the other five will not stay with us. So we are a true manufacturing company and we do design as a service. We still have 15,200 people in design, but we design products for customers with the hope that manufacturing comes to us.
Vineet
Okay. Thank you. That answers your questions.
Kunhamed Bicha
Welcome.
Operator
Thank you. The next line of question is from Sumit Kumar. Please go-ahead.
Sumit Kumar
Yeah, hi, sir. So when talking about — talking about Avlon, say, industry is growing at 30% CAGR and so what are we doing to outperform the industry when we see the diversification, we have a decent diversification across industry we have a presence. And also we are focusing on domestic side. So — but what about the guidance and the growth you are talking about and when we see the other companies, some companies are growing more than 40%. So what is our aspirational number for the growth and what are we doing for the higher-growth? In which segment we are focusing where we are lacking? So can you talk on that?
Kunhamed Bicha
Yes. So we always have said that we are not going to do growth at all costs. We are going to do profitable growth. In the sense, we are not going to sign businesses for the top-line, okay. That is a very clear mantra and goal for us and we have maintained that over the years. If we wanted to solve the top-line problem, there’s enough business out there at lower margins. So that’s why we’re not in the consumer space. That’s why we’re not in certain spaces where we can’t achieve that.
So in the longer-term, we’ll continue to do that and we believe that we can grow at a faster rate in our own business, which is the more complex, the more mission-critical, the more difficult to do, the more export. And that has been our goal always has not changed anything. So there’s enough business out there to cater to that. Did I answer your questions?
Sumit Kumar
Yeah. So when you see, because we have seen through FY ’24 the growth and ’25 onwards, we have seen recovery. So for that, what are the risk mitigation, what are the diversification we are thinking of? We have a higher — higher contribution of export now focusing on domestic. So in that we have seen the clean-energy is not doing good in US, our growth is muted. So if this kind of scenario is not going to arise in future, what are — what are other segments we are diversifying?
Kunhamed Bicha
This correct that if that’s okay with you. Our clean-energy, which is 22% of the business grew 53% year-over-year.
Sumit Kumar
Okay.
Kunhamed Bicha
Okay. So it is going — our growth is going to come from sectors and a few couple of industries we’re entering into, which we’ll talk about a few quarters later, okay, which we are specifically targeting again the same business model as we have today. And I think there are sub-verticals in the five verticals we have and we are very confident that piece will be a different set of growth rate than what we have today in these five verticals.
Sumit Kumar
And what about the railway? How things are going on in railway side?
Kunhamed Bicha
Railways is a good part of our revenue and a lot of that is in the — in India, and we are seeing tremendous growth this year as well as we are going to see more next year. And we have added a few more products, products added to our railway portfolio, which I think as the country, as India, as we grow, we’re going to see a large pattern of growth and complexity.
Sumit Kumar
Okay. Thank you, sir. Thank you so much.
Operator
The next line of the question comes from Deepak Krishn from Kotak Institutional Equities. Please go-ahead.
Deepak Krishnan
Hi, sir. I hope I’m audible.
Kunhamed Bicha
Hi, Deepak, your perfect is audible.
Deepak Krishnan
Yeah, congratulations on a good set of results. I just more from the previous participant itself. Now you said three levers of growth. I think first is recovery of the US existing base that’s definitely come through and there could be further growth there. But in terms of incremental growth..
Kunhamed Bicha
Deepak — Deepak, you sound a little bit muted. Can you repeat the question again? There was some… Sorry about that.
Deepak Krishnan
Is this better now?
Kunhamed Bicha
Yeah, it’s much better now, much better now.
Deepak Krishnan
Yeah, I just wanted to sort of understand the incremental…
Kunhamed Bicha
Deepak, are you there?
Operator
His call got disconnected. Should I promote next one.
Suresh Veerappan
Yeah, go-ahead.
Operator
Thank you. The next line of question is from Nayal from DM Capital. Please go-ahead.
Bhoomika Nair
Yeah. Congratulations, sir, on a good set of numbers and strong growth in the current quarter. Sir, just wanted to get a sense in terms of you know this in terms of the new clients and the order intake that we are seeing, which areas if you can talk about which is seeing a strong scale-up from an end-user perspective, how large are they? If you can get some color in terms of that aspect, sir?
Kunhamed Bicha
Hi,, as usual, you asked the most difficult question, but I will try to answer it best — best way possible. See, lot of — see the key part of it is export is back, okay. That was where we were struggling for two, 3/4 and that’s where our business was. And with that, the India piece is growing. So we see a broad-based growth, especially the industrials have done very well in this quarter and we’ll continue to do well in the following quarters. But as we target to have a 25% to 30% in each of these verticals.
So what you’re seeing is in India, you’re seeing a lot more of the mobility that’s per se, rail business and the air business coming through. Industrial is a 50-50 mix and the order intake is very similar to what we are seeing in the past, it’s a healthy mix between the three. Communications, you may see a bigger upside in the future. And medical, of course, we don’t focus as much now. But it’s going to be split 50-50.
Our goal has always been to get the company to be 50% in India and 50% outside India because if we go back three years, we were 70% outside India and 30% so we will never be caught in the wrong foot like what we were caught 12 18 months back. So in that sense, it’s a broad-based growth and we have like as mentioned before, couple of verticals which are exciting for us. And as we get deeper into that business, we can talk about it.
Bhoomika Nair
Sure, sure. That helps. So the other aspect is with this whole administration change in US, but you have obviously have both offerings, right? Are you seeing — we shifted a lot of manufacturing to India over the past year, year and a half. Are you seeing some of the clients rethinking their decision, wanting to come back to US manufacturing or anything of that sort, you’re sensing — they might not have yet taken any decisions as such, but are you sensing any of that kind of conversations with your clients?
Kunhamed Bicha
In fact, we being the opposite of that. So the clients have move, now they’re moving other products directly to India, which is a good sign. And the way I look at it is in case there is a tariff or something put on it, we can always make it back-in the US at a higher-cost. Okay, of course, the charges will go up but I believe that you know we move to India as true we have convinced these customers that we can make in India because they were paying to do to the US and we have done that because we are lucky that we did that year before the election because right now we don’t know which way it’s going, every day it changes right. So we can’t make a guess or customers can’t make a guess on what’s happening. But the interesting piece for us is even the places close to the US, we are seeing some traction with business moving to India to us.
Bhoomika Nair
Okay. Okay. Okay. That’s interesting. And even the new customers are happy to kind of just directly move to India rather than wanting to have a production in US, would that understanding be correct?
Kunhamed Bicha
I would say by far that’s always been our goal if to make it in India. If the guy want to start there, they are more than happy to do it and transition out in six to six months-to a year, however it feels like. But certain products cannot move like these — because they are military stuff which we do cannot move outside the country. So we’ll focus on that and I think there is a huge potential there too to make stuff in the US and we look at it from that context.
Bhoomika Nair
Sure. The other aspect is on the — we’ve scaled down on US quite a bit. We’ve moved to India. We’ve seen clients coming to India as well. But the US business continues to be a bit of a drag had it not been for US, we would have actually reported a much better margin profile. So how are you seeing that loss kind of tapering down given that there’s not really much of revenue momentum that’s happening and the negative operating leverage in US is really hurting us or not materially as it was perhaps, say, a year-ago, it’s obviously come down dramatically. But where do we get into a breakeven situation or some bit of a profitable situation in the US?
Kunhamed Bicha
So end-of-the day, in our minds, we are very clear that US is our big share, okay. A lot of the activity, lot of the conversation happen there and if they want prototypes, we can still do it there. So at this point, we believe it is essential to have absolutely essential to have that front-end, especially when you’re dealing with very complex products where you have engineering interactions, because you have understand the 12 hour time difference to convince an engineer to talk to somebody in India is always a convincing story, right? And we have teams of engineers, whether it’s 18 or 20 engineers involved in a project from the US and from our side. That actually helps in a big way. That’s probably the most positive thing we have because 55% of our business is in the US and that’s a support structure with — okay. So we believe that is — even if there is a small loss on that and we hopefully we breakeven, our goal is to make it profitable. And we will strive towards that.
Bhoomika Nair
Okay.
Kunhamed Bicha
But it’s lower-cost now if you…
Bhoomika Nair
Like one can possibly view it as perhaps a small cost center to get the volumes or get the customers in, perhaps?
Kunhamed Bicha
Absolutely, absolutely.
Bhoomika Nair
Got it. Got it. Perfect, sir. Thank you so much.
Operator
Thank you. The next line of the question comes from Karan Sanwal from Niveshare. Please go-ahead.
Karan Sanwal
Hope I’m audible. Hello. Hello. Hope I’m audible.
Suresh Veerappan
You’re audible. Please go-ahead.
Karan Sanwal
Yeah, great. Congratulations on good set of numbers. I have a few questions regarding that we talked about reducing our net working capital for the full-year. So would it be predominantly through decrease in receivables?
Kunhamed Bicha
Sudish, you want to answer that?
Suresh Veerappan
It’s going to be a combination of all three aspects. They are working as a team on receivables, payables as well as inventory. But yes, we are confident on reducing the capital base from where we are today to March ’25.
Karan Sanwal
Okay. And also could you — could you get — get us the nine monthly figure for the cash-flow from operations?
Suresh Veerappan
Approximately it will be negative INR10.6 crores on a Nine-Month basis.
Karan Sanwal
Okay. And would we be trying to convert this to positive for the full-year or would it stay negative yes.
Suresh Veerappan
For example, we had INR36 crores of positive cash-flow operations in the first-quarter. It is just in this quarter with the increasing receivables, we saw that. But with the increasing sales and a positive operating leverage, I think in the coming quarters, we should start from there.
Karan Sanwal
Okay. So there is no challenges in collecting receivables, right? It’s just the sales have increased that’s why it has increased. Am I correct?
Suresh Veerappan
Yes. Yes, yes, you’re absolutely right. There are no challenges. These are very large MNCs kind of like watching tech company. It is just a temporary phenomenon, which was collected in the first fortnight of January.
Karan Sanwal
Understood. And also, you talked about the subsidiary, the businesses that we do in the subsidiary. So any specific segments that are covered only through subsidiary or is it all interrelated within the company?
Suresh Veerappan
We operate as a single group, okay. It is for practical purposes. We have different subsidiaries. But the way how we operate, it is a single group.
Karan Sanwal
Okay. One last question. If you could talk about the coverage opportunity that we are doing with the vendor, like when are we expected to start field trials or bid for those tenders. Any or any progress on that part, if you could — anything you could highlight for that?
Kunhamed Bicha
Yes, Karan, this is KB. So we are in different forms of field trials now some products have been built and the trials are customers approved by the Indian railways and when Stage 2 hopefully Stage 2 or Stage 3, we should see a good part of business coming to us. So the trials are going up.
Karan Sanwal
Okay, great. Thank you so much and all the very best.
Kunhamed Bicha
You’re welcome. Thank you.
Operator
Thank you. The next line of question comes from Jitu Punjabi from EM Capital Advisors. Please go-ahead.
Jeetu Panjabi
Hi, thank you. The numbers are great. Thanks so much for that. I have two broad questions. In the — in the backdrop of what’s been happening in recent weeks and since Trumps come in, but there seems to be a fair amount of global distrust that’s come up. My question really is, is there any change in the tone of discussions of customers when they’re engaging with you all? Is there any sense of caution or are you — do you think that they would think about the business in any different — any different way?
Kunhamed Bicha
So see, because the second coming of, most of Americas use of the bus coming, okay. So he did something very similar and it’s what we as a personal opinion is more of a negotiating tool more than trying to get things done. But of course, from a business from an avalone standpoint, if the patriotism of course plays out in America. You have a choice to make it in the US, okay, or you can make it in India, but of course, cost prevails and the first preference is where it is cost-effective. So this — every meeting starts with talk of, but to us it’s what you read in the newspapers today and what be tomorrow will be two different things. You can’t plan for that.
Jeetu Panjabi
Okay. Okay. And are you doing anything different on the back or do you just say status co and business continues.
Kunhamed Bicha
Business continues because see these changes can only happen over a period of a year or two, even if things are transferring from XYZ to one location to another, it takes time because our products are complex. And most customers would not want to change that because some of the lifetime of our products is five to 15 years. So it is not in their best interest to start moving things just because of a change in governance. So we believe in the longer-term, the customers who are here will always be here if any customer wants to make in the US, they are more than welcome to do that.
Jeetu Panjabi
Okay. Now my second question is kind of — you’ve given a guidance of 22% to 24% going next year, which is actually a great number. So thanks for that. But I have a question, in a scenario where you say I want to step on the gas and I want to grow at 35% and not 24. Is there a way to get there? Like is there a — is the opportunity — does the opportunity exist? Do you think you can execute to that opportunity? And is there a model to sustain the business model at a higher-growth rate.
Kunhamed Bicha
Absolutely, you’ve seen the 30% growth rate already in the last two quarters and we think it will be a little bit better this quarter. And we are confident we have set-up our operations and leadership factories out to have the sustained higher-growth. Okay. So for the next 12 to 18 months, we don’t anticipate having an issue with that. Of course, we don’t know what we — what we don’t know. But as we stands in existing type of business, we are very confident.
Jeetu Panjabi
Okay, excellent. And one last piece, if I may sneak in is in the context of these, 25%, 30% or whatever number you’d grow at, what will be the toughest part of the business to manage?
Kunhamed Bicha
See, so in the context, on the technology side, it is broad-based because once the startup of the businesses will take time because there’s lot of engineering content, it is not step and repeat. So some of our products are INR1 crores to INR2 crores are scalable by the one-product, right? So some of them are fairly complex in what we do. So just — so when we plan for a cut-in in four months or six months, that may go to eight months. Both sides, there’s lot of engineering involved to cut in the product. So that I would say is trying to time the pieces of business which are coming in would be difficult because of the cutover because they’re transferring from different parts of the world now they’re introducing a new product and we have to be very and very engineering intensive.
Jeetu Panjabi
Thank you. Okay. Good wishes. Wish you all the best and looking-forward to a great performance next year or two or three. Thank you.
Kunhamed Bicha
Thank you.
Operator
Thank you. The next line of question comes from Ashitosh Agarwal from Northbridge India. Please go-ahead.
Ashutosh Agarwal
Hello, sir, is my voice audible?
Kunhamed Bicha
Yes. Perfectly audible.
Ashutosh Agarwal
Yeah, firstly, congratulations on very great set of numbers and I’m thankful to you being an investor since IPO. So company has done very well like throughout this period. So firstly, I want to give my gratitude and thank you to you for all the efforts
Kunhamed Bicha
You’re welcome and we try to make our goal is to make shareholder wealth creation which needs to happen over a period of time and it’s not instant over a period of time, we are going to create that. And thank you for being an IPO investor and staying with us through the course.
Ashutosh Agarwal
Yeah, thank you so much, sir for kind words. Just sir, I have two queries. Firstly, as a part of long-term vision, can we have like a ballpark number for revenue or PAT for the next three to four years.
Kunhamed Bicha
So we have aspirational goals in the sense what we want to be, but we want to kind of get closer to that and announce things or give guidance, been caught in the wrong foot in the past couple of years. So I think from a sense of the future, the growth is there. We believe that India is getting accepted and there is a push for America where we are all-in both locations. And we do also operate — operate in sense of sales activity in the other geographies also, which will grow over a period of time.
Ashutosh Agarwal
Okay. So like in terms of number, like can we have a ballpark figure like are we looking to grow at maybe 25% CAGR revenue and PAT wise, is there any margin expansion probability? So just wanted to take an idea about that.
Suresh Veerappan
This is we are working on our budget for now. So we will be completing it in this quarter and then probably during the next quarter, we will be able to give more details.
But on your question on revenue growth, I think the industry is growing at a higher pace. It has started our growth momentum. It is only going to get better and we’re going to be stronger from there. In terms of margins, with the scale operating leverage effect will keep continuing to impact us positively, which is what we saw in the last two quarters, except to continue to see the same quarter.
Ashutosh Agarwal
Okay. And my next and last question is with respect to — I know many investors has already discussed this that after Trump, what is the impact? So we are seeing like a lot of positive and negatives on the EMS industry as a whole after Trump. So do you feel that there is a substantial or maybe a reduction in audios or a reduction in business with the US after coming off the — coming off Trump in the EMS industry or do you feel that it is just a social media hype and practically there will not be a major disruption?
Kunhamed Bicha
No, I think, see, both India and US stand to gain out of this, unless you know Trump says something else tomorrow, which I don’t know about, but for us, we are seeing both sides, we are seeing a lot of activity. And we always said previously, our goal is to do 50% in India and 50% of sales as export. So we maintained that and it’s counter — what do you say, it counters each other because last-time we went through a downturn, though, we are diversified, we were a lot US-based. Today, we have come out of that and we have a combination of India, US and of course, few other countries also.
Ashutosh Agarwal
Okay, thank you so much for answering the queries. Looking-forward for more longer-term relationship. Thank you.
Kunhamed Bicha
Thank you for being a shareholder and being with us from the IPO.
Ashutosh Agarwal
Sure, sir, sure. Looking for long-term relationship. Thank you.
Kunhamed Bicha
Thank you.
Operator
Thank you. I would now like to hand over the conference over to the management for closing comments.
Kunhamed Bicha
In summary, we are seeing strong signs of growth, which we expect to sustain and accelerate in the future. I would like to thank each of you for being — I’m sorry, I’m sorry. We are encouraged by the robust support from our investors. We are committed to reinforce the trust that our investors have in our company. I sincerely appreciate your steadfast support and confidence in Avalon. Together, we are set for a remarkable journey of profitable growth and success.
Thanks to everyone attending the call. Thank you very much.
Operator
Thank you. On behalf of Technologies Limited, that concludes the conference. Thank you for joining us and you may now disconnect your lines. Thank you.