ENDURANCE - Endurance Technologies Limited Share Price

In the Q3 FY26 earnings call, management provided an optimistic outlook. They reported that India's economy is projected to grow at 7.4% for FY26, with the World Bank forecasting a 7.2% growth and maintaining a 6.5% outlook for FY27. The RBI's repo rate remains stable at 5.25%, signaling favorable monetary conditions. Management emphasized the strong growth momentum in the automotive sector, with two-wheeler sales rising 18.2% to 7.1 million units and passenger vehicle sales up 19.2% to 1.5 million units for Q3 FY26.

Key forward-looking points include:

1. ABS Regulations: Clarity on ABS mandates is expected by this quarter, with anticipations for increased demand from the 125 cc and below segments. The company is set to start production of single-channel ABS in Q1 FY27 and dual-channel systems shortly after.

2. New Plant Development: The Chennai plant for disc brake systems will begin operations in Q2 FY27, with an annual capacity of 3 million assemblies and 4 million discs.

3. R&D Facilities: An integrated R&D facility for brakes has been operational since January 2026, with significant upgrades for four-wheeler brake assembly testing.

4. AURIC Shendra Plant: This plant is expected to generate peak annual revenues of Rs. 388 crores, with SOPs starting by Q2 FY27.

5. Order Wins: In the first nine months of FY26, the company secured an impressive Rs. 1,282.8 crores in new business, including significant contracts for battery packs and management systems.

6. Financial Performance: Standalone total income reached Rs. 2,678.3 crores, up 22.2%, while consolidated income increased to Rs. 3,645.6 crores, reflecting a growth of 26.5%. EBITDA margins were reported at 12.7% for standalone and 14.1% for consolidated.

7. Sustainability Initiatives: The company aims for a 65% carbon neutrality target by FY30 and has made substantial progress in energy efficiency and waste management.

8. Expansion Plans: Continuous investment in CAPEX (around Rs. 800 crores) is focused on profitable growth and automation.

Management remains committed to navigating challenges and leveraging opportunities for sustained growth in both India and Europe, despite market uncertainties.

Question 1: If ABS comes through clearly, however, if there is a situation where we move to electronic CBS, what is the opportunity for Endurance in that situation?

Answer: If ABS is implemented, it will cover 120 cc and below vehicles. In case they switch to a non-electronic CBS, the demand would shift to our hydraulic braking systems, which have a higher assembly value compared to ABS. This transition could present substantial business growth for us. If ABS comes in, the gains would be even greater due to higher value products.

Question 2: If you can break up the growth in Europe between Stöferle and Endurance, what has been the growth of our European operation, excluding Stöferle?

Answer: Endurance overseas recorded a €93 million turnover, a 21% increase from last year's €76.8 million. Stöferle contributed €20 million. Excluding Stöferle, the turnover had a slight dip due to tooling sales but production grew by 4.2%. Year-to-date, the overall growth is 27.2%, and without Stöferle, we see a 5.1% increase.

Question 3: What is the expected CAPEX for this year and how should we think about CAPEX for the next couple of years?

Answer: We anticipate CAPEX this year to be slightly below Rs.800 crores, largely due to new facilities and brake expansions. Moving forward, our investments will focus on profitable growth. For the next year, we're concentrating on automation and compliance, intending to maintain capital expenditure below this figure to ensure efficient asset use while pursuing high-margin projects.

Question 4: What kind of content value would be there for the hydraulic brakes if CBS is adopted?

Answer: I can't specify exact numbers, but I can confirm that the content value for hydraulic brakes would be higher than that of ABS. This transition could create a significant opportunity for us as it aligns with market trends.

Question 5: What updates do you have on the four-wheeler suspension area and the relationship with Korean OEMs?

Answer: We are currently working on three proof-of-concept projects with Korean partners involving technology for four-wheelers. One project awaits customer feedback expected this quarter, and we are progressing positively in other collaborations. It's a competitive area, and we aim to exceed the current suppliers' quality benchmarks.

Question 6: What led to the change in SOP date for AURIC plant orders, and what is the current status of the order book?

Answer: The delay is primarily due to a UK-based OEM, which has pushed SOP to Q2. The US-based customer should still commence by the end of Q1. Our total business from this plant is set to reach Rs.388 crores per annum, maintaining a strong outlook in the upcoming periods.

Question 7: Can you elaborate on the new opportunities now in Europe post the acquisition of Stöferle?

Answer: The acquisition allows for better integration and leveraging our production capacity in Europe. We are working on enhancing profitability through economies of scale, and with secured volumes until 2030-2032, we are optimistic about achieving consistent growth in this segment.

Question 8: Looking at the M&A strategy, are you now more confident in pursuing larger deals?

Answer: Our M&A strategy is focused on existing product areas with high-margin targets, primarily in suspension and casting. We're actively evaluating potential deals that align with our business goals while ensuring they meet market demands. Our approach will remain cautious but progressive.

Question 9: Can you confirm that the CAPEX intensity of about Rs.800 crores would continue in India for the next couple of years?

Answer: I believe CAPEX in India will remain controlled and could be below Rs.800 crores. We are adopting a more resource-efficient approach by focusing on in-house production and managing our resources strategically while being prepared for any optimal opportunities.

Question 10: How do you see the competition from Chinese OEMs in the European market impacting Endurance?

Answer: New agreements, plus our established local presence in Europe, could provide us an edge against Chinese competition. We're evaluating how to leverage this and anticipate further discussions on production requirements with emerging Chinese OEMs to identify potential collaborations and benefits.

Please note that these answers are synthesized from the provided text to remain informative and concise.