Prabhudas Lilladher's research report on Endurance Technologies
Endurance’s 4QFY22 EBITDA margin in India (12.7%, +150 bps QoQ) and Europe (11.5%, +210 bps QoQ) surprised positively. Company announced its entry into electronics business through 100% acquisition of Maxwell Energy for BMS, telematics etc. Its supplies of driveshafts for Bajaj should commence in coming months, along with 3Ws and LCVs. Further, ramping up of ABS supplies (as the chip supply issues ease out) will aid revenues. In India, Endurance has a total order book of Rs 7.45mn. However, there remains pressure on EU operations due to semi-conductor shortages, soaring energy prices and other supply chain issues. We believe Endurance will continue to outperform the industry led by (1) expectations of improvement in 2W demand over FY23 (after two weak years), (2) addition of new and value added products (ABS supply ramp-up over FY23, driveshafts, non-automotive castings etc.), (3) ramp-up in EV products (EV order book of ~Rs 3bn incl. Maxwell) and (5) increasing share of after markets and exports.
Maintain ‘BUY’ with a target price of Rs 1,700 at 30x FY24E EPS (in line with its long-term trading average).
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