Endurance Technologies Ltd. share price target

8 February 2020 ENDUs 3QFY20 performance miss is a reflection of the weak volume environment for 2Ws. Thus, there was a 15% revenue miss in the India business, resulting in 10% consol. While near-term outlook for the 2W industry is weak, ENDU should outperform due to new customers and content increase. We have lowered our EPS for FY20/21E to factor in the near-term weakness in the 2W industry. However, we maintain would be transitory but scope for content increase is structural. revenue/EBITDA/PAT grew -9.5%/3%/12% to ~INR16.4b/INR2.6b/ INR1.24b. S/A revenues declined ~12.5% YoY to ~INR11.6b (v/s est.

understanding of ENDU's products (Refer PPT). We also visited ENDU's diecasting, transmission and suspension R&D; centers along with world class test tracks for which ENDU has invested Rs0.55b. We believe ENDU's core focus on R&D; with its ability to offer unique solutions among peers sets it apart in winning break through products from difficult accounts like Hyundai/ Kia group (Koreans auto ancillary are preferred suppliers), HMCL (Munjal Showa- Hero group company) and HMSI (Showa India Honda group company). With new products innovation (CBS/ABS, inverted front forks, CVTs and aluminum forging products), we believe ENDU would continue to...

Impressive Performance Maintain HOLD: During Q2FY20, Endurance Technologies Ltd (ETL's) sales

Endurance Technologies Ltd is one of India's leading automotive component manufacturers with operations in India and Europe. It mainly caters to twoand three-wheeler OEMs in India and supplies aluminium casting products to four-wheeler OEMs in Europe. The company operates 16 plants in India, 9...

Reversal of tyre venture decision alleviates investor concerns Quarterly results buck the trend Endurance's Q1 numbers came in above street expectations with margins zooming beyond expectations despite topline showing softness. On the topline front, the domestic revenues showed a 3.5% yoy and 1.5% qoq growth. This positive growth came in despite the underlying auto industry declining significantly. Due to a strong order book and constant business coming from existing clients, mainly the 2W companies this growth was possible. Domestic margins went up by 450 bps yoy and 250 bps qoq on Maharashtra Government tax incentives of 70 cr In Q1, tight control on...

expanded 260bp YoY (+340bp QoQ) to 15.5% (our est. 12.9%) led by incentives, decline in RM and better mix. Adj. PAT grew 35% YoY to INR1.1b. EU business revenues grew 12.5% YoY to INR5.6b (in-line), with CC revenue growing 10.9% YoY. EBITDA margin expanded 130bp YoY (+200bp QoQ) to 20.9%, driven by higher tooling revenues. Higher depreciation restricted PAT growth to 17% YoY at INR384m (our est. INR352m). Key highlights from earnings call: (a) In FY19, ENDU received new orders of INR10.3b in India and ~EUR60m in the EU business, taking the total Europe...

Endurance Technologies Ltd (ETL's) Q4FY19 results were mixed bag relative to our expectations to factor in slackness in Indian 2W industry and overall slowdown in European car market, we have reduced our sales estimates by 1.9%/2%.

Endurance Technologies (Endurance) is one of the biggest suppliers of components to 2wheelers and 3-wheelers in India, having core-competence in aluminium casting, transmission and suspension products. The company is likely to benefit from new customer wins, stricter safety norms in India and increasing demand for aluminium content in passenger vehicles across India and Europe. The company is growing at a rate faster than its peers as well as its underlying industry, hence we believe that the premium valuations of 24x on FY21E earnings, at which the...

Margin Sustainability Persists: During Q3FY19, Endurance Technologies Ltd (ETL's) consolidated sales increasedby 17.8% YoY to Rs. 18.1 bn. Its EBITDA margins however declined by 80 bps YoY to 14%.

Revenue in both India and EU businesses grew faster than underlying industry. EBITDA margin shrank 80bp YoY (-40bp QoQ) to 14% (60bp) and RM inflation. PAT grew 16% YoY to INR1.1b (our 8 February 2019 22%/20%/24% YoY. EBITDA margin shrank 130bp YoY (-80bp QoQ) to 12.1% (our Manesar to Pantnagar (50bp impact), the retrospective impact of an increase in tariff on certain imports (30bp) and RM inflation (~50bp). Adj. revenue declined 1.4% YoY (v/s industry volume decline of 7.8%). EBITDA margin was in-line at 18.