Buy Endurance Technologies Ltd For Target Rs.3,380 by Choice Institutional Equities Ltd
Healthy growth momentum despite commodity headwinds:
ENDU delivered a strong Q1FY27 performance, with consolidated revenue growing 30.0% YoY and EBITDA/PAT increasing 20.7%/8.0% YoY, supported by robust domestic volumes, European growth and new capacity ramp-up. EBITDA margin moderated to 12.4% due to commodity inflation and pass-through lag. We expect margin recovery as commodity costs are progressively passed through to OEMs.
Strong order pipeline strengthens medium-term visibility:
India order wins stood at INR 4,050 Mn in Q1FY27, taking cumulative India order wins since FY23 to INR 57,200 Mn. Cumulative EV order wins reached INR 18,060 Mn, including Bajaj Auto, while the active RFQ pipeline stood at INR 45,260 Mn. New wins across brakes, castings, battery packs, alloy wheels and suspension should support revenue growth
EV, premiumisation and new capacity to drive growth:
The company continues to scale its EV and technology portfolio, with Maxwell achieving its first PAT-positive quarter and supplying over 0.1 Mn BMS units. The Pune batterypack facility has commenced Hero MotoCorp supplies, while ABS capacity is expanding to 1.54 Mn units annually. Shendra casting, Bidkin alloy wheels and Chennai braking capacities should further support growth.
Positive outlook with margin recovery:
The management remains constructive on medium-term growth, supported by premiumisation, EV adoption, localisation and China+1 opportunities. European EV/hybrid order wins, Stöferle integration and solar diversification provide additional growth levers. We believe strong order visibility, capacity expansion and improving commodity trends should support sustained revenue growth and margin recovery over FY27–28E.
View and Valuation:
We maintain our FY27E EPS estimate and raise our FY28E EPS estimate by 6.5%, reflecting strong order visibility, EV-led growth and capacity ramp-up. We value the company at 30x FY28E EPS and arrive at a target price of INR 3,380. We upgrade our rating to ‘BUY’ from ‘ADD’, supported by premiumisation, EV adoption, robust order wins and improving earnings visibility.
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