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Endurance Technologies (Endu) reported consolidated revenues of ?25.5 bn, up 3.9% qoq and 7.8% yoy. Reduction in Maharashtra state incentives from ?340 mn to ?240 mn yoy also had some impact on the numbers. EBITDA margins came in at 12.1% in domestic business while European margins were at 12.4% down from 14.6% qoq on weakness in European demand. The EBITDA margins at the domestic level were up 40 bps up yoy as the RM cost tailwinds were seen in the quarter and also due to firmness in the domestic 2W volumes. Consol PAT grew 17.5% yoy at ?1.56 bn, while EBITDA margins came in at 12.5%, up 40 bps yoy and down by 60 bps qoq..

Robust order wins to boosts investor confidence

Endu has won several orders during H1 FY24 and has also received RFQs worth ?19 bn from various OEMs in India and abroad. ?7.7 bn worth new orders were won in H1 FY24 excluding orders from Bajaj Auto. Out of cumulative ?36.64 bn (?25.71 bn was the new business orders, while ?10.93 bn was replacement order), the company catered ?4.4 bn in FY 23, while order pipeline of ?8.2 bn would be addressed in FY 24E and ?10 bn would be completed in FY25E-26E. Apart from this, the company has started work on new order worth ?1.25 bn from HMSI in H1 FY24. The other major order wins mainly consist orders from Suzuki (front forks worth ?1.4 bn in FY 23 and ?0.25 bn in H1FY24), New 4W order of ?0.24bn for forging exports to JLR and ?0.58 bn for castings to Punch Power Train. Endu has also supplied Aluminum die castings, alloy wheels, suspensions and braking components for certain new launches in the premium motorcycle segment. TVS suspension and alloy wheels order passed ?5bn this quarter, while the latest orders from TVS are for IFF and monoshox worth ?0.27 bn. The total order wins by Endu in the EV space is ?0.19 bn in H1 FY24 from Bajaj Auto, Aether Energy, Hero Electric, Mahindra Electric, TVS, Tata Motors, Ampere, Okinawa and Bounce. The order wins from EV segment reduced this quarter as FAME-2 subsidy got withdrawn from July 23.

The company supplies ABS assemblies to Bajaj Auto & Royal Enfield and has reached peak production of 400K this month, while with increasing demand, the company has taken it up to 600K units and plans to take it at 1.2 mn units per annum by H2 FY25. As a value added product, Endu has started manufacturing Valves for ABS from March 23 which is considered to be a high margin business. Endu has started supplies of a new product - Driveshafts at their Waluj plant for OEMs such as M&M, TVS and Bajaj Auto after the commercial production commenced in July 2022. Endu is expanding its Alloy wheels capacity from 4.5 mn units to 5.5 mn in April 2024 to supply Bajaj Auto, Yamaha, TVS and Hero Electric.

Furthermore, in order to supply Disc Brake assemblies to HMSI new business, Endu has started their second plant at Waluj, Aurangabad. The company has also ramped up its production to supply inverted front forks to KTM, HMSI, HMCL and Honda 2-wheelers. The company has won an order worth ?2.5 bn from Hyundai Kia to supply castings for which the production is ramped up at their Vallam plant. Such a strong portfolio of orders and products will surely ensure strong growth visibility for the company in ensuing years.

In Europe, the company won orders worth €20 mn during H1 FY24, and has won orders worth €240 mn cumulative orders for last 5 years out of which 47% was for hybrid technology, while 37% was for EV and 16% for ICE. The H1 FY24 orders mainly came from VW for EV motor cover. Slowdown in Europe and certain regulatory hurdles led to tapering of EV order wins and slowdown in EV business during H1 FY24.

Maxwell losses reduce, strong potential to grow

Maxwell, the biggest acquisition of Endu, now contributes 0.7% of the consolidated business and has great potential to rapidly increase its contribution. The company reported ?170 mn of topline in Q2 and ?43 mn of EBITDA losses from ?61 mn of losses yoy. This is due to reduction in gas and electricity prices in Europe and higher volumes. Its order book in the 2.5 years is ?3.7 bn. This company has already commenced supply to Hero Motocorp worth ?1 bn. ?0.5 bn orders are also won from Ampere whose production shall start from Q4 FY 24. It has also received LOI from Hero Eleectric and Ampere worth ?0.7 bn and ?0.2 bn which are expected to start work from Q4 FY24. With a good order flow, we expect the company to reduce losses in the next 1-2 quarters and report profitable growth.

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