Endurance Technologies Limited — Q3 FY25 earnings call

Call held 13 Feb 2025

Management summary

Endurance Technologies reported a strong Q3 FY25 with consolidated revenue up 11.3% and PAT up 21.1%, driven by robust performance in Europe and new order wins, particularly in EV and 4W segments. The strategic acquisition of Stöferle in Germany is set to enhance capabilities and market presence. Despite macroeconomic headwinds and EV market volatility, the company is expanding its R&D and manufacturing footprint, including a new 4W suspension facility and AURIC Shendra plant, to capitalize on future growth opportunities.

Highlights

  • Consolidated revenue increased by 11.3% year-on-year to ₹28.8 billion, demonstrating strong top-line growth.

  • Consolidated profit after tax (PAT) grew by 21.1% year-on-year to ₹1.84 billion, indicating improved profitability.

  • European subsidiaries posted an impressive 21.2% growth in Q3 revenues and 26.7% growth in Q3 EBITDA, despite a difficult market.

  • The acquisition of Stöferle in Germany is strategic, bringing in-house machine building expertise and expected to add EUR 80 million in sales and EUR 15-16 million in EBITDA.

  • New order wins this year (excluding Bajaj Auto) totaled ₹7,806 million, with significant contributions from EV (50%) and 4W (40%) segments, diversifying the revenue base.

Concerns

  • India's GDP growth for FY25 is expected to be 6.4%, a downturn from last year's 8.2%, indicating a broader economic slowdown.

  • The European new car sales dropped by 0.4% year-to-date, reflecting a difficult market environment.

  • Certain entities of KTM have filed for financial restructuring, though management states progress is smooth and operations are expected to resume in March.

  • Volatility in the EV market and financial status of some OEM clients led the company to tone down internal business plans for these segments.

Key financials

  1. Consolidated Revenue ₹28,800 Cr +11.3%YoY
  2. Consolidated PAT ₹1,840 Cr +21.1%YoY
  3. Consolidated EPS (Trailing 12 Months) ₹56.97
  4. European Operations Revenue Growth 21.2%
  5. European Operations EBITDA Growth 26.7%

What they filed

Q1 FY27: revenue up 30.0%, net profit up 8.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,913 2,859 2,963 3,319 3,583 +23%3,608 +26%4,086 +38%4,315 +30%
EBITDA382 373 422 444 477 +25%477 +28%568 +35%536 +21%
Net profit203 184 245 226 227 +12%222 +21%276 +13%245 +8%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹7,806 Mn

as of 2024-12-31 quantified

Execution

Close to Rs. 14 billion of new orders won since FY21 are expected to have the SOP by this financial year and further Rs. 10 billion are expected to have SOP in FY26.

Composition

Mix 2 products
  • Electric Vehicles 50%
  • 4W Segment 40%

Share of order book by product· partial disclosure (90% of the book)

Cancellations & deferrals

  • cancelled: Removed ₹1,580 million of business wins from 5 electric vehicle OEMs due to their financial issues.
The company has won significant new orders this year, with a strong focus on EV and 4W segments, and expects further SOPs from orders won since FY21 and FY22.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Stöferle Acquisition · Pending regulatory

    Strengthen position with German OEM customers, gain in-house machine building and automation expertise, and achieve synergies with existing European operations.

    Expected to add EUR 80 million in sales and EUR 15-16 million in EBITDA, with early payback and largely funded by internal accruals.

    The Stöferle acquisition and that of the automation company Ingenia, which was done earlier this year, brings onboard in-house machine building and automation expertise, which can also be used in our Indian operations. ... As mentioned earlier, Stöferle acquisition will give us up to €80 million in sales and €15-16 million of EBITDA. ... The agreement is to buy the company without cash and without debt. ... We are waiting the confirmation from the Authority of Antitrust in Europe, because this is a strategic supplier for our customer. ... within the end of this financial year, we can close the transaction.

Guidance & targets

Volume

  • KTM India Sales Volume · FY26 · High confidence ₹120 crores
    Our sales to KTM India are expected to grow close to Rs. 120 crores in FY26 based on schedules which we have got.

    — Anurang Jain, Managing Director

Revenue

  • 4W Drive Shaft Annual Run Rate Revenue · per annum · Medium confidence ₹1,000 million
    Despite this being a new vertical, with no 2W end use, we soon expect to hit an annual revenue run rate of close to Rs. 1,000 million per annum, including orders from Bajaj Auto.

    — Anurang Jain, Managing Director

Project Timeline

  • 4W Drive Shaft SOP Project Timeline · FY26 · High confidence Start SOP in FY26
    We expect to start SOP also for 4W drive shaft in FY26.

    — Anurang Jain, Managing Director

  • AURIC Shendra 4W Casting Plant SOP Project Timeline · June 2025 · High confidence June 2025
    The plant infrastructure is set to be ready by the end of February, 2025 and the SOP is planned for June 2025.

    — Anurang Jain, Managing Director

  • G45 R&D Facility Start Project Timeline · March / April 2025 · High confidence March / April 2025
    Speaking about a new future ready R&D facility, which is for 2W, 3W and 4W suspensions, which we call G45 based on its address, we are on track to start this by March / April, 2025.

    — Anurang Jain, Managing Director

  • 4W Brakes Business Start Project Timeline · Q4 FY26 · High confidence Last quarter of next financial year (Q4 FY26)
    Our target is the last quarter of the next financial year, because it takes time for testing and development. But that is something which is already at advanced stage, and that's going to happen for sure.

    — Anurang Jain, Managing Director

State Incentives

  • Booking of 2013 Scheme Incentives State Incentives · FY26 and FY27 · High confidence ₹80 million
    The remaining INR 80 million under the 2013 scheme will be booked in FY26 and FY27.

    — R.S Raja Sastry, Group CFO

What to watch in Q4 FY25

KTM operations restart

next quarter
Current Certain entities filed for financial restructuring
Target Operations start in second half of March

Why it matters

KTM is an important customer, and their operational status impacts sales schedules.

Ahead of the court hearing on 25th of this month, we have clear indications that KTM will soon start operations in the second half of March, and we have started to get schedules.

Risks & concerns

  • Macroeconomic slowdown in India

    medium

    India's GDP growth for FY25 is expected at 6.4%, a downturn from last year's 8.2%, with Q2 marking a seven-quarter low at 5.4%.

    Management acknowledged

  • Difficult market conditions in Europe

    medium

    Year-to-date new car sales in Europe have dropped by 0.4% compared to the same period last year.

    Management acknowledged

  • Volatility in EV market and OEM client financial health

    medium

    Given the volatility of EV markets and the status of some OEM clients, the company has toned down internal business plans for these segments.

    Management acknowledged

  • Inflationary pressures in Germany

    medium

    The German region experienced inflationary pressures due to high energy costs, for which management is finding mitigation actions.

    Management acknowledged

  • Financial restructuring of KTM

    low

    Certain entities of KTM have filed for financial restructuring, but progress is smooth, and operations are expected to start in the second half of March.

    Management downplayed

Q&A highlights

6 direct
4W Suspension tie-up details and Capex Partial
The Suspension space in India is very less crowded. There are not many players. Hardly 1 or 2 players are there, and OEMs are looking for very formidable companies, who can offer products that are affordable, and also world-class. ... We have finalized the location, but I think I may talk about that in the next call. We have finalized land also. But there are certain things ongoing.

Analysts are keen on the strategic 4W suspension entry; management confirmed a Korean partner and greenfield facility but deferred location and Capex details, indicating ongoing strategic moves.

Asked by Aditya Jhawar

Maxwell business performance and ramp-up plan Direct
The R&D function of Maxwell has a significant level of products in their pipeline, which cater to a wide range of applications. ... The quotations are going out to a wide range of customers, who produce 3W, and 2W. ... we do see good interest from some customers on these product lines, and we should see growth going forward.

Provides insight into the growth drivers and future potential of the Maxwell subsidiary, highlighting R&D and customer diversification.

Asked by Aditya Jhawar

European business performance and outlook Direct
The situation in Europe in terms of the market is not promising. As you are aware, the demand is very low. ... But let me say, as Endurance, we are in a different position, thanks to the business acquisition over the last 5 years. ... I am optimistic for the next quarter. We grew double digits in the past three quarters, and the expectation for the future is more or less the same.

Clarifies that Endurance's strong European performance is due to strategic acquisitions and business wins, rather than a general market recovery, and management remains optimistic.

Asked by Aditya Jhawar

4W Suspension agreement and anchor customer Direct
We will definitely be a second source supplier, unless there are some new models looking at how we do in performance in future. But right now, definitely for the customers we enter in India, we will be as a second source. ... The Suspension space in India is very less crowded. There are not many players. Hardly 1 or 2 players are there, and OEMs are looking for very formidable companies, who can offer products that are affordable, and also world-class.

Reveals the company's entry strategy into the 4W suspension market, positioning itself as a second source for existing OEMs and potentially a first source for new platforms, leveraging its Korean partner's expertise.

Asked by Jinesh Gandhi

4W Braking business technology partner and ramp-up Direct
The technology for the high-end braking systems will likely come from BWI, who is already a partner as you know for the 2W ABS. We are at a fairly advanced stage in talks with them. ... Our target is the last quarter of the next financial year, because it takes time for testing and development.

Identifies BWI as a likely technology partner for the new 4W braking business, providing clarity on the strategic direction and timeline for this important new vertical.

Asked by Jinesh Gandhi

Stöferle acquisition details (products, financials, closing) Direct
On 12th of December, we signed the SPA with the Stöferle family. Now, we are waiting the confirmation from the Authority of Antitrust in Europe... within the end of this financial year, we can close the transaction. ... The Company has a total turnover of EUR 80 million, and EBITDA that is more or less 18%-20% - EUR15 million-EUR16 million of EBITDA. The company purchase is on cash free debt free basis.

Provides crucial financial details of the Stöferle acquisition, its strategic rationale, and the expected timeline for closing, confirming it's a profitable, debt-free acquisition.

Asked by Shagun Beria

Booking of state incentives Direct
The remaining INR 80 million under the 2013 scheme will be booked in FY26 and FY27. For the 2019 scheme, we are at a stage where we have submitted our applications and our documentation is complete. We are waiting for the eligibility certificate from the government, and it will be subject to the receipt of eligibility certificate that we would book any amount in Q4.

Clarifies the timing and conditions for booking state incentives, indicating that a portion will be recognized in future fiscal years and some is contingent on regulatory approval.

Asked by Shagun Beria

Key customer wins for 4W suspension TLA Partial
About the customers, we are not allowed to mention the names yet. ... This Korean partner has been handpicked and identified with lot of internal deliberations, that who is the right company who can work with us in India, and provide the niche and affordable technology. ... we will be the second source in most of the OEMs to start with. But let me tell you that for the new platforms, we will get RFQs very soon, where we will be the first supplier.

While specific customer names were not disclosed, management emphasized the strategic importance of the Korean partner and the company's positioning as a second source for existing OEMs and a first source for new platforms in the 4W suspension market.

Asked by Shagun Beria

2 min read 5 chapters

Detailed narrative

Strategic Acquisition of Stöferle and European Performance

Endurance Technologies announced the acquisition of Stöferle in Germany, a highly profitable and vertically integrated company. This acquisition is expected to add EUR 80 million in sales and EUR 15-16 million in EBITDA, funded largely by internal accruals. Despite a difficult European market with new car sales down 0.4% year-to-date, Endurance's European subsidiaries demonstrated strong growth, with Q3 revenues up 21.2% and EBITDA up 26.7% year-on-year, attributed to astute management and new business wins.

Expansion into 4W Segment and New R&D Facilities

The company is making significant strides in the 4W segment, including a new technical assistance agreement for 4W suspension with a leading Korean entity, aiming to become a second source for existing OEMs and a first for new platforms. A new R&D facility (G45) for 2W, 3W, and 4W suspensions is on track to start by March/April 2025, which will be four times larger than the existing facility. Additionally, the AURIC Shendra four-wheeler casting plant, a green building with advanced die casting machines, is set for SOP in June 2025, having already secured orders including ₹730 million from Valeo for an e-axle for Mahindra EV and ₹1.5 billion for export to a global OEM.

Robust Order Wins and Product Diversification

Endurance secured new orders totaling ₹7,806 million this year (excluding Bajaj Auto), with 50% attributed to electric vehicles and 40% to the 4W segment. Key product-wise wins include ₹3,779 million for aluminum castings, ₹1,413 million for suspension, ₹1,710 million for brakes, ₹524 million for transmission clutch assemblies, and ₹415 million for drive shafts. The company also noted that ₹14 billion of orders won since FY21 are expected to reach SOP this fiscal year, with another ₹10 billion slated for FY26, indicating strong future revenue visibility.

EV Readiness and Market Strategy

The company emphasized its EV-agnostic product range, with 96% of its offerings (excluding clutch assemblies) being suitable for both EV and internal combustion engine models. New orders for electric vehicles since FY22 amount to ₹9,631 million, even after removing ₹1,580 million from financially challenged OEMs. Endurance is also developing innovative mid and high-voltage Battery Management System (BMS) platforms (XT-Safe and HP-Safe) and motor control/power electronics solutions, catering to a broad range of market segments and geographies.

Aftermarket Business and ESG Initiatives

Endurance is embarking on a special project with a global consultancy to multiply aftermarket sales over the next two years, focusing on market spread, new product introductions, and exports. On the ESG front, the company is actively working towards a net-zero target, having achieved 43% carbon neutrality and aiming for over 50% by FY30. Initiatives include increased sourcing of captive solar power (capacity doubled to 25 MW), 91% water recycling, and various community development programs through its CSR arm, Sevak-Trust.

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