Advanced EV Components Will Unlock Secular Market Opportunities

Key Takeaways

• Integration of acquisitions, in-house electronics scaling, and capacity expansion position Endurance as a dominant, high-margin player across automotive and battery management segments.
  
• Regulatory shifts and industry trends in safety and lightweighting enable rapid market share gains, export growth, and sustained earnings outperformance over competitors.
  
• Accelerated EV adoption, cost pressures, high customer concentration, and regulatory risks threaten core revenue streams, profitability, and international expansion potential for Endurance Technologies.

Catalysts

Manufactures and supplies automotive components for original equipment manufacturers in India and internationally.

• Analysts broadly agree that the Stoferle acquisition will boost revenue and margin, but this significantly understates the upside: by integrating Stoferle's advanced machine-building capabilities and cross-selling synergies with European EV OEMs, Endurance can unlock margin-accretive opportunities, ramp up high-value contracts, and achieve well above current consensus levels of EBITDA growth in Europe.
  
• The consensus expects the ABS regulatory change and new capacity will expand this business, but the true catalyst is Endurance's emerging dominance as virtually the only scaled domestic ABS supplier; as regulations are implemented, this should enable Endurance to rapidly increase market share to 25% or more and tap a market set for exponential volume growth, sharply accelerating both revenues and net margins.
  
• Endurance is uniquely positioned to leverage global lightweighting and safety trends through its rapid expansion of high-tonnage die casting and forging capacity, which are already winning major contracts from global and domestic OEMs for both ICE and EV platforms; this will substantially grow export revenues and deliver operating leverage over the next cycle.
  
• The company's full ownership and aggressive scaling of Maxwell (its electronics and battery management unit) positions Endurance to dominate the high-growth BMS segment, not only for 2
• and 3-wheelers but also across 4-wheelers, tractors, and industrial vehicles; this vertical integration into energy management and electronics will structurally lift earnings, diversify revenue streams and yield sustainably higher margins.
  
• Endurance's proven ability to rapidly innovate and value engineer new solutions, as demonstrated by fast product launches and advanced R&D centres, is enabling them to both outpace multinationals on cost and capture first-mover advantage in regulatory-driven markets like India's next-gen braking, suspension, and smart component systems; this supports long-term growth in EBITDA and return on capital well above current market expectations.

Endurance Technologies Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Endurance Technologies compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Endurance Technologies's revenue will grow by 19.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 7.1% today to 8.5% in 3 years time.
• The bullish analysts expect earnings to reach ₹17.4 billion (and earnings per share of ₹123.6) by about August 2028, up from ₹8.6 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 37.4x on those 2028 earnings, down from 46.8x today. This future PE is greater than the current PE for the IN Auto Components industry at 30.2x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 14.28%, as per the Simply Wall St company report.

Endurance Technologies Future Earnings Per Share Growth

Risks

• The accelerated industry shift toward electric vehicles threatens Endurance's core ICE-focused product portfolio, and despite early steps into EV components, the company's present limited penetration and capabilities in high-growth EV parts risk lost market share and could suppress future revenue growth relative to more diversified competitors.
  
• High customer concentration-with significant business tied to a small number of OEMs like Bajaj Auto and Royal Enfield-leaves Endurance vulnerable to customer loss, price renegotiations, or lower ordering volumes, which could cause volatility or declines in revenue and profitability.
  
• Intensifying cost pressures from rising commodity prices, energy inflation, and ongoing investments in new capacities, coupled with Endurance's struggle to fully pass higher input costs to customers, are already visible in declining EBITDA margins, and may further erode net margins and earnings in the long run.
  
• The transition to EVs and possible regulatory-driven product shifts (such as ABS mandates or stricter ESG requirements) may result in higher capital expenditure and compliance costs, while structurally lowering the value-add and margins of component suppliers, which could negatively impact net margins and return on capital.
  
• European market uncertainties-including slower-than-expected ramp-up post acquisitions, dependence on government incentives for automotive growth, industry-wide consolidation, and deglobalization trends-pose risks to international business expansion, pricing power, and profit contributions, thereby pressuring overall earnings and margin resilience.

Valuation

• The assumed bullish price target for Endurance Technologies is ₹3108.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Endurance Technologies's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹3108.0, and the most bearish reporting a price target of just ₹2140.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₹203.7 billion, earnings will come to ₹17.4 billion, and it would be trading on a PE ratio of 37.4x, assuming you use a discount rate of 14.3%.
• Given the current share price of ₹2857.7, the bullish analyst price target of ₹3108.0 is 8.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.