This SBI MF-Backed Stock Is Top Pick of The Week By Axis Securities: Here’s Why

Endurance Technologies is a large-cap auto company. Endurance is one of the largest aluminium die-casting companies in India and a top auto component maker with a growing global presence. The stock which has gained 26% YTD is among the top pick of the week by the brokerage firm Axis Securities as the brokerage sees more potential upside on the stock for a target price of Rs 1,845.

Reasons To Buy Endurance Technologies

As per a report shared by Axis Securities, here is the investment rationale for buying Endurance Technologies.

Strong Order Wins

In H1FY24, the company won new business orders worth ~Rs 777 Cr in India, taking the total cumulative order book for the last five years to ~Rs 3,664 Cr. This also includes a cumulative EV order of Rs 620 Cr.

Capex and Capacity expansion plans

ABS capacity increased from 4 Lc to 6.4 Lc units per annum. Alloy wheel capacity is expected to increase from 4.5 Mn to 5.5 Mn wheels per annum by Apr'24. Successful trials at the Waluj plant for certain BMS boards are underway and a sample for BMS with optimized design is submitted to key OEMs. The management expects audit and validation followed by production in Q4FY24.

Aftermarket & Exports

Aftermarket sales in Q2FY24 stood at Rs 125 Cr, up 20% YoY. The company will start exporting to a total of 35 countries including Brazil, DR Congo, and Cameroon. The export sales in Q2FY24 grew by 12.6% YoY to Rs 40 Cr. This was majorly led by machine casting sales to Ford Motors in the UK and IVECO in Italy (including Case New Holland) and also from two-wheeler suspension exports for the KTM plants in Austria, China, and Southeast Asia.

Outlook & Valuation

Endurance Technologies is focused on building capacities to meet industry demand and increasing utilization of existing facilities. On account of the expected recovery in the EU business, demand pick-up in 2W EVs, production ramp-up by OEMs in premium 2W MC, and demand recovery from rural markets in India, we believe the ramp-up of existing and new capacities to lead to operational efficiency. We like Endurance as a play on Auto, primarily due to its strong EV product portfolio, robust order book, and capacity expansion projects, the benefits of which are expected in H2FY25 and beyond.

Endurance Technologies Share Price Target

"The growth in 2W demand based on signs of recovery from rural regions and impending exports demand we value the stock at 27x (earlier 25x) on Dec'25E EPS to arrive at our TP of Rs 1,845/share (earlier Rs 1,690). The TP implies an upside of 10% from the CMP and hence we recommend a BUY on the stock," said Axis Securities in a note.

Endurance Technologies Shareholding Pattern

During Q2FY24, the company reported promoters' shareholding of 75.00%, FIIs stake of 8.31%, DIIs stake of 14.91% and public stake of 1.80%. As per the shareholding pattern of the company for the July to September quarter, Sbi Multicap Fund held fully paid-up equity shares of 28,25,859 or 2.01% stake whereas Uti Flexi Cap Fund held 41,59,316 shares or 2.96% stake in Endurance Technologies.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.