Endurance Technologies falls 6%; stock nears 52-week low on weak Q3 results

Shares of Endurance Technologies were down 6 per cent at Rs 1,275 on the BSE in Monday’s intra-day trade due to growth concerns. In comparison, at 01:31 pm, the S&P BSE Sensex was up 0.16 per cent.

The stock of the automotive components manufacturer has fallen 20 per cent in the past one month after the company reported a weak set of December quarter (Q3FY22) numbers. It was trading close to its 52-week low price of Rs 1,250 touched on April 15, 2021. The stock has corrected 36 per cent from its 52-week high of Rs 1,981 hit on November 8, 2021.

For Q3FY22, Endurance Technologies' profit after tax (PAT) halved to Rs 94.6 crore in December quarter (Q3FY22) due to weak operational performance. The company had posted PAT of Rs 190 crore in the year-ago quarter (Q3FY21).

Consolidated revenue from operations was down 7 per cent year-on-year (YoY) at Rs 1,889 crore against Rs 2,041 crore in previous year quarter. Earnings before interest tax and depreciation and amortization (Ebitda) decreased 41 per cent YoY at Rs 210.7 crore, while margins contracted 640 bps at 11.1 per cent during the quarter.

The management said the market this year is subdued with headwinds in the form of weak rural demand and higher cost of ownership. "In the EU (including UK), the number of new car registrations was down by 23.4 per cent YoY in Q3. The European automotive market has been deeply impacted by semi-conductor shortages and soaring energy prices," the management said.

Endurance is one of the leading automotive component manufacturers having a diverse range of technology intensified products with operations in India and Europe (Italy and Germany). In India, the company predominantly caters to two and three wheeler OEM5 and products include aluminium castings, suspensions, transmission and braking systems. In Europe, the company predominantly caters to four wheeler OEM5 and mainly supply aluminium casting products.

Bajaj Auto contributed about 54 per cent of the domestic revenue and 39 per cent of overall revenue in fiscal 2021. The top three customers in Europe accounted for nearly 70 per cent of revenue from the region.

Last month, CRISIL Ratings had reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the bank loan facilities and commercial paper of Endurance Technologies.

The company received fresh orders worth Euro 10 million in Europe during the same period, mainly led by Porsche, Daimler, Case New Holland and Stellantis (Fiat’s new JV). Entry into the aluminium forging business should support backward integration and revenue diversification, and thereby enhance profitability and operating performance, CRISIL Ratings said in a rationale dated January 14, 2022.