Endurance Technologies Ltd (ENDURANCE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Endurance Technologies Q2 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you, and over to you, sir.
Nishit Jalan (Axis Capital): Thank you, Leo. Good morning, everyone. Welcome to Q2 FY27 post-results conference call of Endurance Technologies. We are pleased to host the entire management team of Endurance for this call. We have with us, Mr. Anurang Jain, Managing Director, Mr. Massimo Venuti, Director and CEO, Endurance Overseas, Mr. Rajendra Abhange, Director and COO, Mr. Raja Gopal Sastry, Group CFO, Mr. Aditya Jhavar, Head, Growth and Business Transformation, and Mr. Raj Mundra, Treasurer and Investor Relations. I'll hand over the call to Anurang now for his opening remarks post which we will have the Q&A. Over to you, Anurang.
Anurang Jain (Endurance Technologies Ltd): Thanks a lot. So, good morning, everyone. As we closed the second quarter of FY27, the Indian economy has continued to remain strong, supported by domestic demand and, and investment. At the same time, geopolitical tensions, particularly in West Asia, have increased the volatility in energy prices and added to uncertainty around global trade and supply chains. The global environment remains uncertain, the re-escalation of the conflict in West Asia has led to higher and more volatile crude oil prices and has added to uncertainty around energy costs, freight, and supply chains. Trade uncertainties and tighter global financial conditions also continue to weigh on the global outlook. In quarter two FY27, in the Indian automotive sector, as per SIAM, two-wheeler sales grew by 18% year-on-year, with motorcycles at 13% growth and scooters at 30% growth. Passenger vehicle sales increased by 24% year-on-year while three-wheeler sales rose 25%. In the European Union, new car sales saw a year-on-year rise of 5.6% in quarter two FY27, with each country recording a sales growth and France leading with a 9.6% growth. In quarter two FY27, new car volumes in Europe, there was a 27% share of battery electric vehicles, 11% share of plug-in hybrids, and 34% share of hybrids. So two out of every three vehicles being sold in the European Union are either electric or hybrid. On our quarter two financials, the information has been uploaded at the stock exchanges last evening along with our presentation explaining the numbers. I will, however, highlight some key numbers. In quarter two FY27, our consolidated total income grew 33% year-on-year to Rs. 4,811 crores. The EBITDA grew 17.3% to Rs. 584 crores. Our margin was at 12.1%. The consolidated PAT grew 21% year-on-year to Rs. 274 crores with a PAT of 5.7%. In quarter two FY27, PAT growth was supported by Rs. 36 crores from gain from Steffele early acquisition of the 100% stake, the balance 32%. However, this was largely offset by the accelerated depreciation of an OEM program of Rs. 31 crores in Europe. On standalone basis, the company recorded a total income of Rs. 3,761 crores, a year-on-year growth of 40%.
Anurang Jain (Endurance Technologies Ltd): growth of 13% year-on-year, an EBITDA of rupees 183 crores at 17.8% with a growth of 13.7% year-on-year. PAT was at rupees 57 crores at 5.5%, which is a growth of 39.6% year-on-year. I would like to mention that our subsidiary, Maxwell, has reported a PAT positive in consecutive quarter financials. Their total income grew by 94% rupees 85 crores in quarter two of FY27. In quarter two FY27, our consolidated net cash position as on 30th September, 2026 was at rupees 436 crores. In quarter two FY26, standalone RMC was 66% to sale. Sorry, in quarter one FY26, 27 Sorry, in quarter two FY26, standalone RMC was 66% to sales and in quarter two FY27, it is 70% to sales. In spite of a 4% increase in RMC percentage in quarter two, our India standalone EBITDA percentage declined by 2% to 10.5%. The standalone EBITDA amount in quarter two FY27 has increased to rupees 395 crores, implying a growth of 18% year-on-year. In quarter two FY27, the EBITDA amount was higher than quarter one FY27, which was at rupees 358 crores. I would like to mention that for quarter one and quarter two FY27, conversion cost increase of fuels, including diesel, PNG and LPG gas and cutting tools were not adjusted by most OEMs, and certain OEM increases we have got have been settled only from quarter three FY27 of 1st October, 2026 onwards. We would like to mention that aluminum alloys and steel form a significant part of our RMC. In quarter three FY27, we expect steel prices to increase and we see a softening of the aluminum alloy prices. Overall, as of now, we see an absolute 0.6% lowering of RMC percentage to sales in quarter three. In quarter two, we accelerated the acquisition of the remaining 32% stake in Stefelle, taking our ownership of the Stefelle entities to 100%. In quarter two, we also acquired 100% stake in Fonderpress in Italy, strengthening Endurance's European aluminum casting and machining capabilities. Fonderpress offers a strong location, a track record of generating over 60 million euro in highly profitable revenue, best in class quality and factory management processes and a significant scope for expansion. The net acquisition outlay was just under 1 million euro. In the coming months, we will realize the plant synergies, we will progressively bring externally sourced castings from Stefelle in-house, manufacture transmission housings for Stellantis, and expand the truck segment business. We expect these to lead to significant gains across our European operations. In quarter two, we divested our stake in Veloce for 2.2 million euro upfront plus future earn outs. Veloce housed a fleet management software business, which, though niche, was quite small and not central to our core business. In quarter two FY27, the total consolidated income India share, including Maxwell, was 78.5% and Europe's share was 21.5%. This is with Maxwell. I would like to inform you that our EV sales in India standalone for quarter two FY27 grew by 185% to rupees 229 crores, which was at 5% of our total net sales. At quarter four FY27, for ABS, we will have a capacity of 1.54 million single and dual channel ABSs per annum, of which 70% is already booked by Bajaj Auto and Royal Enfield. For the dual channel ABS supplies to Bajaj Auto has started in October
Anurang Jain (Endurance Technologies Ltd): two of this financial year. We are enhancing our ABS product offering with new features. We have already started the ride modes, and now we are adding the traction controls for improved stability. This will help in sales value and margin accretion in our ABS business. At our new Chennai plant for disc brake assembly systems, the SOP will start in March 2027. In Q1 FY '27, we commence SOP for the KTM brake systems. These programs also include export orders supplied from our Waluj brakes plant. This business will see a significant increase in future years. Also, to meet increased demand for Hero MotoCorp and TVS our brakes business, we added a capacity of 1 million units at our Waluj brakes plant. The SOP for this started in Q2 of this financial year. A four-wheeler aluminum casting business is a very big focus area for us. We are expanding our business at our Shendra, Chakan, Chennai, and Vallam plants. Our Shendra plant started SOP on 25th of September this year and will serve four-wheeler OEMs in India, the UK, and the U.S. This plant does high pressure and low pressure die casting, critical machining, and powder coating. The supplies to the U.S. EV OEM have also begun. We are expanding our four-wheeler casting business with domestic OEMs like Tata Motors, Mahindra & Mahindra, and helping Korean OEMs to localize. We are also expanding in commercial vehicles, and we are in active dialogue with multiple OEMs. Capacity expansion across multiple locations is already under progress to capture this. There has been an encouraging progress in the four-wheeler non-auto die casting business as well as on the non-auto business. On the four-wheeler suspension business, there has been advanced engagement with two Indian and one overseas customers. Out of this, SOP of one customer is is expected in half one of FY '28 and the other in half two FY '29. The third customer SOP timelines will get finalized in quarter four of this year. Four-wheeler brakes and driveshaft is also seeing good progress with passenger and commercial vehicle OEMs with commencement of SOP for driveshaft in this quarter and for brakes from half one of the next financial year. We expect cumulative SOP for four-wheeler suspension, brakes, and driveshaft to increase from ₹100 crores in FY '28 to ₹800 crores in FY '31. We believe once we start execution in this new areas, engagement with customers would increase. Non-auto business includes supplies to solar, railways, and industrial applications for products like suspension actuators and actuators. We expect cumulative SOP of ₹250 crores in FY '28, which should be scaled up to ₹650 crores by FY '31. At our AURIC, Bidkin two-wheeler alloy wheel plant, supplies to Bajaj Auto began in October last year. SOP started for Ather in September this year and Royal Enfield in October. SOP for Suzuki is expected to begin in this quarter. Our newly established battery pack business has made good progress, marking another important milestone in our diversification into emerging mobility technologies, a journey that began with our acquisition of Maxwell. We have commenced SOP of battery packs for EVs for a leading two-wheeler OEM with full ramp-up expected in Q3 of this financial year, which is in this quarter. Also, we have received letters of nomination from two passenger vehicle OEMs for four-wheeler battery packs, with commencement of SOP scheduled for quarter one and quarter two of the next financial year respectively. Battery pack business will also help increase our business of battery management systems and aluminum ca-
Anurang Jain (Endurance Technologies Ltd): which we supply. In H1 of this financial year, our wholly-owned subsidiary Maxwell achieved a turnover of Rs. 141 crores, as against Rs. 161 crores in the full year of FY26. In Q2 FY27, Maxwell Maxwell revenue grew by 95% year-on-year and 50% quarter-on-quarter to Rs. 85 crores. Our strong R&D and innovation cell at Maxwell at Bangalore is also focusing on the IoT and V2X solutions, TPMS, and high-voltage battery management systems for four-wheelers and e-buses. This is a tremendous, profitable growth potential. Our premium segment suspension business continues to grow, with upside down front forks and monoshocks, with wider adoption across OEMs and a steadily growing OEM customer base. We are adding capacities in line with the market growth for the upside down front forks, and we are reaching the milestone of 100,000 units per month, spread across 7 OEM customers and including exports by Q4 of this financial year. Aluminium forgings has become an increasingly strategic part of our portfolio, serving both captive consumption for our inverted front fork business and a growing external customer base. To meet this demand, we're adding a fifth aluminium forging press, with SOP expected in Q4 of FY27. In this segment, we have started catering to India to Indian and EU OEMs. In the non-automotive segment, our state-of-the-art solar damper plant at Sanand, Gujarat is ready. An SOP for a European client from this plant has started in Q2. For the solar US client, SOP is expected in the second half of this financial year. We are also gearing up for the supply of solar actuators and the SOP is expected in Q4 of this financial year. In the transmission segment, we are increasing our business for Assist and Slipper Clutches, with our Italian subsidiary Adler's technology. We are already supplying Assist and Slipper Clutches to Royal Enfield and Kawasaki. For Bajaj Auto, customer validation is in process and SOP is expected in Q4 of this financial year. In our transmission segment of drive shafts, for our four-wheeler drive shaft program, the SOP for Tata Motors is expected in this quarter. Supplies had already begun for the three-wheeler drive shaft programs of Bajaj, Mahindra, and TVS, and we expect our drive shaft revenue to cross Rs. 100 crores in FY27. We are also seeing an uptake in our Bajaj EV drive shaft program, with volumes expected to grow. Our India capex in FY26 was approximately Rs. 800 crores, compared to Rs. 611 crores in the previous year of FY25, driven by investments in new growth areas. We expect capital expenditure in FY27 to be around Rs. 1,100 crores. Our consolidated capex is expected to be Rs. 1,250 crores. Under the Maharashtra Package Scheme of Incentives 2019, we had received an addendum taking our incentive up from Rs. 600 crores to Rs. 858 crores. These incentives will be availed by way of state GST refund broadly over a 7-year period. We are well placed to avail more incentives, with several of our plants located in Chhatrapati Sambhajinagar and serving OEM customers within the state of Maharashtra. In H1 of this year, we have booked an income of Rs. 75 crores against these PSI incentives, and expect to book a further Rs. 50 crores in H2 of this financial year. Let me now give you a gist of orders won during H1 of this financial year. Please note that the business value from new orders are without including orders from Bajaj. Total business win in H1 was Rs. 748 crores, largely from from HMSI or Honda, Tata Motors, Hero MotoCorp, TVS, Ather, and a US EV OEM. The total business order was since since FY22
Anurang Jain (Endurance Technologies Ltd): ₹6,372 crores, of which ₹5,125 crores is new business. This is in the last 5 years. From ₹6,372 crores of order win, ₹3,798 crores of business is still to be realized. Two things to highlight in the total business win order book of ₹6,372 crores as on FY '27 H1 compared to FY '22 is as follows: The share of the EVs has increased to 24% as on H1 FY '27 versus 11% in FY '22. The share of four-wheelers from India has increased to 23% in H1 FY '27 versus 16% in FY '22. This is for the new business wins which I'm talking about. This shows the company's increasing focus on electric vehicles and four-wheeler new order wins. While EU auto market continues to be slow, Endurance has continued to grow order wins. Few things to highlight are: consolidation in supply chain is also driving order win in Europe, considering Endurance's strong financials. Like the €10 million order for Mercedes hybrid cars won in Q1 FY '27 with SOP in 2027, and the €4 million order from Stellantis won in Q1 for their car and LCVs which SOP also is in 2027. In Q2, marquee order wins includes two orders from Mercedes of €14 million for specialized components for their upcoming hybrid LCV with SOP in 2029. In total, €28 million new orders were won in H1 of this financial year. The aftermarket business remains a strategic priority for us with ambitious growth goals set out in 2030, guided by a comprehensive, capability-focused blueprint built around the voice of our team, our channel partners, retailers and mechanics. Our India aftermarket business grew by 36% year-on-year in Q2 FY '27, comprising 4% of our consolidated income. It is a significantly margin-accretive business for us. In four-wheelers, we are building on the steps taken in proprietary products such as driveshafts and braking, alongside the expansion of our existing casting capabilities. We also see electronically controlled braking in four-wheelers as an extension of our braking capabilities. The larger objective is to progressively move up the value chain from individual components towards proprietary products and systems, while remaining focused around technologies where Endurance has an underlying competency or a credible path to build one. Across two-wheeler, four-wheeler and non-automotive applications, the common philosophy is, therefore, consistent. We start with Endurance's existing engineering and manufacturing strengths, we add electronics and software capabilities, we partner selectively where technology gaps exist, and progressively, we move from being a component manufacturer towards a broader solutions and technology provider. Finally, we are looking at selective diversification beyond automotive, again based on transferable competencies rather than diversification for its own sake. These include precision machined and structural components and dampers for non-auto applications. With these opening remarks, I would now like to hand over the call to Aditya Jhawar, our Head - Growth and Business Transformation. Thank you.
Aditya Jhavar (Endurance Technologies Ltd): Thank you. Thank you, Anurang. Good morning, everyone. It's nice to be on this side of the conference call. I'm quite excited to join Endurance and leverage a strong execution track record and a very strong balance sheet to push the pedal on growth and diversification. In the presentation, I would like you to refer to slide number 3 and 4. We have put forward our strategic priorities with focus on expanding in four-wheelers, in EVs, and non-automotive expansion.
Aditya Jhavar (Endurance Technologies Ltd): also to benefit from regulatory changes. In all the growth vectors mentioned on slide four, we have already established business with customers or in advanced engagement with near term commercialization. Except for aviation and defence, which are under active consideration. For example, we have started supplies to a large US EV customer for their non-auto application. This is expected to start next quarter while supplies for their automotive applications have already started. While we continue to grow in our existing business, these strategic priorities will help shape our future growth. On slide number five, we show that our capex and investments have gone up over the years. Despite that, we have generated FCF consistently and maintained a very strong balance sheet. This positions us very well to further push the pedal on investment and expand in our strategic priority. Our existing manufacturing capability in India and Europe, along with growing expertise in embedded electronics, positions us very well to tap the new growth areas in automotive and non-automotive. Thank you, over to the moderator for questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from Arvind Sharma from Citigroup. Please go ahead.
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