Regulatory Mandates And EV Adoption Will Expand Auto Capacity

Key Takeaways

• Surging EV adoption and regulatory changes are driving demand for high-value, advanced auto components, boosting Endurance's revenue, market share, and net margins.
  
• Strategic diversification, capacity expansion, and M&A enhance market reach, reduce legacy dependence, and support sustained earnings and margin improvement.
  
• Shifting market demand, regulatory uncertainties, high capital spending, and competitive pressures threaten Endurance Technologies' traditional revenue streams and margin stability.

Catalysts

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

• Regulatory mandates in India requiring ABS systems for all >50cc two-wheelers and high-powered EVs starting Jan 2026 are set to increase demand nearly tenfold for ABS and related disc brake assemblies; Endurance is rapidly expanding capacity to address this, which should drive a significant jump in revenue and market share from FY27 onwards.
  
• Automotive electrification trends and growing EV adoption are leading to rising orders for high-value EV-specific components (e.g., battery management systems, battery packs, EV motor housings), with large new multi-year orders from Indian, Chinese, US, and European OEMs already secured; this is poised to meaningfully boost revenue and net margins as these higher-margin products scale.
  
• Ongoing shift toward advanced, lightweight, and technologically sophisticated auto parts (e.g., aluminum die casting, precision forging, lightweight suspension) aligns with Endurance's new product launches and capex investments in high-tonnage/modernized plants, set to support both operating leverage and improved net margins as content per vehicle rises.
  
• Strategic diversification into 4-wheeler braking and suspension in domestic and export markets, including EV applications, opens new addressable markets; recently won anchor orders from Tata Motors, Jaguar Land Rover, and other OEMs provide multi-year revenue visibility and reduce dependence on legacy 2W/3W segments.
  
• Capacity expansions, inorganic growth via M&A (notably Stoferle in Germany, with EBIT margin uplift), and increased R&D focus all point to higher future earnings; Endurance's strong balance sheet and disciplined capex cycles should allow for sustained operating efficiency improvements and long-term EPS growth.

Endurance Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Endurance Technologies's revenue will grow by 15.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.1% today to 8.2% in 3 years time.
• Analysts expect earnings to reach ₹15.2 billion (and earnings per share of ₹107.84) by about August 2028, up from ₹8.6 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as ₹13.5 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 37.9x 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

• Rapid acceleration of electric vehicle (EV) adoption in Europe and globally could reduce demand for Endurance's traditional internal combustion engine (ICE) components, especially as European car volumes remain structurally below pre-COVID levels, putting pressure on core revenue streams tied to ICE platforms.
  
• Persistent weakness in 2-wheeler domestic demand (evidenced by a YoY decline in Indian motorcycle and scooter sales) and potential long-term deceleration in overall two-wheeler segment growth could erode Endurance's largest market and undermine top-line growth.
  
• Delays or ambiguity in the implementation of key regulatory triggers (such as mandatory ABS requirements) and dependence on government mandates may postpone realization of growth opportunities, leading to underutilized new capacity and weaker earnings leverage.
  
• Ongoing high CapEx requirements for expansion, plant modernization, and acquisitions-amid already tight industry margins and exposure to commodity price inflation-could pressure net margins and increase financial risk if incremental revenues do not materialize as anticipated.
  
• Intensifying competitive pressures from global players in both legacy and advanced component segments, coupled with demand volatility among major OEM clients and limited technological differentiation in some product lines, may constrain Endurance's ability to sustain pricing power and stable gross margins.

Valuation

• The analysts have a consensus price target of ₹2751.067 for Endurance Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. 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 analyst's consensus, you'd need to believe that by 2028, revenues will be ₹184.7 billion, earnings will come to ₹15.2 billion, and it would be trading on a PE ratio of 37.9x, assuming you use a discount rate of 14.3%.
  
• Given the current share price of ₹2857.7, the analyst price target of ₹2751.07 is 3.9% lower. 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.