Accumulate Endurance Technologies; target of Rs 2696: Prabhudas Lilladher

Prabhudas Lilladher's research report on Endurance Technologies

We increase our estimates by 1-2% over the forecast period and upgrade our rating from “HOLD” to “ACCUMULATE” given the recent correction in stock price. ENDU’s consolidated revenue for Q1FY25 grew by 15.3% YoY, in line with consensus estimates, but marginally lower than PLe. EBITDA grew by 16.4% YoY, while margin remained flat at 13.2%, mainly due to higher other expenses in proportion to sales. Subdued performance on the operational front was offset by 2x growth in other income, which led PAT to increase by 24.7% over last year. With a healthy order book, RFQs across business divisions and diversification, the management remains optimistic on its growth prospects. ENDU shall witness steady growth on the back of 1) a healthy order book with addition of new customers, 2) volume and revenue growth led by double-digit growth in 2W industry, 3) focus on increasing sales of after-market products, 4) expansion of its product portfolio, especially in premium segment, which could result in diversification benefits.

Outlook

Factoring this, we estimate its revenue/EBITDA/EPS to grow at a CAGR of 21%/29%/39% over FY24-26E and assign ‘ACCUMULATE’ with a TP of Rs2,696 (earlier Rs2,664), valuing it at 29x on its FY26E EPS.