Endurance Technologies Limited analyst Q&A

Thank you sir for the opportunity and congrats on strong results. Sir, we have seen a notable growth of 30% Y-o-Y and also up 13% Q-o-Q on the consolidated revenue. I just want to check any one-time impact on the revenues in both standalone and Europe? Something like price hike which impacted the numbers?

Standalone revenue was driven by factors including commodity inflation. If I see the whole year, the raw material increased by ₹160 crores, which is in absolute terms 1.5% RMC increase. So if you see our RMC percentage went up from 65.3% to 66.82%. ₹73.70 crores out of this was for aluminium alloy and steel increase, which is a non -value add increase. We don't make any money on this increase in topline. On the RMC front, we also had ₹31.3 crores from outsourcing cost due to large, unexpected increase in volumes post GST guidelines. But with the 10% lowering of GST, the volumes really went and we did not have enough capacity in-house. For example, for products we do in-house like bottom cases for our front fork, we had to outsource them at higher prices. Due to the continuous inflationary trend in the commodity prices, RMC costs were higher due to cost increases yet to be passed on, as pass-on is with a lag of a Quarter for some customers. In Q4 of last year, there were one-time gains totalling about ₹25 crores. There were conversion cost increases as well as price correction by some of the OEMs, which did not happen in FY 26. ₹9.5 crores were corrections due to decrease in price due to some adjustments in components like springs. And ₹ 5.2 crores was the impact of the new plant at AURIC Bidkin, which is for 2W alloy wheels. If I just take the ₹73.7 crores impact of alloy and steel, which is completely a non-value add, if you see the numbers from that angle, our EBITDA margin instead of 12.6% should have been 13.3%.

So in a way, sir, this RMC ₹73.7 crores -- also on the top line, it would have impacted that much percentage?

Absolutely. So if you take that out and you take our margin divided by net of that for the year, then the margin would look at 13.3% instead of 12.6%.

Got it, sir. Sir, also I was checking on the PPTs, electricity gas cost in Europe has gone up. Do you see any further increase on it and also how is the pass-through happening?

In India, the government has increased petrol and diesel prices this morning as well - also LPG has seen price rise. Of course, this will impact us. We are in touch with all our customers for these conversion cost increases. Conversion cost increase is not very easy to get from customers. But we are doing our best because these increases are quite high. Fuel prices have already gone up by 50%. So this is something on which we are engaging with every OEM. As far as the alumin ium alloy is concerned, where we have been largely affected also since March '26- apart from shortages there have been large increases in the cost in March as well as April. We are engaged with the OEMs. Many OEMs have already confirmed the rates, some have given the emails or PO amendments, some are still awaited. It's a challenge when you ask for such large increases from customers. It's not that easy, so it's WIP. But we are quite confident that our customers would be fair and we would get these increases. On the conversion cost also, we'll put our full efforts. These are very abnormal increases and we are assertively pursuing all the OEMs to give these increases to us.

And sir, on the Europe side?

Okay, so to answer the first question regarding the turnover of Euro pe. In the quarter, the European company closed with €106.9 million turnover compared to €80 million of the previous financial year, with a growth of 33.6% in terms of turnover. Speaking about the total financial year, Europe closed with €391.7 million compared to € 303.9 million of the previous financial year. Please consider that the company g rew 28.9% total financial year and also grew without considering the acquisition of Stöferle. The market, as Mr. Jain told you, closed with 4% of new car registration increase compared to the previous year in Q4 and 3% total year. Without considering the imports of cars, the market was more or less stable. And so , also in this financial year, Endurance Overseas outperformed in terms of turnover compared to the previous financial year. Speaking about energy, for sure we have had an increase in the las t 2 months due to the war in Iran, but the situation was bad in the previous year as well due to the war in Ukraine. So, everyday we face this kind of problem. But despite the increase of energy cost in the previous quarter in Eur ope, due to the important increase of volume, we have been able to optimize EBITDA and we closed with € 21.9 million, so it means 20.5% margin in the quarter and with an increase of 49.1% compared to the previous year. This was the best quarter of Endurance Overseas in the history. And speaking about the full year, we closed with € 72.4 million of EBITDA, it means 18.5% margin with an increase of 41.7% compared to the previous year. So we are performing very well, despite the challenging environment.

So Massimo sir, you are able to manage the energy cost through the growth and also some pass- through, right? ?

Yes, we are managing the situation and we are discussing with the customer for the future months. For sure if the situation continues like this, we have to ask for their support, like in the past. If I compare the energy cost of the previous quarter compared to the previous financial year, there was an increase of just 5%. We are managing the situation more in the gas compared to the energy. The big increase was in the month of March. April is in this moment more or less under control.

In this quarter, we have done a very good margin, more than 20%. Anything to call out, what drove- is it more for revenue growth?

I explained to you why the margin was positive in Eur ope, because usually we try to do an analysis of the turnover compared to the registration. But in this case, it's important to analyze the volume compared to the production. It means that in the previous quarter as compared to Q3, the production of cars in Europe was higher by approximately 6%. It means that even if the registration s are 2% higher compared to the previous quarter, the production was up 5.7%. And this is the reason why in the European market we grew 15% compared to the previous quarter. And this is the reason why we increased the EBITDA in an important way, because with stable fixed cost, this is the demonstration that if in Europe we have volume, we can make a lot of money with good profitability.

On the ABS side, if you can indicate what kind of revenues we are doing currently . And with the dual-channel SOP starting, how should one see the revenue for next year?

In FY '26 we did about 280,000 ABSes, which were single-channel. This year we are doubling, but we feel this figure will go up also, looking at the line of sight and looking at the dual-channel which we are starting from July. So I think the growth can be 100% to 150% compared to last year. Of course, we went ahead with the 12 lakh ABS line looking at the draft guidelines. But we believe and the sense which we are getting from most of the OEM customers, many of them will anyway go ahead and implement the ABSes. This 12 lakh per annum line will not be fully used, but our plan is to see how fast we can fill up the capacity on this line. That's our focus with single-channel and dual-channel. I can't give the value, I'm giving you the numbers.

If you can just talk us through the four greenfield facilities, what are the timelines of them coming on stream? And when is the export to US EV OEM and JLR expected to start? And a related question to this is that in terms of our 4W revenue, it was about 6% in FY 26. How should we see this number in the next 2 to 3 years given the order book is about 60% share of 4 W in FY 26?

As far as the 4W business is concerned, this is both for aluminium castings, which includes our plant at Shendra, which also includes Hyundai, Kia, Isuzu in South India, as well as Tata Motors and Mahindra at our Chakan plant in Pune, which is growing, as I said between 37% to 41%. As far as proprietary is concerned, I said the Foundation Brakes for Tata Motors is starting in June, the driveshaft business is starting in Q2, that's also for Tata Motors. The non-auto is mainly solar damper and actuator business. The solar damper I said we have ₹ 118 crores of orders, and for the actuators ₹240 crores. That will start in H2 of the next year. For AURIC Shendra we won ₹500 crores of business, but this is not all we won last year.

When we look at our 4W contribution it's about 6%. Putting all the things into perspective, how that 6 % will look like in 3 years down the line?

Our plan is to reach 10% soon, but the question in the 10% is because it may look as a lower number, but the sales in 2W are also growing. If you see the sales growth which we have planned in the next 3 to 5 years is very large. Definitely you will see with the AURIC Shendra, with Tata Mahindra, with our plants in Chennai and Vallam, and the proprietary business, you will see a very good traction towards the 4W percentage. That's for sure.

That's very good to know. The timing of the four greenfield facilities and the start of commercial production for US EV OEM and JLR?

As far as the AURIC Bidkin facility for 2W alloy wheel is concerned, it started in October 2025, it is already operational. I think it will reach peak sales by end of Q3 or beginning of Q4 of this financial year. And when I s ay sales, I think is around ₹600 crores per annum is what we are looking at, because there are many platforms of Suzuki, and Ather, which will be coming till then. Right now we have started only with Bajaj Auto. So this is one plant which we have started in AURIC Bidkin. The second plant is the AURIC Shendra plant, where we have won business from this US EV 4W OEM, for which the SOP is in June 2026. And for JLR it is between July -August of 2026. And we have other businesses of Valeo and Yazaki. We are planning to cross ₹ 200 crores this year from AURIC Shendra plant. It's a profitable business. Now coming to the third plant, the battery pack plant, where we have got an order from a 2W EV OEM. That plant is starting from the last week of this month. This is a n order which is approximately, as I've said ₹ 300 crores but I think could go to ₹350- ₹360 crores per annum. And of course, this order will go up to ₹ 600 crores per annum by next financial year based on the outlook of the customer. The Chennai plant, for brakes which will cater to the South Indian customers like TVS and Royal Enfield, we are starting in July for Royal Enfield is in July and the balance customers will be in the in Q3.

From a standalone margin per spective, we understand that FY 26 had few headwinds like the startup cost of the new plant that you talked about, the consultant charges that you had mentioned in the previous calls. Are these largely behind and FY 27 should we see a much more normalized margin trajectory?

Well, I would say that Q1 will still be a bit volatile because as the war goes on, the prices are not going down, whether it's oil, whether it's gas, whether it's alloy. They continue to rise. So we will se e a bit of volatility. I'm not at all concerned about the growth, but I'm definitely concerned about these cost increases in raw material and gas and oil and to be able to pass those on to our customers, which I said earlier that we have been very, very assertive on that. And I hope this war ends by next month at least and then I think once the war ends, it will take some time to normalize, but I see much better numbers from Q2. But that doesn't take away the fact that we are focusing on profit improvement. So those actions are already on.

Thank you. Next question is from the line of Arvind Sharma from Citigroup. Please go ahead.

First on the domestic business, as you highlighted energy cost and gas availability, what is the situation right now in terms of both availability and the cost of the gas and will it impact the first quarter FY 27 numbers?

See, today I think our dependence on gas has gone down because when the gas availability issue happened in March, we have switched not only our plants but even our T ier 2 supplier plants from gas to furnace oil and diesel oil. So, our dependence on gas has gone down, but of course gas for our surface treatments and all is still required. I don't think the availability is a concern as far as the industrial gases are concerned, but I think the main concern is on the cost increases and how we can pass them on to our customers. I think that's a concern which we are really speaking to our customers and working with them.

Is there something that impacted the Maxwell margin this quarter?

We had inventory in our books and you may have noticed that there was a recent decision, the resolution process for Hero Electric had failed. For the inventory pertaining to Hero Electric we have taken a provision using the appropriate accounting standards, and that's a one-time impact which is impacting the EBITDA of this quarter.

So sir, in terms of gross margin, it's fairly okay?

Yes the gross margin is safe when we exclude the inventory provision of ₹6 crores.

Right. And sir, one last question on the Eur opean front if I could ask. Very strong margins this quarter. Massimo did talk about it, but the sustainability of the margins from the current numbers and if you could enumerate the Stöferle revenue and EBITDA?

Q4 of Stöferle was €21 million in terms of turnover, €4.9 million in terms of EBITDA and €2.6 million in terms of net result. And speaking about year-to-date, the company closed with €82.1 million turnover, € 17.9 million of EBITDA and €8 million of net result. And so completely aligned with our expectation, better compared to our expectation, 1% more in terms of EBITDA. The company performed very well and not only from the income statement point of view but also speaking about the cash be cause they did more or less €20 million cash in the year. And regarding the total result of Endurance Overseas, I repeat, this quarter was the best of our history. If you ask me regarding the sustainability in the medium-long term, I can tell you that April was a good month. We don't see problem s if we maintain this level of volume. If the market grow s and the production grows, we are able to optimis e our contribution margin and to improve our EBITDA. For sure, energy continues to be a problem. If we compare compared to the previous year, more or less we are in the same condition, 5% - 6% more. But I remind you that if I compare with the 2021, we are pay ing the energy 3x, €130 per megawatt compared to € 44 and the gas € 42 compared to €13 i.e., 3x. Last year, there was war in Ukraine, now there is the situation in Iran. So we have to try to overcome this problem in some way, building efficiency and increasing the productivity in our process. And in the last quarter we have been able to do this.

Thank you. Next question is from the line of Pramod Amthe from InCred Capital. Please go ahead.

This is with regard to the aluminium casting business. You operate in Europe substantially and the way you've scaled up your profitability post the merger and also now you seem to have won good business from India for the global clients. Would you anytime in the future look for entering into US territory for manufacturing considering the cost of energy is very high in Europe?

No, firstly let me tell you the customers who are coming to us are part of the China plus O ne strategy. And they want to buy from India. They don't want to buy locally, whether it's in US or in Europe. They want to bring that down. So our focus will be to supply from India and that's why this new plant at AURIC Shendra has been set up. And our aim is to really grow the business , we have enough land there. In fact we can expand in the existing 11 acres and we can use another 24 acres of land where we want to expand. And this is our focus, if we do a good job of supply and quality, there's a tremendous potential of growth in this business a nd that's how we are going about it. So we have no intention to put up any plant in US or Eur ope because this is not what the customers are looking at. They're looking at a best cost -base in a country like China or India and we become a part of the China plus One strategy.

As far as castings is concerned in India, increases we get the same quarter . The question is the negotiation of what we pay to suppliers versus what customers sometimes think the price should be, but that is a negotiation which normally we do arrive at the right solution. The issue happens in the proprietary products and now with Bajaj like I said with a quarter lag, which has impacted a bit of our cash flow also, is that the 3 months we get in the next 3 months. So here what we are requesting the customers are for the spot increases because the fluctuations are very high. We cannot wait for 3 months to get these increases. So that is where the work is on right now. Some have agreed, some are still to agree.

And similar contracts work for Europe or they are different?

Yes, in Europe it is more or less the same. As you know, we have a clear rule with our customer and we change the price quarter per quarter considering the average of the price of the previous quarter. And so it means that in our profit and loss we have an impact only if the price of aluminium continues to grow. We try to fix the price with the same index also with our supplier. And so, in this moment is absolutely not a risk. The only problem is that, as you know, if the price of material continues to go up, only because of denominator effect, the percentage of EBITDA goes down, but in total value it continues to grow. And so no particular issue.

Thank you. Next question is from the line of A Sriram Palaniappan from ithought PMS. Please go ahead.

Thanks for the opportunity, sir. So, in coming years, can we expect a order book run rate similar to FY 26? And when we mention peak sales, does it mean the complete realization of sales orders, sir?

Yes, yes. When I say peak sales is a complete realization. If I say, ₹513 crores in AURIC Shendra is in FY 29, that's the peak sales. But that doesn't mean that we are not taking more orders. I've said in the past that we have to also supply all our 2W products to all OEMs, and now with electronics included, which includes BMS and includes the battery packs also, we have to supply to all the customers, you know, which we are not doing today. So that itself is a growth driver for us. And apart from getting more share of business, also when you look at the technology products like ABS, inverted front fork, braking systems for the high CC bikes, this is really a trigger for growth and the margins are good. These factors which I told you is what is helping us to grow higher than industry, which we want to sustain. For example, if you see Bajaj, they grew 11.56% last y ear, we grew 16.10%. If you see Honda, 16.90% was our growth versus their 7.86%. For Royal Enfield we grew 32.70% versus their 23.90%. TVS, against their 21.17% we grew 29.10%. It's because we are entering new products, increasing share of business, and t his is happening because of our strength of technology, our experience in these products, and the comfort which the customers have for us to do the investment for them and to supply these products to them. Because in most of these products we are there between 15 to 25 years brakes, suspension mainly. Castings for 35 years. So, to answer your question, that's our focus to keep growing and keep growing higher than industry.

Aren’t some OEMs themselves backward integrating battery pac king and even in BMS the market looks fragmented? So, what edge do we have in these segments, sir?

See, I think our edge is the technology which we have, and I think the connect with the customer, the trust we have of the customer. So even if it's a new product, they would depend on us compared to others. And let me tell you, in both battery pack and BMS there are very few players.

Thank you. Next question is from the line of Raj Agrawal from Niveshaay Asset Management. Please go ahead.

Sir, we have mentioned that we have received this ₹300 crores order on the battery pack side and we have received this from a customer. So, we also mentioned few calls back that basically this is a very different way of basically doing a wire-free battery pack. So how novel is this technology? Is anyone else doing this in India?

See, this has been always the impression about the investor community that what is so great in making the battery pack assemblies because everyo ne imports the cells and does the pack assembly. The differentiator that we bring here is that our product is highly reliable, it is produced on a fully automatic line. The battery pack i s a safety product, it has got the fire hazard situation and if the product manufacturing is not reliable, it can lead to problems in the field. So we have first of all taken care of with completely untouched production of the battery pack lines. The pack is nothing but an assembly of cells done in a battery box and then you have to connect it with the busbars. And the design of busbars is the key to the battery design. Our design is very special, it has got couple of patents into it, that means it has a ve ry low possibility of getting into a fire -like situation because of the heavy current densities into certain parts of the battery pack, and our products are superior in that context. This is our know -how, this is our development, and this is our IP. So, t hese two parameters differentiate us from the other battery pack manufacturers who are in the country.

Sir, did you develop this with someone and basically does OEM demand this solution?

This is fully in-house developed solution by our R&D team. We have a sizeable number of R&D engineers in the battery pack business which are from best of the best from the industry and this is our IP. And nobody in the industry currently can offer this kind of IP to the OEMs. The product is yet to go to the market and we will prove it once it goes to the market.

Are you talking to other OEMs as well?

Yes, we are talking to other OEMs...

OEMs demand this solution?

This solution is for this OEM we are supplying to. There could be different solutions being asked by different customers. So, it may or may not be the same.

Thank you. Next question is from the line of Mihir Vora from Equirus Securities. Please go ahead.

In terms of Eur ope order book, we do see some kind of stagnation there, but there we are not, you know, including the Stöferle order book before FY 26. So, is it possible to quantify that what order book would Stöferle be having here and how we see the E uropean revenue growth ahead?

The total turnover in the quarter grew 33.60% compared to the previous year, but without Stöferle it was 7.40%. If I speak about the total financial year, the company grew 28.90% compared to the previous financial year and 2% without Stöferle . But please consider that this 2% total increase of turnover, but considering only the sale of parts without tooling, the increase of turnover was 6.40% compared to the previous year.

My question was on the order book front in terms of Stöferle, can you quantify that?

The new business acquired from Stöferle in the previous financial year is mor e or less € 7.00 million with final customer Magna and BMW.

And when we had acquired the company, it had an annual run rate of around €70 to €80 million.

Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

I would like to thank everybody for their time for this call. Thank you.

Thank you very much.