Endurance Technologies -Best among auto ancillary or not?
Stock Analysis -1
Endurance Technologies operates in auto ancillary space
First of all lets us know what is Auto ancillary ? .
There are many parts in a car , the company that makes these small-small parts of a car for the car manufacturing companies is called a company that operates in auto ancillary space. And then the car manufacturing company assembles these parts made by the auto ancillary company.
So now you have understood what is auto ancillary then now lets go deep into the stocks in this space.
The key growth drivers for the auto component or auto ancillary industry include:
Advent of autonomous vehicles
OEM and government focus on electric vehicles
Use of advanced technology
Concerns of vehicle and passenger safety
Vehicle light-weighting
Endurance Technologies
Anuranj Engineering pvt ltd formed in 1985 was taken over by the name of Endurance technologies in 2002. Endurance tech listed was listed on indian stock market in 2016.Endurance tech major beneficiary of growth is in inorganic growth that means mergers and acquisitions.
Key highlights:
Leading 2Wheeler and 3Wheeler Auto Component Manufacturer in India.
Largest Aluminium die-casting company in India.
18 Manufacturing plants in India.
The company makes 5 Main products:-
Aluminium Die-Casting- A mold is taken and molten aluminium is taken in it and they are pressurized under high pressure and the product that is formed is supplied by endurance tech.
Suspension- When the road is not good and has many holes in it the part that saves you is called the suspension. It basically absorbs the shocks.
Transmission- This transmission helps in transferring the energy generated by engine to the wheels , so that the car moves is called Transmission.
Braking System- Well everyone knows what is brakes, there is no need of explanation.
They are increasing the disc brake assembly capacity from the existing 285,000 brake assemblies a month to 570,000 brake assemblies a month. And the disc capacity is being increased from 375,000 numbers a month to 675,000 numbers a month, by August 2021. A new plant at Waluj is being set up for this increase in volumes.
Aftermarket - The Company caters to the replacement market for components of 2-Wheelers and 3-Wheelers through its aftermarket business.
The market for spare parts, accessories, and components for motor vehicles.aftermarket is not a B2B but a B2C segement of their business. Margins in B2C is more than B2B business.
They have 350+ distributors in india in aftermarket segment.
Financials:
Financials are robust and ticks all boxes no doubt on that.Though covid has impacted their financials but still they are improving. Their Debt to equity ratio has been decreasing from 0.6 to -0.1 in FY15 to FY21. ROCE is also stable at 16.9% the drop is due to covid. EBITDA Margin at 16.3% also a good sign
Infrastructure:-
The Company has 27 state-of-the-art manufacturing facilities, of which nine are in Germany and Italy, with an export footprint spread across 29 countries. In India, the Company has 18 manufacturing facilities, strategically located across Maharashtra, Gujarat, Uttarakhand, Tamil Nadu and Karnataka.
Revenue Product Wise Split Change-
Revenue from Suspension is increased and from Aluminum Die casting,Transmission and Braking decreased. From FY2020 to FY2021.
Revenue Geography and Vehicle Wise Split Change-
Their revenue from India has increased from FY20 to FY21. Revenue from 2 Wheeler is increased and 4 Wheeler is decreased.
Anything related to Electric Vehicle?
Even though the overall production and sales of new vehicles suffered due to the outbreak of the pandemic, the electric vehicles (EVs) growth story remained intact. According to EV-Volumes, the share of global EV market (passenger cars and commercial vehicles) increased from 2.5% in 2019 to 4.2% in 2020. This was on account of the continued focus of automotive companies and government bodies on reducing emission of fuels from vehicles, to prevent air pollution and global warming .Endurance Tech significant presence in Hybrid and Electric vehicles. EV sales in India, excluding e-rickshaws, witnessed strong growth of 53% in FY 2020-21, with a total sale of 238,000 EVs, including 144,000 2-Wheeler EVs, 88,000 3-Wheeler EVs and 5,900 4-Wheeler EV.
Above image shows parts of EVs made by Endurance Technologies.
Clients-
The Company has good and diversified customer base across the sector.
Business Updates from Concall-
In India, Rs.6,380 million of new business was won from OEMs which included HMSI or Honda two-wheelers, Royal Enfield, Hero MotoCorp, Hyundai, Kia, Yamaha India, and our new OEM client TVS.
They are also setting up an aluminum cylinder head low pressure die casting plant at Pantnagar, Uttarakhand for 720,000 numbers per annum and operations will start in Q2 of this financial year.
We are happy to inform you that the supply of two-wheeler ABS assembly should start by October of this financial year, as we are in the final stages of testing and validation. As you may be aware, competition is mainly from Bosch, which controls approximately 85% market share in the Indian ABS motorcycle market that requires 3 million ABS assemblies. This is a very large business opportunity for Endurance as there are very few suppliers and they are mainly foreign companies in this line of high technology requirements. Says Management.
As far as Europe is concerned, in FY'21 we acquired €19.3 million of new business with Audi, Daimler, Volkswagen, Fiat Chrysler and Maserati. As mentioned in previous investor calls, I would specifically like to point out that in the last two years, €110 million of business has been won for electric and hybrids which has started in FY'21 and will reach peak volume in FY'24. Therefore, 50% of our existing total Europe business value has already been won by us for EVs and Hybrids. Out of this €110 million value, €30 million is for electric cars for Audi and Porsche. And €80 million of business has been won for hybrid cars of Volkswagen, Daimler, BMW, Fiat Chrysler, and Maserati. Says Management
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