Endurance Technologies Ltd Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aashin Modi - Equirus Securties Pvt. Ltd - Analyst : Yeah. Hi, team. So thanks for the opportunity. So my first question is regarding the new orders during the quarter, we have added around INR160 crore-odd of new orders wherein we have added INR60 crore of new EV business and also four-wheeler casting business. Could you please highlight -- give us some more highlight on that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Aashin Modi - Equirus Securties Pvt. Ltd - Analyst : And my second question is regarding -- so if you look at the current ramp up of our order book, most of it is happening in FY25. So how do we see growth from FY26 onwards? Which would be the key segments which would be driving the growth and in which segments will we see incremental orders from here?

Question: Aashin Modi - Equirus Securties Pvt. Ltd - Analyst : Thank you, sir, for the detailed answer. And sir, my last question is regarding Maxwell. So congratulations on the order win from Royal Enfield. So with the slew of new launches in the electric scooter space, how do we see order wins over there as in -- with conventional there, like Hero and all are coming up with new launches, how do we see orderings over there?

Question: Aashin Modi - Equirus Securties Pvt. Ltd - Analyst : Okay. Thank you. I'll join back the queue.

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Hi, sir. Continuing on Maxwell, in terms of branded key customers have been facing this issue of FAME II. How far are we in terms of getting in roads with mainstream OEMs like Ola, Ather, and Bajaj, Hero, TVS. What we need to do to get orders from them?

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Okay, but even with Bajaj, are we expecting it to take longer time for us to get orders from Bajaj for BMS, given that (multiple speakers)?

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Got it. And one ratification on the four-wheeler focus which we talked about taking share up to 45%. So that particularly, in the aluminum side, there is basically the doubt including, alloy wheels, (technical difficulty) we currently don't do, right? Or are we looking at that as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Right. And on the structuring casting parts order which you talked about. So this is for ICE or EV side?

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Right. And this obviously can be a fairly -- will lead to the reasonable increase in contents per vehicle on the aluminum side on the two-wheelers? (multiple speakers)

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Right. Got it. And last question or rather observation was that in the passenger vehicle business both in India and Europe, we have seen some bit of lower growth than the underlying industry in nine months. So is it more through with the timing difference because of the product launches of key customers in India or there is something else there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Jinesh Gandhi - Ambit Private Limited - Analyst : Got it, got it. Thanks. I'll fall back in queue.

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Thank you, sir, for the opportunity and congratulations on the strong revenue growth, new order wins, and the future diversification plans. So firstly, on the revenue growth for this quarter, so on Q-on-Q basis, we've seen a double-digit growth in the die casting, and suspension segments. Can you help us understand which new orders have went up and supported the growth in Q3?

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Basically, I want to understand on Q-on-Q basis, Q3 versus Q2, the die casting, and suspension have grown by double digit versus the industry growth being flattish. So just to understand more which new orders were ramped up this quarter?

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Casting and suspension, yeah.

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Understood, sir. This was helpful, sir. Just on the other expense, was there any one-off this quarter? Because other expense has grown broadly in line with the top-line growth. We have not seen any positive leverage benefit. Any reasons for that, sir?

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Yeah. So yeah, India -- basically, concerns other expenses. If you look at, it has grown broadly in line with the revenue growth.

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Yeah, both the case. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : I think in India also we have seen the increase. So if you can help us understand. Unidentified Company Representative In India, there has been no significant increase in other expenses. Some preventive maintenance expense we normally undertake in December. So that's something. But if you see other expenses as a percentage of revenues, especially the fact that metal prices are coming down, so revenues have to adjusted for that actually as a percentage of sale, it's not gone up at all. But one-off item would be preventive maintenance cost, but nothing really significant there. So Europe, other expenses, quarter on quarter, would -- Massimo, you would like to add something?

Question: Mumuksh Mandlesha - Anand Rathi Securities Pvt. Ltd - Analyst : Got it, sir. This is helpful. Thank you so much.

Question: Pramod Amthe - InCred Capital - Analyst : Yeah, hi. Thanks for taking my question. So the first question is with regard to the page number 7 -- 6, which you talked about the new order wins, how they are going to plan out into the sales, where you have called out for FY25 almost around INR2,400 crore of business to come. It looks huge, if I had to top it up on the existing sales. You are basically talking about the 25%-plus growth from the new order wins, which I think is one of the best in the last five years which you might have done. So if I had to track what are these customers we need to watch out for because you also alluded to the fact that in case of EVs, one of the customer missed out and hence, the deferral for next year. So wanted to get some more granularity when you are projecting that much of a lumpy rise for next year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Pramod Amthe - InCred Capital - Analyst : Okay. Sir, and the second question is with regard to the Punch Powertrain where you alluded to that you have won and supplies are immediately starting. Considering that it's the first of its kind born EV and you have been able to make inroads, surprised to see the short lead time of win versus your delivery. So is that anything to see if we extrapolate the similar one for other EVs coming in car business or how are you looking or it's a one-off to have a short lead time per se?

Question: Pramod Amthe - InCred Capital - Analyst : And looking at the opportunity in the EV Powertrain, how much you might have addressed in this case of Punch? And is there a more headroom available for you to expand your opportunity with that? How do you look at? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Pramod Amthe - InCred Capital - Analyst : Just the rule of thumb, like how much you might have been able to address now with this win?

Question: Pramod Amthe - InCred Capital - Analyst : Sure. Thanks. And a similar question to the European operations. If I have to look at the order wins in nine months FY24, they look dismal versus what you have done in last two years. Any color why it was a case and how you expect -- was the new product development itself was weaker, or your wins were lower in Europe this year and how that will have a repercussion going forward?

Question: Pramod Amthe - InCred Capital - Analyst : Sure, sir. Thanks and all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Arvind Sharma - Citi Investment Research (India) - Analyst : Hello. Good morning, sir. Thanks for taking my question. Sir, first question would be on the margin trend in the India business. On a quarter-on-quarter basis, there has been a slight decline. Any reasons for that, sir, EBITDA margin?

Question: Arvind Sharma - Citi Investment Research (India) - Analyst : Got it, sir. And do we expect any mega-project incentives next year?

Question: Arvind Sharma - Citi Investment Research (India) - Analyst : Sure, Sir. Thank you for the clarification. Sir, next question will be more on the demand trends that you are seeing. Yes, there have been new order wins which will help the revenue, but on the demand side, especially in the two-wheeler segment, what are your views for next year, say fiscal '25 leaving the new order part, purely from industry perspective. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Arvind Sharma - Citi Investment Research (India) - Analyst : Sure, sir. So just one data point in -- for the European business, you've shared the revenue and EBITDA in the presentation in euro terms, what would be the PAT, sir?

Question: Arvind Sharma - Citi Investment Research (India) - Analyst : Thank you, Massimo. Thank you, sir, for your responses. That's all from my side.

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Couple of questions. First is you talked about us having an aspiration of 45% of mix from four-wheelers by 2030. So what product segments will drive that for us? That is one. Second is if you can talk about the suspension segment performance, so you've given brief color in terms of how the two-wheeler end market has done on the nine month and how we have done. But that outperformance is led more by the suspension or is it other product categories? And the third question is this largely on the competitive dynamics and suspension? So will it be good within two-wheelers and if at all we're looking in, four-wheeler? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Right. So on suspension what my question was, even you talked about adding a sizable amount of unit. So you talked about the Hero Motors, close to [INR130 crore order] and even from Suzuki and other players. What will be your share now in the two-wheeler space, and if you can just help us understand whether opportunities for further growth in the two-wheeler space in suspension?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Yeah, for us, it's largely two-wheeler, right?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : And who would we be replacing in the competition?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Okay. Just last question on the Maxwell business, if you can just give some color on the corporative dynamics in the product segments we participate in. Who will be the larger players and their share as of today?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : So my question was largely on the comparative dynamics in the product segments we participate in -- in all the other players and their share as we speak today.

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Okay. If I can just squeeze in one last question on the margin side, especially in the standalone business. Now despite such a healthy performance, you're seeing a overall key raw material cost also being softer now. Still margins on the standalone has not recovered to the levels where we say REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2024 / 5:30AM, ENDU.NS - Q3 2024 Endurance Technologies Ltd Earnings Call around 14%, 15% or 16%. So is there anybody just segment which is dragging the overall piece in the standalone business? Any perspective we can get?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Really appreciate it. And we can clearly see that. It's just that, if you look at the end segments, especially the OEs, they are making one of the best spread on a per unit basis. And if you look at the overall RM context as well, it's been benign for last few quarters. So just in that perspective. I was trying to understand is it more to do with the segment of the product mix or it's more about product cost recovery which may play out at further in coming quarters.

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Okay. Thank you and good luck.

Question: Prateek Poddar - Nippon Life India Asset Management Limited - Analyst : Just once more question, just wanted to confirm. Are the Royal Enfield BMS orders start from Q1 FY25? Is that a fair understanding?

Question: Prateek Poddar - Nippon Life India Asset Management Limited - Analyst : BMS orders for Royal Enfield, do they start from Q1 FY25 or Q1 FY26?

Question: Prateek Poddar - Nippon Life India Asset Management Limited - Analyst : Because the presentation mentions it's at Q1 FY25. So it got quite a bit confusing.

Question: Prateek Poddar - Nippon Life India Asset Management Limited - Analyst : Okay. And sir, just in Maxwell, how much of your total revenue potentially next to the [feet] revenue of INR380 crore, how much would come from Hero Electric? Is that around INR70 crore-odd?

Question: Prateek Poddar - Nippon Life India Asset Management Limited - Analyst : Fantastic. Okay. Sure. Thanks. Thank you.

Question: Prateek Poddar - Nippon Life India Asset Management Limited - Analyst : I just wanted to confirm. Yeah.