Prabhudas Lilladher
Endurance Tech (Buy)
Target: ₹1,478
CMP: ₹1267.35
Endurance Technologies is structurally placed to benefit from 1) global automotive trend of light weighting vehicles (will drive die-casting business), 2) machined and EV/hybrids in Europe (de-risk its business model), 3) dominant position in suspension of 2W/3W segments and 4) huge potential in nascent but technology enabled businesses such as transmission, brakes and after-market.
The company's strong focus is to drive content increase in its core castings business (100 per cent machining), suspension business (premiumisation of 2Ws) and to build new product portfolio in its nascent businesses.
We believe the stock is attractive given (i) outperformance in medium-to-long term led by deeper client-penetration levels, (ii) significant market share gains with new products/technologies such as ABS and (iii) new order wins for EV/hybrid segment in Europe.
We believe market share gains in each segment and rising domestic penetration should drive revenue/EBITDA/PAT CAGR of 8.3%/11.4%/15.3% over FY20-23.