|Subscription: Endurance Technologies Ltd IPO ( x times)|
|Day 2||1.70||o .13||0.82||0.92|
Anchor Investors : Endurance Technologies IPO raises Rs 348 crore from 24 anchor investors by selling @ Rs 472 per share ahead. of its initial share sale starting from Oct 05, 2016.The anchor investors include Smallcap World Fund Inc, Government Of Singapore, ICICI Pru, Birla Sunlife, Nomura, HDFC Life, Goldman Sachs, Axis Mutual Fund, Sundram mutual fund etc.
ICICI Securities Ltd: “We believe ETL has a diversified product portfolio vis-à-vis its peers, thus giving it an edge in terms of higher association with major OEMs. The company has outperformed the industry growth in the past, consistently free cash flow generating & strong return ratios (>20%). At the upper price band of Rs. 472, the stock is available at 22.9x on FY16 EPS of 20. 6. We believe ETL has a stable business model (strong customer base & diversified revenue) and financial performance. Hence, we recommend SUBSCRIBE on the IPO.
Philips Capital: “Valuations bit, lofty but deserved. At its higher price band of Rs 472, ETL would trade at ~19x/16x our FY17/18 consolidated estimates. Using SOTP valuations, our estimates point to a value of Rs 505. We like the structural growth potential in place, coupled with scarcity premium for quality companies to play the segmental opportunities it offers. We recommend subscribing to the issue despite near optimum valuations.
Asit C Mehta: “Has recommended subscribing the issue for medium to long-term time horizon, believes it is available at discount to its peer such as Motherson Sumi (32.81x FY16 EPS), Bharat Forge (32.98x FY16 EPS), and at par with Gabriel India (22xof FY16 EPS).”
Nirmal Bang: “On the valuation front, at the given upper price band of issue of Rs. 472, ETL is offered at P/E of 22.8x (FY16) it’s diluted EPS which we believe is fairly priced in comparison to its peers. We recommend subscribing to the issue.”
SPA Securities: “Endurance Technologies is the largest two wheeler and three wheeler automotive component having tie-up with all the major OEMs. According to CRISIL, 2 and 3 wheelers industry is likely to register CAGR of 8-10% and 7-8% respectively between FY16-19. ETL will benefit from robust 2 and 3 wheeler industry growths in India followed by increasing presence in high margin European business. ETL is available at a multiple of 22.8x based on FY16 earnings, which is at a discount to its peers Sundaram Clayton (24.1x) and Bharat Forge (35.6x). The issue seems to be attractively priced as the company is likely to deliver EPS CAGR of ~20% between FY16-18E, as operating and financial leverage comes into play. We recommend investors to SUBSCRIBE to the issue for long term gain.”
KRChoksey : “ETL is the largest Two-Wheeler and Three-Wheeler Automotive Component Manufacturer in India. ETL is a multi-solution provider of a diverse product portfolio to a wide variety of OEMs, which provides ETL with a diversified revenue profile. Going forward, we believe presence in multi-component auto products, increasing customer base, strong relationship with OEM’s and presence across geographies will help ETL to improve its revenue visibility in coming days. Company’s focus on improving R&D capabilities in order to focus on advanced technology, high value-add products will ensure consistent profitable growth. At price band of (INR ~467- INR 472) the ETL offer comes at a PE of 22.54x and 22.79x respectively on FY16 diluted EPS of INR 20.71. We maintain a positive view on the company with long term upward bias and expect the company to deliver healthy profitable growth going forward. We advise investors to subscribe the IPO and remain invested in ETL’s long term story.”
Dalal Street Journal: “ETL with EPS of 20.60 can trade with upper price band P/E of 22.91x. The company looks reasonably valued as compared to Bharat Forge, Motherson Sumi and Mahindra CIE. Considering good financial numbers and reasonable valuation status of the company, we suggest to go for subscription with 1-2 year of holding period.”
Reliance Securities: “Considering its bulky size, large-sized OEM customers, premium motorcycle play, high-margin European business, healthy return ratios, sustainable EBITDA margin and organic as well as inorganic growth opportunity, we recommend to subscribe to the IPO with a long-term time horizon”GEPL Capital : “Endurance technologies Ltd. stands to gain from operating leverage. At a P/E of 22.9 xs we believe that Endurance technologies Ltd. demand a discount to its domestic peers. We assign a Subscribe rating to the IPO.” NVS Wealth Managers Pvt. Ltd: “Endurance Technologies Ltd (ETL) is India’s largest two-wheeler and three-wheeler automotive component manufacturer by aggregate revenue for FY2015 from their selected product segments. EDL’s total revenue in FY2016 grew by 6.5% to Rs.5,241Crs (FY15- Rs.4,917Crs), EBITDA grew by 11% to Rs.711Crs (FY15- Rs.637Crs) and Net Profit for the company grew at 16% to Rs.292Crs (FY15- Rs.252Crs). At the higher band price of Rs.472 per share, the IPO is priced at a PE multiple of 23x and EV/EBITDA multiple of 10x which is compared reasonably well with its peers. At a growth of 18-20%, we expect company to post PAT of ~Rs.350Crs in FY17, thus trading at 19x FY17E Earnings, hence making the pricing much more attractive.”
Ajcon Global: Robust play in Auto components sector – “SUBSCRIBE”
Capital Market: “score 46/100 ; Largest two- and three-wheeler component manufacturer”
Business Standard: “Despite the strong fundamentals and leadership position, what matters to the ordinary investor is whether they will make money in the short run. At a price to earnings (P/E) valuation of 22 as compared to around 30 levels for companies in the similar product range, there is some room for upside on listing gains. But the fundamental of the company suggests it’s one of those that can be kept for the long haul.”
Hindu Business Line: “At the offer price, the valuation works out to about 22 times the company’s trailing 12-month consolidated earnings. Though it is a multi-product company and has a foothold in the European markets, Endurance thankfully does not bracket itself with the more established global players such as Bharat Forge, Mahindra CIE or Motherson Sumi. These stocks now trade at high PEs of over 30 times their trailing 12-month consolidated earnings. while Endurance’s valuation matches that of other companies in the castings and suspensions space such as Rico Auto and Gabriel India. Long-term investors can consider subscribing to the offer, as they could benefit from the company’s diversified product and client base, its investments in technology and R&D and efforts to improve profitability. But there are no immediate or short-term triggers for investors looking to make a quick buck, as the issue seems fully valued at this juncture.”
ShareKhan : “At a price band of Rs467-472, the issue is priced at 22.6-22.8x its price-earnings (PE) ratio for FY2016 consolidated Earnings Per Share ( EPS) of Rs20.7. ETL is a large Tier-1 auto ancillary player, having a fairly diversified product portfolio. The company has been able to consistently maintain its operating performance (operating profit margins have been in 13-14% range) and robust return ratios (in excess of 20%) over the last 4-5 years.”
Free Press Journal “Company has been reporting consistent growth in top and bottom line. Based on future prospects for automobile sector, investors may consider investment for short to long term.”Related Links :
- Endurance Technologies Ltd IPO Analysis http://www.ipoandmore.com/2016/09/28/endurance-technologies-ipo-analysis/
- Endurance Technologies Ltd 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.