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Aurangabad based  Endurance Technologies Ltd, the largest two-wheeler and three-wheeler automotive component manufacturer in India in terms of revenue ans also number one aluminum die-casting company in the country  is coming out with a 11160 crore  IPO on 5th October 2006. Endurance Technologies Ltd  is offering  2.46 crore shares of face value of Rs 10 each for sale in the IPO, out of which over 1.92 crore shares are sold by Actis Components and System Investments Ltd. The IPO offer constitutes 17.05 per cent of the post-offer capital of Endurance Technologies Ltd.

Date of Issue: Oct 5, 2016  to Oct 7,2016

Price Band : Rs. 467- Rs. 472

IPO Size: 1161 Crore

Lead managers : Axis Capital and Citigroup Global Markets

Retail allocation is at 35%.

About The Company:

The Company was originally incorporated as a private limited company under the name of “Endurance Suspension Systems (India) Private Limited”  in  1999. The company products and services in India focus on 2/3 wheeler components consisting of:

  • Raw and machined aluminium castings, such as high-pressure, low-pressure and aluminium alloy wheels for motorcycles;
  • suspension, such as shock absorbers for scooters, motorcycles and three-wheelers, front forks for motorcycles and scooters and hydraulic dampers for quadricycles;
  • transmission, such as clutch assemblies, cork and paper-based friction plates for motorcycles and three- wheelers and continuous variable transmission assemblies (“CVTs”) for scooters;
  • brake systems, such as hydraulic disc brake assemblies including calipers, master cylinders and rotary disc brakes for motorcycles and hydraulic drum brake assemblies and tandem master cylinder assemblies for three-wheelers; and
  • after market services to cater to the replacement

In Europe, Endurance Technologies Ltd   predominantly caters to four-wheeler OEMs, focusing on engine and transmission components. These products include raw and machined aluminium castings (high-pressure and gravity die-casting products) and steel, cast iron and engineering plastic parts.

Net revenue by Product type ( Rs. Million)
aluminium castings including alloy wheels 32,901.92 31308.15 26297.78
Suspension. 12224.16 11209.65 9952.58
Transmission components 2858.67 2574.16
Brake systems …. 2433.33 1845.61
Aftermarket services 1974.86 1748.55 1427.27

The largest customer of  Endurance Technologies Ltd  in India are Bajaj Auto Limited, Royal Enfield, Honda and Yamaha.  Endurance Technologies Ltd has a long-standing relationship with Bajaj, which is its  largest customer. In addition to these customers, it also supplies to OEMs in India, such as Hero Motorcorp Limited (“Hero”), Mahindra & Mahindra Limited (“Mahindra”), Tata Motors Limited, H-D Motor Company India Pvt. Ltd., Fiat India Automobiles Private Limited (“Fiat India”). In Europe,  Endurance Technologies Ltd  largest customer is FCA Italy S.p.A. and its group companies  and the company supplies  components used in the engines of a variety of FCA Italy S.p.A.’s brands, such as Jeep, Chrysler, Alfa Romeo, Abarth, Fiat and . Endurance Technologies Ltd  also supplies to Daimler AG and other reputable four-wheeler OEMs operating from Europe.

Total revenue by geography  (  in Rs. Millions)

Year 2016 Year 2015 Year 2014
India 35,594.51 34,024.57 30,191.52
Europe 16,139.32 14,709.66 11,190.11
Others 1,005.79 760.15 1,022.13
Total 52,739.62 49,494.38 42,403.76

For year 2016 : Share of India =67.5%     , Share of Europe = 30.6%

Endurance Technologies Ltd has  25 plants across India, Italy and Germany out of this it has 18 manufacturing plants in India, all of which are strategically located in the major automotive manufacturing belts of the country, comprising eight in Aurangabad (Maharashtra), five in Pune (Maharashtra), two in Pantnagar (Uttarakhand) and one each in Manesar (Haryana), Chennai (Tamil Nadu) and Sanand (Gujarat), with three in-house tool rooms.  Endurance Technologies Ltd  also have two manufacturing plants in Massenbachhausen, Germany at our subsidiary Endurance Amann GmbH (“Endurance Amann”), and five in and around Torino, Italy, at its indirect subsidiaries, namely, Endurance Fondalmec SpA, (“Endurance Fondalmec”), Endurance FOA SpA (“Endurance FOA”) and Endurance Engineering Srl.

Financial Results:
Year Rs. millions
Particulars 2016 2015 2014 2013 2012
Gross Revenue 56,278.00 52,471.49 45,216.86 41,112.16 40,838.86
Net Revenue 52,405.55 49,169.50 42,119.04 38,224.93 38317
Total revenue 52,739.62 49,494.38 42,403.76 38,508.78 38,422.94
Expenses 45,635.94 43,120.85 36,711.38 33,298.23 33,167.44
PBIDT 7,103.68 6,373.53 5,692.38 5,210.55 5,255.50
Finance Charges 464.44 509.99 809.59 928.85 955.05
Depriciation 2,507.74 2,268.68 2,077.94 1,873.35 1,869.48
 Profit before Tax 4,131.50 3,594.86 2,804.85 2,408.35 2,430.97
 Profit after Tax 2,909.18 2,539.95 2,052.21 1,696.25 1,829.47
NPM 5.52% 5.13% 4.84% 4.40% 4.76%
Equity Capital 1,406.60
Face Value 10.00
EPS 20.68
Issue Price 472.00
PE Ratio 22.82
Endurance Technologies Ltd average return on equity in FY2014, FY2015 and FY2016 was 23.9%, 23.9% and 22.4%, respectively. Credit Rating:
                              April 22,                                   2013 April 22, 2014 August 26 , 2014 February 5, 2015
Long-term bank facilities …… CARE BBB CARE A- CARE A+ CRISIL AA-/Stable
Short-term bank facilities …… CARE A3+ CARE A2+ CARE A1 CRISIL A1+
Assessment: 
  • Endurance Technologies Ltd is the largest two-wheeler and three-wheeler automotive component manufacturer in India in terms of aggregate revenue from selected product segments
  • Good and Consistent track record of   both organic and inorganic growth
  • Endurance Technologies Ltd manufacturing facilities are in proximity to customers so as to help reduce logistics costs and to ensure timely delivery of products.
  • While  Endurance Technologies Ltd  is a major supplier to Bajaj auto, it is heavily dependent on Bajaj Auto for a major chunk of its business. In FY2015 and FY2016, Bajaj represented 43.19 percent and 40.83 percent of net revenues from operations.
  • Endurance Technologies Ltd average return on equity in FY2014, FY2015 and FY2016 was 23.9%, 23.9% and 22.4%, respectively.
  • Endurance Technologies Ltd has acquired and developed R&D capabilities including product design, reverse engineering, product simulation, prototyping and testing. It has tieup with leading global technology partners.
  • From FY2014 to FY2016, Endurance Technologies Ltd total revenue in India grew at a CAGR of 4%, as compared to the two-wheeler production and three-wheeler production which grew at a CAGR of 5.6% and at a CAGR of 6.1%, respectively
  • Endurance Technologies Ltd, finance charges have been heading downward even as its revenue has risen over the years.
  • Company’s credit rating has improved over a period of time.
  • The company has an EPS of Rs. 20.68 on the expanded equity after bonus and at the offer price of 473/-, its PE Ratio strands at 22.82 which is considered reasonable considering the strengths of the company.
  • Endurance Technologies Ltd  appears to be a stock to watch out for due to its steady performance.
  • With ICICI Pru Life IPO poor listing and other developing casting a shadow, Investors  should mellow down their expectations from  Endurance Technologies Ltd  IPO but it remains a reasonable one  at least for the long haul.
  • I intend to apply for this IPO as it has a decent track record, a 70:30 presence in Indian and Europe  with both operations profitable and it  offers a good play in auto ancillary space.
 

Related Link : Endurance Technologies IPO: Comparison with Peers  

http://www.ipoandmore.com/2016/09/27/endurance-tech-ipo-compararion-peers/

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.