We had given an accumulate call on Endurance Technologies, a tier-1 supplier of automotive parts, back in February 2022, when the stock was trading at ₹1,423 per share. Since then, the company has ridden the post-Covid boom in the auto industry, growing its revenue and profit at compounded rates of 15 per cent and 22 per cent respectively, between FY22 and FY25. This solid performance put the stock in the fast lane, racing to an all-time high of ₹3,061 by June 2024.
Since the industry couldn’t replicate its FY24 growth in FY25, partly because of a high base, the stock started correcting. Falling 39 per cent from the all-time high, its recent low coincided with the tariff-led jitters seen around March-April.
However, taking cues from ending FY25 on a healthy note and the management’s plans (discussed later), it has already recovered nearly half of the said correction and now trades at 43.3x its FY25 earnings per share. This is at a mild premium to its five-year average PE of 42x.
The stock looks fairly priced now, considering the growth drivers and risks . But if you are playing the long game, it makes sense to accumulate, when it dips 15 per cent or more, as there would be a reasonable margin of safety at those levels. After all, the two-wheeler (2W) industry, which contributes 64 per cent of the company’s revenue, is expected to grow at a high single-digit figure in FY26. Add to that the company’s new growth engines and its fairly isolated stance from tariff shocks, you have a stock worth holding in your long-term portfolio. Buying opportunities could come along, as the situation with tariffs and rare earth magnets is still evolving.
Business
The company is a Maharashtra-based supplier of diversified auto components to marquee OEMs. The product mix is given in the accompanying infographic. As the infographic shows, products such as suspensions and brakes are not dependent on the type of powertrain. End-use wise, parts accounting for 64 per cent of the revenue (based on FY25) find use in 2W applications, 8 per cent in 3W and the rest in 4W applications.
Besides operations in India, the company has subsidiaries in Europe. While Indian operations manufacture parts for OEMs in India, those in Europe cater to OEMs there. The revenue split between India and Europe is 77:23.
Under the hood
Fundamentally speaking, Endurance has solid, clean books. There is no pledged promoter holding and promoters’ stake has remained at 75 per cent since March 2019. In the last seven financial years, its debt-to-equity ratio has never gone past 0.2x and is currently net debt free.
It also ensures that accounting profit is thoroughly converted to cash. Since FY19, it has maintained cash flow from operations to EBITDA ratio at a consistent 100 per cent (113 per cent for FY25) and cash flow from operations (post tax) to PAT ratio of above 120 per cent (183 per cent for FY25). Robust cash accruals have helped the company fund its capex and acquisitions, without largely depending on debt. RoCE for FY25 stands at a decent 16.4 per cent.
Torque for tomorrow
FY25 was a dull year for automobiles compared with FY24. Per SIAM (Society of Indian Automobile Manufacturers), the domestic auto industry volume grew 7.3 per cent in FY25 vs 12.5 per cent in FY24. Driven by personal tax sops in the Budget, rate cuts by the RBI and a good harvest, the expectation is that FY26 would be better, with 2W volume expected to grow in high single-digits.
European operations, too, are not a cause for concern, as Europe revenue grew 14.5 per cent in a declining market. The management aims to replicate the same in FY26 too, driven by organic and inorganic growth.
Speaking of India operations, Endurance secured ₹1,200-crore worth of new orders in FY25. These orders exclude Bajaj numbers (figures not disclosed) and represent estimated peak sales under such orders on an annual basis, when SOP kicks off. These orders are in addition to those that the company is already servicing and recognising revenue from.
Likewise, in the last five fiscals, new orders won in each of those years add up to about ₹3,700 crore (excluding replacement market orders). Of this, ₹1,400-crore worth of orders have already seen SOP (start of production) by FY25. SOP for the rest will occur in the upcoming years.
In the assessment of forward revenue growth, there are unknowns such as the exact date of SOP of the orders pending SOP, actual purchases deviating from agreed peak demand, new orders that will be secured in FY26 and beyond, orders from Bajaj, etc. Nevertheless, it helps one to be reasonably confident about the company’s revenue visibility. Similarly, in Europe, orders worth €148 million (about ₹1,480 crore) are yet to see SOP.
Firing up new cylinders
Here is a summary of Endurance’s key upcoming ventures and their estimated SOPs.
Manufacture of battery packs: January 2026. Orders worth ₹300 crore secured from an e-scooter OEM in April 2025. This complements its existing battery management system business, which by itself has an order book (peak demand per annum) of ₹250 crore.
Manufacture of cast aluminium products for e-4W applications: September 2025. Peak order servicing of ₹275 crore by FY27.
Manufacture of solar dampers: Q2 FY26. Solar dampers are mounts that help manoeuvre solar panels in the direction of the sun. Initial business expected to be in the range of ₹25-50 crore a year, with scope for scaling up.
Besides, the company has signed a technical assistance agreement with a leading Korean supplier of 4W suspension components. A greenfield facility is being planned for this business as the product is being developed. Further, it has acquired 60 per cent stake in a German manufacturer of cast aluminium parts, called Stoferle, which recorded FY25 revenue of €80 million (₹800 crore). Stoferle’s financials will be consolidated effective April 1, 2025.
Pothole alert
While supplies to European OEMs are consumed within Europe, a few of the finished vehicles might be exported to the US, making them susceptible to elevated tariffs in the absence of a bilateral trade deal between the US and the EU. However, the impact on Endurance’s business is expected to be minimal. In the words of the management, “We do not have direct sales towards US, so the effects are all indirect – for vehicles sold in the US by European carmakers. A rough estimation of the effects on sales could be about €20-30 million, particularly for Porsche applications”.
That said, nearly 40 per cent of the revenue comes from Bajaj, subjecting Endurance to concentration risk. Further, besides being susceptible to cyclicality risks, it could be a casualty to external risks that could impact the auto industry, such as the ongoing rare earth magnets situation. Hence accumulating on dips offers better margin of safety.