Defence Stock Trading Under ₹200 That Is Expanding Into Space Infrastructure to Keep an Eye On
Defence and space are two themes Indian markets keep coming back to. Both depend on government spending, and both move slowly. Stocks in these areas can look dull for a year or two, then jump once orders start landing. One small-cap electronics maker seems to be in that phase right now, and it's worth a look for anyone tracking these themes.
Shares of Avantel are trading at ₹151.45, down 1.69% from the previous close of ₹154.05. The stock has a 52-week high of ₹215 and a 52-week low of ₹117.70, which means it is down about 29.56% from its 52-week high, while its market cap stands at ₹4,025.18 crore.
Where The Growth Story Stands Right Now
Avantel makes radios, satellite terminals and radar systems, mostly for the Indian defence forces. The company provides products and solutions across satellite communication, HF communication, radar systems, electronic warfare and other specialised communication applications. Its last financial year wasn't pretty. Revenue slipped from about ₹248 crore to ₹221 crore, and profit dropped by around ₹37 crore to roughly ₹22 crore. The company gave a fairly detailed reason for the fall, and it's mostly not one big problem but a few small ones stacked together.
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First, research and development spending went up by about ₹7 crore. The company doesn't park this cost on the balance sheet, it takes the full hit in the profit and loss account straight away. Second, depreciation (the yearly cost of using machines and buildings) also rose by about ₹7 crore because of new test and manufacturing facilities.
Third, the product mix changed. The year before, 70 to 80% of revenue came from defence products where the company is the only supplier, which means better margins. This time more work came from civilian projects, like satellite devices for fishing boats. That job carried lower margins and cost around ₹9 crore in profit. New office and lab overheads added about ₹5 crore, and manufacturing cost went up another ₹5 crore or so.
The company's financial performance has also started showing improvement. In Q1 FY27, Avantel reported revenue of around ₹70.5 crore , up nearly 36% year-on-year . Net profit increased by around 67% to ₹5.4 crore , while EBITDA rose sharply during the quarter.
The improvement in profitability is particularly important because the company is operating in a specialised segment where higher volumes and better operating leverage can have a meaningful impact on earnings.
Now the forward part. The company says it has around ₹1,000 crore of orders in hand for the next three years, including railways, satellite ground stations and weather radar work. It talked about revenue of roughly ₹300 crore, then ₹375 to 400 crore, then ₹500 crore over three years, which is around 25% growth a year. The company also said this excludes the new products below. Notice though, it wouldn't give any margin guidance, saying margins depend on how competitors bid.
New Products In The Pipeline
The company has five projects under iDEX, a government scheme that backs Indian firms building defence technology. Three are for the Army and two for the Navy, and they're said to be about 90% done, with customer trials likely to start soon.
Then there are software defined radios, or SDRs. Simply put, these are radios where most of the work is done by software instead of fixed hardware, so they're easier to upgrade and harder to jam. The company sees a yearly market of about ₹3,000 crore across the three services, and it wants at least a 20% share.
Building a space infrastructure opportunity
One of the more interesting parts of the Avantel story is its plan to build a larger presence in the space and satellite infrastructure business. The company is developing a new manufacturing facility at Kondaparva village in Andhra Pradesh's NTR district, near Vijayawada . Management has said the facility will be used to manufacture large HF antennas as well as SATCOM ground-station antennas , including 7.3-metre, 9.3-metre and 11-metre antennas. This can help Avantel expand its ability to manufacture equipment used in satellite communication infrastructure.
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At the same time, the company is working on a Ground Segment as a Service (GSaaS) business. Avantel has received authorisation from IN-SPACe to establish and operate multiple ground stations that can support tracking, telemetry and command, payload data reception and ranging.
The company is also developing a ground-station facility with support for multiple frequency bands, including VHF, UHF, S, C, X and Ka bands. The idea is to provide satellite-related infrastructure and services rather than only selling communication equipment.
For investors, this is an important shift to watch. Avantel is trying to build capabilities across both SATCOM equipment manufacturing and ground-station infrastructure . If these facilities are successfully commercialised, they could give the company another growth avenue beyond its traditional defence-electronics business. The opportunity is still developing, and the key question will be how quickly these investments translate into orders, revenue and profits.