MOSL: ENDURANCE TECHNOLOGIES (Buy)-Consolidated performance in-line
​Endurance Technologies: Consolidated performance in-line
(ENDU IN, Mkt Cap USD2.1b, CMP INR923, TP INR1059, 15% Upside, Buy)
- India business drives consolidated performance: Consolidated net sales grew 7.6% YoY to INR15.5b (our estimate: INR15.8b), led by India business. Consolidated EBITDA margin expanded 80bp YoY (flat QoQ) to 13.8% (our estimate: 13.7%), led by internal cost control initiatives and ramp-up in supplies to domestic customers.
- Ramp-up with HMSI, RE and Yamaha drives India business: Standalone revenue grew 11.8% YoY (v/s 7.8% increase in domestic 2W industry volumes), led by strong growth with HMSI, Royal Enfield (RE) and Yamaha. However, moderation in aftermarket sales due to GST restricted growth. EBITDA margin expanded 30bp YoY to 12.6% (our estimate: 11.8%), supported by lower other expenses. Higher tax restricted PAT growth to 22% YoY to INR679m (our estimate: INR602m).
- EU business – better mix drives margins: EU revenue declined 0.7% in INR terms to INR4.7b (our estimate: INR5.2b). In EUR terms, growth was 5.6% (v/s 1% PV industry growth). Margin improved 110bp YoY (declined 180bp QoQ) to 16.4% (our estimate: 17.4%), driven by better mix. EBITDA was INR766m v/s our estimate of INR910m. Lower other income dented PAT (INR286m v/s our estimate of INR409m).
- Earnings call highlights: (a) ENDU expects its ABS product to be ready by January 2019 (in tie-up with BWI Group); (b) Aftermarket sales impacted due to GST, expect recovery in coming quarters; (c) Expects to penetrate products like CVT, brakes, and clutches with new customers like HMSI and HMCL over the next two years; (d) Won contract to supply components for EV application from Porsche; (e) Die casting business to benefit from EV, as product platform has 20-year lifecycle v/s IC engines’ 7-8 years.
Endurance Technologies Ltd (CN) is an India-based automotive component manufacturer company. The Company is engaged in manufacturing of aluminium die castings (including alloy wheels), suspension, transmission and braking products. The Companys products include aluminium die casting, which offers high pressure die castings, low pressure die castings, gravity die castings, and alloy wheels; suspension which offers shock absorbers, motorcycle front forks, and hydraulic & gas charged dampers, macpherson struts, gas springs for cars ; transmission which offers clutch assemblies, continuous variable transmissions (CVTs), and friction plates; and braking, which offers hydraulic disc brakes, tandem master cylinder assemblies, hydraulic drum brakes, and non-asbestos brake shoes.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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