Buy Endurance Technologies; target of Rs 2278: LKP Research

LKP Research's research report on Endurance Technologies

Endurance Technologies (Endurance) delivered an in-line operational performance in Q3 FY25, with better results from European operations offsetting weaker-than-anticipated Indian performance. However, its strong order book and continued expansion across product categories, both organically and inorganically, positions Endurance well for stable growth in both regions. The company’s Q3FY25 consolidated revenue/EBITDA/PAT grew ~12%/25%/21% yoy to ₹28.6bn/3.7bn/1.8bn. 9MFY25 revenue/EBITDA/PAT grew 14%/20%/26% yoy. Standalone revenues grew by 9% yoy as compared to industry growth of 7% in the quarter, while the subsidiaries grew strongly by ~20%. Europe business revenue grew ~22% yoy in Rupee terms and ~21% in EURO terms (vs. new car registration growth of 1.3%) on the back of its strong order wins. Maxwell reported revenue growth of 37% yoy to ₹260m in Q3FY25. Aftermarket sales in India stood at ₹3.5m vs. ₹3.3m yoy. EBITDA margin expanded 130bps YoY (-10bps qoq) to 13%. Standalone EBITDA expanded 90bps yoy to 12.5%. EBITDA margin for EU business improved 70bps yoy to 16.2%. The same for Maxwell business improved ~110bps yoy to 13.7% in Q3FY25. While operating performance was in line, lower other income and higher tax led to a PAT coming at ₹1.8bn (+21% up yoy).

Outlook

The stock trades at 24x FY27E consolidated EPS and does not reflect its strong order book across businesses, consistent outperformance and superior financials. We therefore reiterate our BUY rating with a TP of ₹2,278 (based on 29x FY 27E consolidated EPS) and an upside of 23% post recent correction in the stock price.

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