CRISIL assigns grade 3/5 to Endurance Technologies IPO

CRISIL Equities has assigned a grade of 3/5 to the proposed initial public offer (IPO) of Endurance Technologies, which indicates that the fundamentals of the IPO are average relative to other listed equity securities in India, according to research report.

Endurance is a leading automotive component manufacturing company in India. It manufactures and supplies a diverse range of components for two-wheelers, three-wheelers, passenger vehicles, light commercial vehicles (LCVs) and heavy commercial vehicles (HCVs).

Its products include aluminium die-casting products, suspension products, transmission products and brake products.

The report of Crisil says, "The IPO grade assigned to Endurance factors in its strong position in the auto-component segment - not only a tier-I vendor to companies like Bajaj Auto and the Fiat group but also poised to benefit from the expected growth in the sector. The auto components sector is set to register a CAGR of 14% to reach Rs 2,240 billion over the next five years, as per CRISIL Research. The grade also factors in the advantages arising from its strong 25-year relationship with Bajaj Auto. Endurance derives about 50% revenues from Bajaj Auto. The grade is moderated due to the high dependence on few clients for revenues (Bajaj contributes ~70% of domestic revenues)."

"Endurance will use the IPO proceeds to fund the repayment of certain loans amounting to Rs 206.8 million, to fund the Rs 2,040 million prepayment of loan and to invest Rs 500 million in capital expenditure and capital equipment."

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