Endurance Technologies Limited analyst Q&A

Thank you very much. We will now begin the question-and -answer session. The first question is from the line of Aditya from Investec. Please go ahead.

Thanks for the opportunity and congrats on good set of numbers, especially your delivery on margins. First question is on ABS regulation. You mentioned that you expect to have some clarity by end of this quarter? If ABS comes through clearly, the path is very clear. However, if there is a situation where we move to electronic CBS, what is the opportunity for Endurance in that situation?

If ABS comes like I mentioned, it will be for 120 cc and below up to 50 cc vehicles. I believe there is a testing ongoing at ARAI , which I get from sources. I am not 100% sure, but I'm definitely told by a customer that we hope to get some clarity on the final guidelines by end of March. So, let's hope that happens. Now, in case they go for a CBS, which is not electronic, it is a mechanical CBS. What happens is all the vehicles that are on drum brakes will graduate to our hydraulic braking system, which consists of a master cylinder caliper and a brake disc. Now, if this happens also, it's a huge increase in business because the value of a brake assembly of these three parts is higher than an ABS price. So, we gain both ways, but of course, if the ABS does come in, the gain is much higher because the value goes higher.

That's good to know. Second question is that, if you can break up the growth in Europe between Stöferle and Endurance, you talked about 80 million on an annualized basis, but in this quarter, what has been the growth of our European operation, excluding Stöferle?

So, Endurance overseas closed the quarter with a € 93 million turnover compared to € 76.8 million of the previous financial year, with an increase of 21%, of which Stöferle was € 20 million. EBITDA was € 16.8 million, with a margin of 18%, compared to € 12.4 million of the previous financial year, with margin of 16.2%. The increase of € 4.3 million means 34.9% compared to the previous year. In terms of net profit, we closed with € 4.9 million, with a margin of 5.3%, compared to € 3.8 million of the previous financial year, with a margin of 5 %, an increase in terms of net profit of € 1.1 million, with 28.5% growth. If I don't consider Stöferle, we have had a marginal reduction of turnover but this is entirely due to a reduction of tooling sales. Our production compared to the previous financial year, also without Stöferle, grew 4.2% compared to the previous year, with more or less all the customers, St ellantis, Mercedes and Volkswagen Group. In terms of year-to-date, the Company grew 27.2%. If I consider only parts, it comes to 33.6%, and without Stöferle, 5.1%.

The next question is on CAPEX. So, last couple of years, we have seen that there has been a modest increase in CAPEX from about ₹ 800 crores to about ₹ 1000 crores. So, this year, if you can give a sense that what is the CAPEX that we will end up considering, 4 to 5 big plants are coming on stream, and directionally, how should we think about CAPEX for the next couple of years?

We have been investing in the last 3 years, with an average CAPEX of ₹ 400 crores in India. Of course, the CAPEX was about ₹ 600 crores in FY 25, where in the new plants, the CAPEX had already started. We had bought two lands, in AURIC-Bidkin & Shendra, and in Chennai, where the braking system plant is coming in. This year, we will be slightly less than ₹ 800 crores, largely because of these 4 new facilities, plus expansions which we are doing in Brakes . So, going forward now, our plan is very clear. Our investments will be in profitable growth products, mainly. To retain business, if I have to do products which are at existing margins, I may do it. That is why I specifically mentioned in my opening remarks, that ₹ 530 crores of the ₹ 930 crores, more than two-thirds business is on four -wheeler castings and on solar dampers, which are much higher margin businesses. So, the CAPEX will be mainly on such businesses. We are making a plan for this, in the next week, we will be more clear on the CAPEX plan for next year. Our focus will be more on automation now, for better consistency in quality and lowering contract labor. On CAPEX, I would say it will be more on automation, on environmental health and safety, some statutory compliances, on impro vement of quality, or it will be on profitable growth, expansions or new plans.

The CAPEX, when you look at it in India and Europe separately, is it fair to assume that the CAPEX in India would be the tune of about ₹ 800 crores, and roughly about ₹ 700 crores in Europe for 2026, because of Stöferle acquisition, and total about ₹ 1,500 crores for 2026. And as we progress into ‘27, can you confirm that the CAPEX intensity of about ₹ 800 crores would continue in India for the next couple of years or it would increase?

No, we are going to sweat our assets. If you see the impact on ROC E, in India, the customers don't give you any take -or-pay contracts. There are high risk on volumes and high risk on uncertainties. So, though we are going to in-house some of the high-cost outsourced components, but definitely there are certain components where we may use a balance about outsourcing and doing it in -house and controlling CAPEX. Unless there is a M&A, which we are already in process with. But according to me, in India, the CAPEX will be controlled much below this figure of ₹ 800 crores. And this is our focus. And I cannot speak from FY 28 onwards. I can say FY 2 7 is w hat we are seeing right now in India. As far as Europe is concerned, I think let Massimo give you the answer.

Speaking about Europe, for sure, we spent € 38 million to buy 60% share o f Stöferle. For the ongoing business and new investment, we spent more or less € 38 million. The expectation for next financial year is to stabilise the total investment with more or less € 25-30 million. But I want to underline that despite the acquisition of Stöferle on 1st of April 2025, we continue to be net debt-free. In fact, our net cash saw an increase in this financial year despite payment of € 38 million for the 60% stake and despite the capex of another € 38 million.

Thank you, Sir, for the opportunity and congrats on the good results. Firstly, I just want to clarify on the previous participant question on the ABS part. You mentioned if ABS doesn't come, what could be the alternative option?

So, what happens is that an electronic CBS has to have a hydraulic brake system. I have not seen it working with a mechanical brake system or a drum brake system. So, we have an opportunity even if a combined braking system comes- instead of a drum brake system, they will need to use a master cylinder calliper and a disc brake system rather than a drum brake system. And this is our major brakes business, apart from ABS. So, this definitely will be an opportunity for us to expand further which will be in the bracket of 125cc vehicles and below.

Got it. What kind of content would be there for this hydraulic brakes? Content value, sir?

I cannot give you numbers, but let me tell you that is higher than ABS.

On the four-wheeler suspension area, I just want to know what are the updates there, S ir? How are you seeing the traction with the Korean OEMs and seeing the relationship with the Korean partners?

We collaborated with a Korean partner for the technology to cater to our 4W customers in India. We have since, moved on to work on three proof -of-concept projects with different customers in India. O ne of these project is awaiting cu stomer feedback on product quality and tech- superiority, expected this quarter. Two more projects are ongoing. So, things are advancing well. It's a high technology product line. So, our customers will be very careful, and we have to meet the requirements better than what the current suppliers are doing. That's the current state and the progress is very good.

Got it. And it will be a passive area or something like passive plus or semi-active area, Sir?

All passive.

I wanted to come on the AURIC plant order book there, Sir. I just want to understand the reason for the change in SOP date.

There has been a delay mainly from the UK -based OEM. That was an SOP which was to start in this quarter, actually. Now they will be starting in Q 2 only, we have the schedules. And the US-based OEM should start by the end of Q 1. So that is the line of sight we have. But in the meantime, we are also going to start orders for other customers like Valeo, for example. I think the plant will start from April. But these two large OEM customers will come in end of Q1 and Q2. The US-based customer was always end of Q1. It was this UK-based OEM where there's a delay of two quarters.

And the order book , total business won remains similar in terms of what earlier mentioned around ₹ 230 crores, right, Sir?

It is ₹ 388 crores per annum. With the peak value, I have said was FY 29. But as we speak, we are also getting new business from this quarter onwards also, so which we will report in the May meeting.

Understood. Thank you for this. And finally, I just want to understand, we have this O thers in our segmental breakup which has been growing more than 2x in the last 9 months. Just want to understand what are the key products that are driving the growth?

All the other products which are not included in our two-wheeler, three-wheeler, four -wheeler, we are right now grouping them in O thers and as soon as they become bigger, we will start grouping separately. For instance, the solar suspension panels and all the other businesses which are getting, we group it within that. Also, Other Income and government incentives are shown as ‘Others’.

Thank you. The next question is on the line of Jishnu from LFC Securities. Please go ahead.

I wanted to ask a specific question related to the Europe -India deal. W hat is the specific advantage that we will be getting that was not in our sight before the deal was signed? And now since the deal has been signed, what are the new advantages specific that specifically Endurance would be getting since it has a huge exposure to the Europe business and specifically it would have in terms of Indian auto ancillary companies, we have the largest exposure. What are the advantages that we will get specifically from this deal which was not expected before the deal?

I think what I would like to say is we are at a stage where we are still trying to gather more information for us to take a call on the strategy we have to adopt for the future. Though we have the initial guidelines and rules, but we are required to go into the specifics . I believe this agreement will be only effective within the next 9 months to a year, though it has been signed. I think as this has just happened, , the Endurance European and Indian teams are planning to meet and maybe we can throw some more light in the next quarter call in case we are ready.

Are we having any advantage right now since our plants are located in Europe, so are we having any specific advantages right now in Europe? Like we would already have zero -duty access before the deal, right? Since our plants are there in Europe.

Because we were producing local for local in Europe and also in India, there was no cross-border transactions as of now, but we are studying the overall deal to see what we can do going forward.

If I have to look at your S lide 9 with regard to Europe order inflow, it seems to be dwindling down for last couple of years and I think in spite of German acquisition, it's pretty low for the 9- month period. What is really happening there? Is it an end-market situation or you are evaluating your own strategies to get new orders?

Sure. Yes, in the 9 months of this financial year, we acquired only € 15 million of new business. This is lower compared to € 40 million the previous financial year. But we will have to consider that the market is in a very difficult situation. As you know, in December 2025, the European Commission proposed a review of the 2035 rules . This is not yet finalized, but suggests a potential shift from 100% to 90% of emission reduction target, allowing some residual emission to be offset through measures like green steel production or biofuel. And the market, reaction, as you can imagine, was not so positive. Now, in the second week of March, there will be an official position of the European Authorities and we will see. But at the moment, investment s in the ICE as well as EV have slowed significantly. This is the reason why we are not acquiring much business right now. This is unfortunately a market stagnation. On top of this, even if you see the registration that is growing compared to the previous year . The previous quarter we closed with 4% of increase compared to the previous year in Europe and the year to date is more or less 3%. You have to consider also that the mix of these registration are completely different compared to the past. T o give you an idea, in the Calendar Year 2025, we have had an increase of import of 200,000 cars from China and from the rest of the world. And we lost 200,000 cars of production in terms of export. And so it means 4% reduction, if I consider 10 million vehicles per year. The situation in Europe is very difficult in this moment. But despite the situation, we have been able to close 4.2% without considering the acquisition of Stöferle and without considering tooling sales . But, we are optimistic even if the situation is very tough.

Sure. Thanks for the detailed answer. And related to the same, again, looking at the M&As which you have done and turnaround in Maxwell and also the German acquisition going smooth, how are you approaching, are you more confident now to do larger size deals or how is your M&A strategy going to plan out for next 3-4 years?

See, firstly the M&A strategy will be mainly in our existing areas - like we have done, for example in the solar business. It is suspension for non-auto applications. It could be castings in non- automotive. Our strategy will be in those segments where the margins are much higher with good target markets. It is very important that we enter new areas where there is a target market. We are already working on a deal right now and we will see how that goes. So, we are always looking for the M&A opportunities, but of course, we will be aggressively going ahead with it, but we will only do it if it makes sense to our business, I just g ave you these examples. What’s definitely high on our minds is not only automotive but also non-automotive applications, which will be partly in our products like suspension or casting, or it could be something else.

Thank you. The next question is on the line of Rajit Aggarwal from Nilgiri Investment Managers. Please go ahead.

Good morning, Sir. Just a quick clarification on the CAPEX plans. There are two new CAPEX which have been mentioned in the slide. One is the Sanand expansion and there is another one of Aluminium Forging at AURIC, Bidkin. And both are going to be commissioned in Q1 and Q2. So what is the total CAPEX on these two expansions?

We do not have the figures right now , and we do not want to give you a figure which is lower or higher. But these are not high CAPEX. These will be both below ₹ 50 crores each.

Just following up from a previous participant's question on the order wins in Europe and congratulations for being able to sustain the growth despite the environment being so hard. But going forward, let us say, 1 year or 2 years, if there is inorganic expansion, do you see the growth rate coming down or do you see a chance of de-growth in Europe business?

We do not like to think on those lines. We only think of positive growth. Of course, we have to see the downside. But there have been many downsides since 2008 also, as you know, the global financial crisis. We have faced it, we have grown. So we will find our s olutions. Because we believe in Endurance to find solutions, being positive and going this thing ahead. Because if you think in those lines, then you won’t ever grow. You know what I am saying. So our thinking is a very, because we have faced some very tou gh times since 2008. So when we reach there, we will face it and we will do something about it.

Thank you. The next question is from the line of Mihir from Equirus. Please go ahead.

On slide 8, you mention that the total business wins prior to FY 26 in Stöferle is not included. So, what would be that quantum?

Stöferle acquisition was completed only in April 2025. Prior to our acquisition, the total turnover of Stöferle is € 75-80 million in the total financial year. In this financial year, we acquired € 5 million with the end-customer BMW. Please note that, Stöferle has volumes secured till 2030-2032. So, I don't see any kind of issue and the company is really profitable. Now, we have integrated Stöferle fully in the Company and we are trying to do a lot of economical scale because as you know, Stöferle is buying raw parts from the market, but we have the opportunity also to produce raw parts for them in our foundry. And this is the second step of the integration that we start in the next financial year.

Yes, this is true. We are discussing with some of these OEMs, but I repeat, in my opinion, we need to wait for a clear position from the European government, because these companies are coming and opening new plant s, but only for assembly of the car. So we need to understand whether they will import components like the powertrain components and battery case components and assemble them here, or whether, to reduce tariffs, t hey will be obliged to produce here. As you know, we are discussing with BYD. They are expected to start at the end of this financial year in Hungary and in the next financial year in Turkey, but only for assembling the car. So, there are no benefits for our product range at the moment. If they are obliged to produce parts here in Europe, it could be an opportunity for us. Regarding the previous question on the agreement between India and Europe, this could be, from my point of view, a big opportuni ty for Endurance Group, because as you can imagine, at the moment, we are facing strong competition from the Chinese supplier s. Considering the cost structure of our competitors here in Europe, using our production capacity in Europe and in India and taking benefit of the new trade agreements , is a positive for us and an opportunity in front of our customers. Our industrial footprint in India is a big opportunity, not just for the continuous growth of four wheelers in India, but also for Europe.

I just wanted to clear one point to everybody on the call. When I talked about ABS and the Brake Systems pricing, I had considered some other items and I took mainly for bikes of higher cc. So I think the pricing would be quite similar because there would be no Stainless Steel Braided Hoses and some other items which are there in the higher end bikes. So I would say the prices of the Brake System would be similar in some cases or even slightly lower. So I just want to clear my statement where I said earlier that they would be higher than ABS, the Master Cylinder, Caliper and the Brake Disc. So please make a note of that. It may be same or a bit lower.

Thank you very much. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

I will just say that we at Endurance, both in India and Europe, are fully focused on profit growth and trying to improve both sales growth as well as our margins. So, we will continue to focus on that, in spite of challenging conditions in Europe mainly. But we will try and take whatever opportunities we get and make the best out of them. So, thank you for all your support and see you in the next call.

Thank you very much.