Buy Endurance Technologies; target of Rs 1575: ICICI Direct
ICICI Direct is bullish on Endurance Technologies recommended buy rating on the stock with a target price of Rs 1575 in its research report dated January 05, 2021.
January 14, 2021 / 08:50 PM IST
ICICI Direct's research report on Endurance Technologies
Endurance Technologies (ETL) is the largest aluminium die casting company in India by installed capacity and also a leading (top-two) player by market share in other served products i.e. suspension, braking and transmission. As of FY20, aluminium die casting (ADC; includes 2-W alloy wheels) contributed to ~53% of consolidated sales with suspension, braking, transmission, aftermarket forming ~29%, ~8%, 6%, ~4%, respectively. Total ~71% of revenues came from India, with Europe comprising ~29%. In terms of segments, 2-W formed ~56% of sales while 3-W, 4-W formed ~12%, ~32%, respectively. ETL caters to major OEMs like Bajaj Auto, Honda Motorcycles & Scooters, Royal Enfield in India & Volkswagen, FCA, Daimler in Europe.
We believe ETL deserves to command a significant valuation premium relative to much of the India auto ancillary universe on account of its strong future growth prospects, diversified product and client base along with superior financials (net debt-free B/S, RoIC at ~25%). We assign a BUY recommendation to the stock, valuing it at Rs 1,575 i.e. 30x P/E on FY23E EPS.
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