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Endurance Technologies IPO review (Subscribe)

Review By Dilip Davda on Sep 29, 2016

Endurance Technologies Ltd (ETL) is the largest two-wheeler and three-wheeler automotive component manufacturer in India in terms of aggregate revenue for FY2015 from our selected product segments. The company also has operations in Europe with highly-automated manufacturing facilities in Italy and Germany. As a Tier one companies ETL directly supplies to OEMs its high standard products. The company is also the number one aluminium die-casting company in India in terms of actual output and installed capacity in FY2016. ETL is a complete solutions provider, providing end-to-end services by engaging its customers from conception to end-user delivery. Company’s development process includes design, development, validation, testing, manufacturing, delivery and aftermarket sale service for a wide range of technology-intensive auto component products leading to better customer satisfaction and diversification of its customer base. ETL is an innovation-driven company with strong focus on research and development that allows it to develop new products suited to customer requirements. For FY2015, FY2016 and Q1 FY2017, ETL’s total revenue contribution from India was 71.5%, 70.1% and 66.8%, respectively, while r total revenue contribution from Europe was 28.5%, 29.9% and 33.2%, respectively. According to management, so far they have not seen any adversity on account of Brexit.

For listing gains and providing exit to private equity investors, the company is coming out with its maiden IPO via offer for sale mode for 24613024 equity shares of Rs. 10 each via book building route with a price band of Rs. 467-472 to mobilize Rs. 1149.43 – 1161.73 crore (based on lower and upper price band). Issue opens for subscription on 05.10.16 and will close on 07.10.16. Minimum application is to be made for 30 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE and NSE. BRLMs to the issue are Axis Capital Ltd and Citigroup Global Markets India Pvt Ltd. Link Intime India Pvt Ltd is the registrar to the issue. ETL issued equity capital at par during 1999-2000 and then at a price of Rs. 280 to Rs. 8215.13 per share during 2005-2010. It also issues some share at Rs. 4 face value and offered buy-back for the same in 2011-12 at a price ranging from Rs. 70.42 to Rs. 457.42 per share. ETL has also issued bonus shares in the ratio of 9 for 1 in November 2007 and 7 for 1 in May 2016. As at 31.05.16 its paid up equity capital stood at Rs. 140.66 crore.

On performance front, for last four fiscals the company has (on consolidated basis) posted turnover/net profits of Rs.3850.88 cr. / Rs. 169.63 cr. (FY13), Rs. 4240.38 cr. / Rs. 205.22 cr. (FY14), Rs. 4949.44 cr. / Rs. 253.94 cr. (FY15) and Rs. 5274.55 cr. / Rs. 292.29 cr. (FY16). For the first quarter of current fiscal it has reported net profit of Rs. 80.05 cr. on a turnover of Rs. 1452.94 cr. If we annualize this and attribute to the equity (that remains same at Rs. 140.66 cr. post IPO due to offer for sale) then the asking price is at a P/E of 20 plus against industry composite of 33 plus. Issue price stands at a P/BV of 4 plus. However, the company has no peer with similar model of product verticals. ETL is well established player in automotive components for two, three and four wheeler automobiles. On consolidated basis its revenue and PAT grew at a CAGR of 11.5 and 19.3 per cent respectively for last three fiscals. For the said period, its average RoCE has remained constant around 22 per cent on an average.

ETL’s client list includes Bajaj Auto, Suzuki, Royal Enfield, Yamaha, Piaggio, Hero, Honda, Daimler, Chrysler, Tata Motors etc. Company is having major thrust on its R & D capabilities with continuous innovations. It also has tie up with renowned MNCs for specialized suspension and brakes components. Since 2005 the company follows Total Productivity Management (TPM) and puts economies of scale and cost reduction strategies in place. ETL currently exports to over 20 countries and has 26 distributors in overseas market. In India it has 256 distributors

On BRLM’s front, two lead managers handled 19 public issues in past three years out of which 5 issues closed below the issue price on the listing date.

Conclusion: 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.


Conclusion / Investment Strategy

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.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Sep 29, 2016

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

The Endurance Technologies IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if Endurance Technologies IPO worth investing. The Endurance Technologies IPO Note sets the IPO expectations in systematic way which tells you if Endurance Technologies IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in Endurance Technologies IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.


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