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Endurance Technologies IPO: Valuation Attractive, Say Analysts. 5 Things To Know

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Endurance Technologies IPO: Valuation Attractive, Say Analysts. 5 Things To Know

Endurance Technologies has set the price band for its IPO at Rs 467-472.


Aurangabad-based Endurance Technologies has hit the capital markets with its Rs 1,160 crore initial public offer (IPO) on Wednesday. The auto ancillary company has set the price band for its IPO at Rs 467-472. Investors can subscribe the IPO in lot sizes of 30 shares. The IPO will close on Friday, October 7. 

Here are 5 things to know about the company: 

1) Through this IPO, Endurance Technologies does not intend to raise any fresh capital from market. The issue is purely an offer for sale by its existing investors and promoters. Post this IPO, promoter holding in the company will come down to 82.5 per cent from 86.28 per cent earlier.  The company has raised Rs 349 crore from anchor investors by issuing shares at Rs 472.

2) Endurance Technologies supplies components for two-wheeler and three-wheelers in India and four-wheelers in Europe. It operates in five key segments - die-casting (contributes 63 per cent of revenue), suspension (23.3 per cent of revenue), transmission (5.5 per cent of revenue), brake system (4.6 per cent of revenue) and aftermarket (3.8 per cent of revenue). 

3) Endurance Technologies had reported a net profit of Rs 290 crore on revenue of Rs 5,241 crore in FY16. Its net profit has grown at a CAGR of 19.1 per cent for last three years while its revenue has expanded at a CAGR of 11.6 per cent. However, its operating margin (EBITDA margin) has been in a range of 12-12.5 per cent for last few years. Endurance Technologies has delivered a return on equity (RoE) of around 22 per cent, which is better than its peers, says Angel Broking. 

4) At the upper end of the price band, Endurance Technologies shares are valued at 22.9 times its FY16 earnings per share (EPS) of Rs 20.6, which looks at par with its peers, said Angel Broking. The brokerage has a "subscribe" rating on the issue. Religare also shares the same view on its valuation. "The company is available at 23x its FY16 earnings, which is fairly valued given its track record, healthy return ratios and robust outlook on automobile industry," Religare said. 

5) Endurance Technologies has high client concentration with top three clients contributing 58 per cent of its revenue. Bajaj Auto alone contributes 38 per cent to its revenue, which is a key risk, say analysts. Further, a slowdown in the two-wheeler segment could be a risk to its future revenues as the company gets significant revenues from the segment.



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