Endurance Technologies is an Aurangabad based Auto Ancillary Company. It has
18 manufacturing plants in India and 8 in Europe. The company’s domestic
business is diversified, new clients have been added and diversification into newer
products continues. Hence, the dependence on the legacy casting business has
come down to 44% from more than 50% a few years ago. In Europe, Endurance
is a 4W aluminum casting supplier and is moving in complex products. Company
derives 2/3rd revenue from India and the rest from Europe. Shares of Endurance have seen a strong appreciation
since its lasting last year. At the CMP of `1,095, the stock is trading at the PE of
26x of its FY2020E EPS. We forecast top-line and bottom-line CAGR of 14.3%
and 21.3% respectively over the next three years. We also forecast
~150bps/200bps jump in its EBITDA margins and ROE respectively. With the
strong FCF generation, we believe that Endurance will become almost debt free in
the next three years. We value Endurance Technologies at 29.0x of its FY2020E
EPS of Rs 42.8 to derive the core business price target of Rs 1,242 and add Rs 35, NPV
of ABS opportunity to derive the target price of Rs 1,277, implying 15% upside.

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