Prabhudas Lilladher's research report on Endurance Technologies
We initiate coverage on Endurance Technologies (ENDU) with BUY rating and a target price of Rs1,478 (24x Mar23 EPS). ENDU is structurally placed to benefit from 1) global automotive trend of light weighting vehicles (will drive die-casting business), 2) machined and EV/hybrids in Europe (de-risk its business model), 3) dominant position in suspension of 2W/3W segments and 4) huge potential in nascent but technology enabled businesses such as transmission, brakes and after-market. ENDU’s strong focus is to drive content increase in its core castings business (100% machining), suspension business (premiumisation of 2Ws) and to build new product portfolio in its nascent businesses. We believe the stock is attractive given (i) outperformance in medium-to-long term led by deeper client-penetration levels, (ii) significant market share gains with new products/technologies such as ABS and (iii) new order wins for EV/hybrid segment in Europe. We believe market share gains in each segment and rising domestic penetration should drive revenue/EBITDA/PAT CAGR of 8.3%/11.4%/15.3% over FY20-23.
We value the stock at 24x Mar23 earnings to arrive at a target price of INR 1,478. We initiate coverage with BUY rating.
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