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Margin stable in Europe despite weak macro

Mandatory ABS may open up a huge new growth opportunity

• Endurance Technologies (ENDU) delivered an in-line operational performance in 1QFY26. The key highlight in the quarter was the steady operating performance in Europe despite the ongoing global headwinds, which is commendable in our view.
• We estimate a CAGR of ~18%/20%/19% in revenue/EBITDA/PAT over FY25-27, driven by new order wins and its focus on significantly ramping up its presence in 4Ws going forward. If ABS were to be mandated in all 2Ws as per the draft notification issued by MORTH, it would open up a huge growth opportunity for players like ENDU. The stock trades at 36x/31x FY26E/FY27E consolidated EPS. We reiterate our BUY rating with a TP of INR3,068 (based on 35x Jun’27E consolidated EPS).

Margin remains intact in Europe despite weak macro

• 1QFY26 consol. revenue grew ~17.5% YoY to INR33.2b (in line with estimate), driven by ~10.1% YoY growth in standalone (India) business (vs. 2W industry sales decline of 1.6%) and ~39% YoY growth in Europe (in INR; +28.5% in EUR terms).
• Standalone performance: Standalone EBITDA margin declined 50bp YoY to 12.4% (below our estimate of 12.9%), impacted by higher metal prices. However, given a higher-than-expected revenue growth, EBITDA was in line with our estimate at INR2.9b.
• Europe performance: Europe business growth was aided by new hybrid/EV orders and Stoferle consolidation. Organic growth would be 0.6% compared to a 1.8% fall in EU new car registrations. Europe EBITDA margin (including other income) expanded 90bp YoY to 17.4%. Stoferle margin stood at 19.6%.
• Maxwell performance: Maxwell revenue jumped 10x YoY (on a low base) to INR310m, led by higher volumes from key customers. Maxwell posted a positive EBITDA of INR10m vs. a loss of INR42m YoY.
• Consolidated PAT grew 11% YoY to INR2.3b (in line), supported largely by inorganic growth (Europe PAT growth of 42% YoY). On the other hand, standalone PAT grew 1.8% YoY to INR1.7b, while Maxwell’s loss declined to INR20m from INR70m in 1QFY25.

Highlights from the management commentary

• In 2W inverted front forks, ENDU is by far the market leader. It is already a big supplier to BAL and KTM and has recently received orders from TVS and HMCL. Recently, ENDU has won a new order from a leading Chinese 2W OEM for inverted front forks and rear mono shocks. SOP for the same is likely to start in 3Q-4QFY26. This is likely to peak in FY27.
• If ABS is mandated on all 2Ws as per the draft notification issued by MORTH, it would open up a huge growth opportunity for players like ENDU, which is already supplying low-cost ABS solutions to BAL and RE, and there are just three other MNC competitors in this segment. With higher volume, ENDU now targets 25% market share initially (from 15% currently). Further, higher ABS usage would also mean higher requirement of disc brakes. Given that ENDU is a market leader in 2W disc brakes (43% share in disc brake systems and 60% share in brake discs), it is likely to emerge as a major beneficiary of the same.
• ENDU has now tied up with a Korean entity for the entry into 4W suspensions in India. It is actively pursuing new business with multiple OEMs.
• In Al forgings, ENDU has recently received another order from RE and HMCL for the supply of Al forgings. ENDU now sees this as a key area for future growth. It is setting up a new plant for this business and expects to relocate the current setup in the new plant.
• ENDU has won its first order for 4W drum brakes from TTMT, for which SOP will begin in 4QFY26. Although it is a small order worth INR250m p.a., it is critical as it marks ENDU’s entry into this segment with a huge opportunity for growth in the long run. It aims to get into advanced braking systems like ESP in collaboration with BWI. However, ENDU is cognizant of the fact that lead time is high in such safety-critical products in 4Ws.
• ENDU intends to invest INR8b in a standalone entity in FY26 and the capex is unlikely to decline even in FY27 given that the company foresees significant growth opportunities in different segments.

Valuation and view

• We estimate a CAGR of ~18%/20%/19% in consolidated revenue/EBITDA/PAT over FY25-27, driven by healthy new order wins and its focus on significantly ramping up its presence in 4Ws going forward. If ABS were to be mandated in all 2Ws as per the draft notification issued by MORTH, it would open up a huge growth opportunity for players like ENDU. The stock trades at 36x/31x FY26E/FY27E consolidated EPS. We reiterate our BUY rating with a TP of INR3,068 (based on 35x Jun’27E consolidated EPS).

Highlights from the management commentary

Update on ABS and braking systems opportunity

• ENDU’s current ABS capacity stands at 640k units p.a., of which it is utilizing 400k units p.a. for single-channel ABS being supplied to BAL and RE. Thus, it has about 13% share in the current ~3m industry.
• Its dual-channel ABS final testing is ongoing and the expected SOP of the same is 2QFY26. This will enable ENDU to ramp up the balance 240k-unit capacity for dual-channel ABS.
• Once ENDU receives the approval for dual channel from its core customers, it targets to increase the capacity by another 2.4m units p.a. by Mar’26.
• MORTH has proposed a new safety requirement for 100% use of ABS on all 2Ws above 4kw motor power w.e.f Jan’26. When this regulation is finalized and notified, management foresees a huge opportunity for ENDU in the braking systems business.
• This would open up a market of almost 22m units of domestic 2Ws (almost 10x growth from current levels). At this higher volume, ENDU now targets 25% market share in ABS initially.
• Further, higher ABS usage would also mean a higher requirement of disc brakes. Given that ENDU is a market leader in 2W disc brakes (43% share in disc brake systems and 60% share in brake discs), it is likely to emerge as a major beneficiary.
• Management is confident that this regulation will come, even if it is with a lag. Hence, it has already started investing in capacity additions to take the benefit of this opportunity.
• As a result, ENDU is planning to increase its disc brake capacity at Waluj and increase its capacity in the Chennai plant (for disc brake assembly) to cater to South-based customers like TVS, RE and Yamaha. These new capacities are likely to come on stream by Mar’26.

Snapshot of order wins in 1QFY26 – excl. BAL

• ENDU won orders worth INR2.5b in 1Q, of which INR2.47b were new orders (excluding the INR3b p.a. battery pack order). It has received these orders from OEMs like RE, TVS and MM.
• Cumulative EV orders so far stand at INR8.6b; including BAL, they stands at INR10.2b.
• Overall, total order wins since 2021 stand at INR49.5b, of which new business accounts for INR39.8b. Of these orders, INR14b worth of orders have seen SOP in FY25, another INR11.5b will see SOP in FY26 and the balance would commence in FY27-FY28.
• For EVs, ENDU received an INR3b order for 4W EVs from four renowned international customers, including Valeo and Yazaki.

Update on suspensions

• ENDU remains the market leader in 2W/3W suspensions in India.
• In 2W inverted front forks, ENDU is by far the market leader. It is already a big supplier to BAL and KTM and has received orders from TVS and HMCL. Recently, it has also won a new order from a leading Chinese 2W OEM for inverted front forks and rear mono shocks. SOP for this order is likely to start in 3Q-4QFY26 and is likely to peak in FY27.
• Further, supplies for KTM had sharply reduced in the recent past. With BAL taking over KTM, supplies are expected to normalize in the coming quarters.
• It has now tied up with a Korean entity for the entry into 4W suspensions in India and is actively pursuing new business with multiple OEMs. Update on Al forgings opportunity
• ENDU had started this product as a backward integration option for inverted front forks. This is now evolving as a good business opportunity in different segments.
• The JLR order is expected to commence in Jan’26.
• ENDU has also recently received an order from RE and HMCL for the supply of Al forgings.
• It now sees this as a key area for future growth.
• ENDU is setting up a new plant for this business and expects to relocate the current setup in the new plant. Update on Transmissions business
• ENDU has received an order from HMCL to supply 100k units of clutches per month, for which SOP will begin in 4QFY26.
• Similarly, it has received an order for the first slip assistance clutch (in partnership with Adler) from RE, which will start from Sep’25.
• ENDU has also received its first order for 4W drive shafts, for which testing has already begun. Update on first order in 4W brakes
• ENDU has won its first order for 4W drum brakes from TTMT, for which SOP will start in 4QFY26.
• Although it is a small order worth INR250m pa, it is critical as it marks ENDU’s entry into this segment with a huge opportunity for growth in the long run.
• It aims to get into advanced braking systems like ESP in collaboration with BWI. However, ENDU is cognizant of the fact that the lead time is high in such safetycritical products for 4Ws. Update on Maxwell
• In 1QFY26, ENDU purchased the remaining 38.5% stake in Maxwell and now owns 100% of the company.
• At Maxwell, ENDU is getting BMS orders for motorcycles, 3Ws, tractors and EVs used in airports for cargo handling.
• ENDU is working on orders worth INR1.56b at Maxwell, which are expected to reach a peak by 1QFY27. It is also working on further leads worth INR1.5b.
• For the same, ENDU is setting up two high-speed surface-mounted lines.
• ENDU intends to leverage this technology to design and develop BMS for 4Ws and e-buses in the future.

Update in Maharashtra Incentive

• The company has received an eligibility certificate to apply for Maharashtra government incentives worth INR6.06b for capex incurred as of FY25. As a result, ENDU has booked an incentive of INR329.1m in 1Q.
• ENDU would look to apply for the eligibility certificate to receive incentives for capex incurred in FY26 soon. Update on Europe
• ENDU has consolidated Stoferle in Apr’25. Stoferle revenue stood at EUR22.9m in 1Q and EBITDA at EUR4.5m, translating into EBITDA margin of 19.6%.
• The market outlook for Europe continues to be challenging.
• Further, most regions are awaiting the government’s stance on EVs, which is also leading to a postponement in purchases by customers. Spain is the only market that is growing in double digits as its government has introduced incentives for EVs.
• In Europe, ENDU has won a new order worth EUR2m for a specialty plastics unit in EVs.
• The total cumulative order book stands at EUR231m, with EUR196m of new orders. Of these orders, SOP for orders of EUR65m started in FY25 and SOP for EUR35m will begin in FY26. SOP for the bulk of the remaining orders is expected in the next two years. Update on new capacity addition and capex guidance
• ENDU has so far incurred a capex of INR2.86b in 1Q.
• It intends to invest INR8b in the standalone entity in FY26 and the capex is unlikely to reduce even in FY27 given that ENDU foresees significant growth opportunities in different segments.
• From the Auric Shendra plant, ENDU has already received orders from Valeo to supply motor housings, which would eventually be used in M&M EVs. In this die casting facility, ENDU targets to have capacity from 1,100t-2,500t of castings. SOP for the same is expected in 4QFY26.
• Investments in the 2W alloy wheel facility at Auric (Bidkin) is also on track with a planned capacity to produce 3.6m units p.a., which is almost fully booked. SOP for this is expected in Aug’25.
• ENDU is also investing in a battery pack assembly plant in Pune, which is currently under construction. ENDU has already received an LoI from a leading domestic 2W OEM to supply battery packs with a peak business worth INR3b. SOP for this is expected in Jan’26.

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