Company Update : Endurance Technologies Ltd by Motilal Oswal Financial Services Ltd
Earnings miss due to higher depreciation and tax rate
* 2QFY26 consol. revenue grew 23% YoY to INR35.8b (in line with estimates), driven by ~17% YoY growth in standalone (India) business (outperforming industry sales growth of 9.5%) and ~47.1% YoY growth in Europe (in INR; +33% in EUR terms). Europe growth was aided by Stoferle acquisition and tooling sales. Organic growth would be in line with EU new car registration growth of 7.7% in 2Q. Maxwell revenue jumped 1.3x YoY (on a low base) to INR440m.
* Europe business saw strong growth from new hybrid/EV orders, favorable mix and Stoferle consolidation. Maxwell revenue surge was led by higher volumes from key OEMs, new BMS variants and early traction in battery pack orders.
* Standalone EBITDA margin declined 100bp YoY to 12% (below our estimate of 13%). However, given a higher-than-expected revenue growth, EBITDA was in line with our estimate at INR3.2b.
* Europe EBITDA margin (including other income) expanded 180bp YoY to 17.8%. Maxwell reported positive EBITDA of INR19m in 2Q vs. loss of INR17m YoY.
* Consolidated PAT grew 12% YoY to INR2.3b (below estimates of INR2.5b). PAT was lower than expected due to lower than expected other income, higher depreciation and higher tax rate in 2Q.
* PAT growth was supported largely by inorganic growth (Europe PAT growth at 52.2% YoY). On the other hand, standalone PAT grew 1.5% YoY to INR1.9b, while Maxwell reported a reduced loss of INR9.5m vs. INR44m in 2QFY25.
From the Investor Presentation
India
* 2Q order wins in India stood at INR9.09b (excl. Bajaj Auto), including INR3.0b for battery packs and INR210m for Maxwell, along with large orders for proprietary brakes and driveshafts.
* Cumulative EV orders (excl. battery packs) in India reached INR11.95b, including Bajaj Auto, with FY26 YTD EV orders forming ~30% of total wins, vs. 49% in FY25 and 5% in FY24, highlighting a steady EV order pipeline.
Europe
* 2Q Europe order wins stood at EUR12.7m, taking the cumulative five-year order book to EUR242m.
* Of these, EUR94m of orders (41%) are for EV and EUR109m (45%) for hybrid applications.
Valuation view: The stock trades at ~40.3x/34.4x FY26E/27E consol EPS.
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