Automobile

Endurance Technologies Ltd. – Empowering Mobility

Endurance Technologies has about 40% market share for suspension business segments as of June, 24.

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(A) About the company

Endurance Technology - logo

Endurance Technologies Limited (Endurance) is a leading 2W as well as 3W auto-component manufacturer with an expanding global footprint. The company has grown from its humble beginnings in 1985 with 2 aluminium die-casting machines to 31 strategically located manufacturing facilities today (19 in India and also 12 overseas).

Endurance Technologies's vision is to be consistently recognized as a first-choice supplier to all its customers by fostering innovation and also delivering excellence through QCDDM (Quality, Cost, Development, Delivery, and Management). The company is one of the largest manufacturers of 2W and 3W auto parts in India and is also among the largest aluminium die-casting manufacturers in Europe, serving 2W, 3W, and 4W OEMs. Endurance has a presence in Europe through its overseas subsidiaries in Italy and also Germany.

(B) Journey Since Inception

Journey_Endurance Technologies_PAWealth

(C) Board Members

(D) Shareholding Pattern of Endurance Technologies Ltd.

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Shareholding_Endurance Technologies_PA Wealth
Shareholding_Endurance Technologies_PA Wealth

(E) Business Segments

The company's main segments include Die-casting, Proprietary and also Aftermarket.
Diecasting includes alloys and also aluminum die-cast products. Proprietary includes suspension, braking systems, and also transmission. Aftermarket includes braking, tires, suspension, and also transmission. The company also makes products for the EV and Hybrid Segment.

(F) Revenue Break up Endurance Technologies Ltd.

  • Products_Endurance_PAWealth
  • Category_Endurance_PAWealth

(G) Cost Structure

Cost_Endurance_PAWealth

(H) Financials

Financials_Endurance_PAWealth

Net Sales has increased from Rs. 4211.9 Cr in FY14 to Rs. 8804.05 in FY23 at a CAGR of 8.54%. While, PAT has increased from Rs 205.23 Cr in FY14 to Rs 8804.05 in FY23 at a CAGR of 9.89%. Furthermore, Debt/Equity Ratio has improved from 0.7x to 0.1x in FY23.

DuPont Analysis

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(I) Management Discussion & Concall

  • Rs. 376 Cr worth of new orders were bagged for the EV segment in FY 2022-23.
  • Endurance has acquired front fork business of Rs 139.8 Cr. from a reputed scooter manufacturing company in FY 2022-23 and furthermore, supplies will start from the Company’s plant at Waluj, in FY 2024-25.
  • The Company is adding new lines of 200,000 ABS assemblies per annum while taking the total volume to 600,000 ABS assemblies per annum.
  • Further, For Transmission the company, Acquired its erstwhile collaborator Adler SpA, Italy and Launched the 3W driveshaft.
  • In FY 2022-23, the company won Rs 129 Cr. of new business for EVs also with a strong pipeline of RFQs.
  • A production run rate of 4,000,000 ABS assemblies per annum was reached in Q3 FY 2022-23.
  • The companypany is increasing its production capacity at its Waluj, Aurangabad Plantfrom 280,000 Parts per annum to 600,000 parts per annum with an incremental value of Rs. 750 Million.

Opportunities

The government has taken multiple steps over the last few years to achieve its ambitious target of cutting its carbon emission to 30% by 2030, including:

  • Offering tax benefits and discounts on replacing old vehicles with new ones under the Voluntary Vehicle Fleet Modernisation Programme (V-VMP).
  • Implementing Bharat Stage VI norms.
  • Amending the National Policy on Biofuels – 2018 to fast forward the target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel to FY 2025-26 from FY 2029-30.

In the Union Budget 2023, the government announced a slew of measures to give an impetus to the automobile industry, while including:

  • Reducing basic custom duty rate from 21% to 13%.
  • Increasing rebate on personal income tax from 5 lakh per annum to 7 lakh per annum.
  • Focusing on greener mobility.
  • Helping the central government to scrap old vehicles.

The government raised the customs duty on fully imported luxury cars as well as EVs from 60% to 70% to boost local production.

Q1FY24 Concall Highlights

  • The company increased equity stake from 51% to 56% in Maxwell. Maxwell is in the business of advanced electronics particularly in Battery Management Systems or the BMS for two-wheeler EVs and automobile two-wheeler battery packs.
  • Company's India Capex will see around Rs 350 crores while Europe will see €60 million.
  • For the suspension business on the whole front forks have a 40% market share. Shock absorbers have 37% of the market in Q1FY24.
  • Total Business Wins for EVs to date stood at Rs. 600 Cr. These orders are from ather energy, Bajaj Auto, Hero Electric, Greaves Electric etc.
  • The company's BMS assembly line which is surface mounted technology line shall commerce operations from Sep, 23 onwards at Waluj, Aurangabad Plant. The value of the business would be Rs. 80 Cr. per annum.
  • The company will be supplying multiple parts for Triumph and Harley's x440 while content for Triumph stands at Rs. 25k per Bike and Rs. 10k per bike for x440.
  • In Sep, The company proposed to increase its alloy wheels production from 190,000 sets per month to 230,000 sets per month which is expected to be completed by April 2024.

(J) Strengths & Weaknesses

Strengths:

  • Leading market position for aluminium die-casting components (ADCC) and also alloy wheels.
  • Healthy relationships with major customers as well as well-diversified revenue streams.

Weaknesses

  • Significant albeit reducing customer concentration in the domestic market.
  • Exposure to cyclicality and volatilities of domestic and also in overseas automotive markets.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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