Defence Stock with Strong ROE Wins Rs 43.25 Crore Order – Should You Invest?

With a Strong Order Book, This Defence Stock is Gearing Up for Future Expansion

Avantel Limited has received a purchase order worth Rs 43.25 crore (including taxes) from NewSpace India Limited. The contract involves the supply, installation, and commissioning of devices for Xponders. The order, which is domestic in nature, is expected to be executed by August 2025.

Company Overview
Avantel Limited specializes in designing, developing, and maintaining wireless and satellite communication products. It caters primarily to the aerospace and defence sectors, offering advanced solutions in satellite communications, radar systems, and network management software.

Core Business Segments
The company operates in three main areas: SATCOM, wireless communication, and software solutions. It provides INSAT-based mobile satellite services for military applications, radar subsystems for defence, and embedded software solutions. Its strategic focus remains on delivering reliable and high-tech equipment for mission-critical operations.

Clientele and Market Position
Avantel serves major defence and government organizations such as DRDO, ISRO, DPSUs, Indian Railways, and private players in the aerospace sector. Its strategic partnerships with Bharat Electronics and Larsen & Toubro further solidify its market position.

Upcoming Expansion Plans
Avantel is expanding its manufacturing capabilities with new facilities in Andhra Pradesh and Hyderabad. It is also setting up an R&D and production centre for its subsidiary, Imeds Global Private Limited. These expansions are expected to enhance its production capacity and technological capabilities.

Future Growth and Diversification
The company is exploring new opportunities through diversification into Ground Station as a Service (GSAAS) and SATCOM as a Service. Additionally, Avantel is working on ventilator projects in collaboration with ISRO. With a robust order book and ongoing product developments, the company is well-positioned for future growth.

Stock Valuation
The company has a market capitalization of Rs 2,714 crore. It has a price-to-earnings (P/E) ratio of 41.3 compared to the industry P/E of 42.3. The return on capital employed (ROCE) stands at 47.5 per cent, while the return on equity (ROE) is 39.2 per cent. The price/earnings-to-growth (PEG) ratio is 0.98, and the debt-to-equity (D/E) ratio is 0.08. As of February 20, the stock is trading at Rs 111.20, up by 3.95 per cent.

Disclaimer: The article is for informational purposes only and not investment advice.