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Strong revenue growth drives operational beat Margin expansion likely from 2Q

* Endurance Technologies’ (ENDU) 1QFY27 Adj. PAT stood at INR2.4b and missed our estimates. Standalone margins at 12.4% came in slightly below our estimate of 12.6%, while the European business posted 18.1% margins, which were ahead of our estimate of 17.5%. Earnings miss was largely driven by higher-than-expected depreciation in Europe.

* On the back of its healthy order backlog, we expect ENDU to outperform core industry growth, both in India and Europe. As a result, we estimate a CAGR of ~19%/21%/23% in consolidated Revenue/EBITDA/PAT over FY26- 28. The stock trades at 37x/28x FY27E/FY28E consolidated EPS. We reiterate our BUY rating with a TP of INR3,350 (based on 32x FY28E consolidated EPS).

Key highlights from the management commentary

* Including all products other than Maxwell and battery packs, cumulative business wins since FY23 stood at INR57.2b, of which INR42.4b represented new business.

* Four-wheeler die casting is emerging as an important growth and marginaccretion area, with management increasingly focused on four-wheeler and non-automotive castings.

* The braking business remains a key growth driver, having delivered over 30% CAGR over the past four years. ABS and CBS hydraulic brake capacity expansion is progressing as planned, with SOP expected in September/early October 2026. A dual-channel ABS program for Bajaj Auto, with annual capacity of 12m units, is scheduled to commence in 2QFY27, while a second 12m unit program is expected to start in 3QFY27.

* Management expects margin expansion from 2QFY27 onwards as OEM price settlements incorporate higher raw material, fuel, gas and manpower costs. Aluminum alloy prices have also softened, while settlements for steel, rubber, plastics, and other inputs are expected in 2QFY27.

* Management expects FY27 capex in India to remain broadly similar to FY26 levels of INR8b.

* European order wins stood at EUR13.9m in 1QFY27, including a major Mercedes hybrid program and an ICE program from Stellantis. The Mercedes program is particularly significant because ENDU will take over 100% of the relevant business, with SOP scheduled for Jan’27 and annual business potential of approximately EUR40m.

Valuation and view

* On the back of its healthy order backlog, we expect ENDU to outperform core industry growth, both in India and Europe. As a result, we estimate a CAGR of ~19%/21%/23% in consolidated Revenue/EBITDA/PAT over FY26-28. The stock trades at 37x/28x FY27E/FY28E consolidated EPS. We reiterate our BUY rating with a TP of INR3,350 (based on 32x FY28E consolidated EPS).

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