ABS is much delayed . Company is expecting it to come by october
Disc: Invested
Hi,
Stock had corrected by 50% from Nov’21 peak, while topline had corrected by 10% within same period.
Drop in EBITDA by 6%
Is this the only reason for such deep correction or am I missing something.
Thnx
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Raw material hike ,power price surge in Europe , 2 wheeler market is still not recovered yet are some of the reason IMO. All major ancillary companies are facing similar erosion in margins. Mangament is rightly moving to niche segments like driveshaft and non auto components like gensets etc to mitigate this.
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@Nibin_Issac, While diversification is a good move, is it a right approach to expanding into gensets which is not their core business but already a crowded space with many known brands like Kirloskar, Cummins, Mahindra etc., procuring parts from small regional players with fierce competition. Again genset is not a voluminous business compared to generic auto components. While I am not sure if this will be a right move, they should definitely look at diversification into green energy vehicle components. Motherson is already moving in this direction
DISC: Not invested but tracking both Motherson and Endurance
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In last concall, they stated that our focus is on 2W and 3W segements where we can cater them by Drive shafts and Disc brake assembly which was under the capacity expansion program. Aftermarket sales is what we need to track more. And one thing where they are way ahead of mother-son is Positive CFO and FCF. With internal accruals they have acquired Adler SPA Italy. So really a testing time for auto sector.
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Gadkari has stated today that electric 2W 3W and 4W prices are going to be same as ICE engine vehicles.
Meaning petrol/diesel ridden pressures for new buyers should make them opt to EVs.
Auto sector should benefit whether its ICE or EV. The point is that ppl should start spending on autos.
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Yes true. As people would start consuming auto, the demand will create opportunities. A rise in per capita income is what drives the nation. Hope it is the time for India to step up the game.
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Indian Govt especially Gadkari is a risk-free bet to implement things on a bigger scale.
Govt has been pushing and implementing changes quickly and effectively.
That’s what you expect from a capitalist govt. India looking good on manufacturing font.
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As per the Q4 2022 earnings call, Maxwell is already in production of BMS and supplying to few European and Indian Automotive companies.
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Capex after a long time. Is it the right time. Probably yes. On ground and reports are pricing in recovery in auto ancs.
Also on account of raw material easing. The space is liking to see tailwinds in the medium to long future.
Endurance has been performing well on earnings as they have done well Vs the sector consistently. Management pedigree is class. Maxwell acquisition is something which can attract a lot of eyes once the sub segment ie BMS ripes well.
The EV Orders increased from 12% in FY22 to 42% in FY23 (Standalone business), It’s more than 3 times
Similarly, EV and Hybrid share in Europe market
EV: 11% in FY22 to 49% in FY23 and 89% in Q1FY24, Fantastic
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Capex to cater 2W EVs
Est Capex : 370million
Almost 100% capacity utilisation of existing capacity
Internal Accruals
https://www.linkedin.com/in/r-s-raja-gopal-sastry-79851914/?originalSubdomain=in
Raja Gopal Sastry has worked as CFO in ZF Commercial joined Endurance
Is it good or bad example of corporate governance?
Nothing. GST not paid by supplier many years ago is not CG issue. Such things happened in business.
Just for example, HDFC was fined for not submitting timely information of foreign subsidary. - we may shocked by such news until you hear management.
Mr D Parekh explained in AGM that the said subsidary is run my single person and hence such delayed happened. Don’t read too much.
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Endurance : Q3FY24
- They added Jaguar Land Rover as a new client new customer for the EV passenger car with an export business value for rupees 240 million
- Strong order wins : new 568Cr + replacement 373Cr
- Capex : 245Cr has been incurred for capacity addition in brake assemblies, aluminium alloy wheels, aluminium casting and machining , suspensions and BMS Line.
- 460Cr cash can be used if needed for funding capex.
- EBITDA : 2W recovery might help in utilisation levels. today 12% it can go to 13% or 14%
- Looking to increase share of 4W from 26% to 45%
- If bajaj grows - Endurance grows with them - they have definite SOP with them.
- Looking to increase share of advanced electronics or embedded electronics business by becoming a significant player for the BMS and new electronic products required for EV applications.
- Royal enfield + BMS Supplies + Maxwell energy from Jan 25
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Great numbers reported by the company and good to see continued moderation of revenue concentration in both segment (2-wheeler) and client (Bajaj).
Anurag Jain is a very capable promoter and has done a great job in finding new growth engines for company and executive them very well.
Now that he is past 60, one thing that is still not clear about the company is succession planning. Any idea about that?
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