Prabhudas Lilladher's research report on Endurance Technologies
Endurance Technologies (ENDU) 4QFY23 consolidated EBITDA margin came in at 12.8% (c130bps QoQ) vs PLe of 12.3%, as margins at subsidiaries (+c300bps QoQ) benefited from lower energy costs. Going ahead, we expect domestic 2W demand to grow. While sentiments in Europe remain weak given inflation and high interest rates, however, retail sales showed strong growth on a low base, which we see continuing. Furthermore, production with new capacities for Dual-channel ABS will start by 1QFY24 end and further rampup by 2HCY24. We believe that ENDU will continue outperform the industry volume growth given (1) expectations of 2W demand improvement, (2) addition of new and value added products (ABS supply ramp-up over FY24-25, driveshafts, nonautomotive castings etc.), (3) ramp-up in EV offering to aid revenue growth and (4) increasing share of after-markets and exports.
Outlook
We increase our FY24/25E EPS estimate by 5-6% as we marginally increase our EBITDA margin by c30bps in FY24/FY25 each to factor in 4Q results and management commentary. Maintain ‘BUY’ with revised TP of Rs 1,670 (Rs 1,570 earlier) at 25x Mar-25E EPS.
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