Endurance Technologies Ltd

Date:- 07/04/2021
CMp =1372 ₹
MCap = 19282 cr₹
ABOUT

Endurance Technologies is engaged in the business of manufacturing and selling of

aluminium die casting (including alloy wheel), suspension, transmission and braking products
with operations spread across India.

Endurance Technologies Ltd is a leading Tier 1 advanced automotive component

manufacturer, catering to mainly the 2-wheeler and 3-wheeler markets in India, and to the 4-
wheeler market in Europe. It’s end-to-end solutions include Aluminium Die Casting, in
which we are ranked first in the Indian market, and also Suspension, Transmission and
Braking Systems.

Apart from creating a niche in India through its quality driven critical automotive
components, the Company has expanded its operations in Europe through its overseas
subsidiaries in Italy and Germany

The profit after tax grew 19.50% and was `4,277 million. The standalone ROCE was at
24.30% and ROE at 19.50%. There was no net debt, as standalone operations had positive
cash of `100 million.

 No. 1 Aluminium Die Casting Company in India

 Tier 1 Supplier to Major OEMs
 11 Patents Granted in India
 07 Designs Registered
 27 Manufacturing Plants Globally (17 in India; 7 in Italy; 3 in Germany)
Key Differentiators:
 Endurance Technologies ltd. are a top automotive components manufacturer
catering to markets in India and Europe
 It’s domestic and international OEM customers are served by plants that
exemplify manufacturing excellence
 It’s experience and expertise span high-quality components for various
vehicles
 Endurance Technologies ltd. are a highly trusted end-to-end multi-solutions
provider, with a wide range of products
 It’s world-class 29-acre multi-track proving ground supports It’s ‘first time
right’ principle
 It’s strong focus on R&D and technological capabilities keeps us ahead in the
game
 Endurance Technologies ltd. nurture relationships with top OEM customers
 Endurance Technologies ltd. develop relationships with Life Time Suppliers
through It’s Endurance Vendor Association
Management Discussion and Analys

After a growth spurt in 2016 and 2017, the world economy had been on a decelerating growth
path consecutively for two years. The International Monetary Fund (IMF), in its World
Economic Outlook (WEO), June 2020, calculated a global economic growth of 2.9% in 2019,
down from 3.6% in 2018. The slower growth was attributed to a lag in global manufacturing
and trade caused by negative growth in a few Emerging Markets and Developing Economies
(EMDEs) and trade clash between the US and China. While the Advanced Economies grew
by 1.7% in 2019, EMDEs registered a growth of 3.7%. There were a few tentative growth
indicators for next fiscal such as an accommodative monetary policy, fiscal easing, fading
negative sentiments over Brexit and positive trade developments. However, these were
clouded by the outbreak of the Coronavirus pandemic.

Industry Overview

Global Passenger Vehicle Market:

Global passenger car sales experienced a significant drop in 2019 as it operated in a
challenging environment amidst trade wars, lower economic growth and tougher emission
regulations. As the pandemic spread across the globe, strict lockdowns in key markets and
economic uncertainty are expected to lead to a further drop in 2020. The International
Organisation of Motor Vehicle Manufacturers has reported a global slowdown in total
passenger vehicle sales in the last three years.

Indian Automobile Industry:

India’s automobile industry is theworld’s fourth largest automobile market in terms of sales
and production and is a top employment generator in the country. In the past few years,
growth in the industry has been supported by robust economic activity and large-scale
infrastructure development, a growing middle class population with increasing income and
availability of financing options. The sector has benefitted from factors such as the
availability of low-cost skilled labour, research & development support and a strong
manufacturing supply chain. Being an attractive sector for investment, the industry has been a
recipient of USD 23.89 billion FDI (between April 2000 and December 2019), amounting to
5% of India’s total FDI flows till date. The automotive industry, including automobile and
component manufacturing, is projected to reach a market size of ` 16-18 trillion (USD 251-
282 billion) by 2026.
Moreover, 2020 projects a further grim outlook, led by the impact of Covid-19. Major
automakers in China, Europe, United States and several other regions have already cut
production in large volumes as the demand for passenger vehicles has been declining since
the outbreak. This is expected to have a negative impact on the yearly production and sales
volume for 2020. IHS Markit a London-based global critical information provider, has
estimated worldwide vehicle sales to decline by 22.7% in 2020 to about 70.30 million units,
led by a drastic fall in vehicle sales in the US.

 The overall automobile exports registered a growth of 2.95% in FY 2019-20,

compared with 4,629,049 units in the previous fiscal year. The increase in exports was
mostly driven by 2-wheelers, even as export of Passenger Vehicles marginally
increased.
 Projected EV Sales Penetration by 2030 (Post-FAME II) Private Cars 30%
Commercial Cars 70% Buses 40% 2-Wheelers and 3-Wheelers 80%
Conference call takeaways:
 Standalone business recovered sharply during the quarter with July, Aug and Sep
sales at 71%, 104% and 123% vs. last year. Oct sales at record high level of Rs
5.6bn (+35%)
 Won Rs 3.6bn of new business in India in H1 (excluding Bajaj), Rs 2.8bn in Q2.
In Europe won EUR 10.8mn of new order
 Additionally, ENDU has Rs 12.3bn of RFQs
 600k unit brake assembly at Pantnagar to start by Jan’21; 17.2k units cylinder
head LPDC plant in Pantnagar to start by Mar’21; Vellum plant to supply
castings to Hyundai, Kia and RE will start operations from next month
 Employee restructuring/VRS would save Rs 49mn in India and EUR 0.6mn in
Europe
 New orders included Rs 320mn order from Hyundai; Hyundai Kia combined
would reach peak rate of Rs 3.07bn revenues by Q4FY21.
 ENDU will start supplying braking, suspension and casting including Battery
house casting for electric scooters in 2021
 Company isn’t seeing any impact of covid lockdowns in Europe on its business
yet
 Production is running at high capacity for domestic as well as Europe business\
 Actively looking at organic and inorganic growth in technology oriented, new
product
Auto Component Industry - Disruptive Challenges:
The auto component industry in India is going through a disruptive transition phase,
presenting a series of challenges, and at the same time, projecting business growth
opportunities in the long run. Some of the key challenges faced by the industry are:
• Slowdown in domestic and international automotive sector
• Outbreak of Covid-19 pandemic in India and worldwide
• Global trade disruptions
• Constant regulatory changes
• Dual GST rates of 18% and 28%
• No regulatory framework for Aftermarket segment
• Absence of an incentive-based Vehicle Scrappage Policy

Risks and Concerns :

 Auto industry downturn
 Outbreak and slow containment of a global pandemic
 Volatility in commodity prices
 Concentration of customers
 Intensifying competition
 Attracting and retaining talent

Fundamental financial analysis:

 Part of S&P BSE 200 Index
 Promoter holding 75% (Very Good)
 Debt to equity = 0.18
 Decent sales growth
 18% last 5 year profit growth
 ROCE and ROE near 20%
 Return on Invested capital = 16.8%
 Int Coverage ratio = 40

 OPM Improve
 PBT AND PAT Continually increasing
 Last year Due to Corona& Lockdown may some effect on PBT and PAT

 Equity diluted in 2017 in IPO after that no further dilution

 Reserves improve
 Debt at all-time low
 Fixed Assets Increase
 Investment increase

 +Ve Cash from operations

 -Ve Cash from investment shows company doing Capex
 -Ve Cash from Financing Activities means Company repayment of their loans
 Net Cash flow +Ve (Good sign)

 Debtors day Decrease

  Promoters having 75%
 FII holding 10%
 DII holding 12.80%
 Only 1.59% having Retailers
 Big numbers of FII & DII holding shows confidence of future growth

Tejori Finance
  Essential Checks

Markets Mojo

SWOT Anslysis
Chart Analysis:

 In Up trend
  Above 50-100-200 SMA
 Near 52week High

Sources:
• https://www.endurancegroup.com/
• Company’s Annual Report
• Conference call
• https://www.screener.in/
• https://www.bseindia.com/

• https://www.tijorifinance.com/

• https://www.valueresearchonline.com/stocks/

• https://trendlyne.com/

• https://www.marketsmojo.com/

• https://forum.valuepickr.com/