Endurance Technologies Ltd Q2 FY27 Earnings Call: Cumulative Order Wins Cross Rs. 6,372 Cr, Margin Recovery Seen From Q3

Strong Top Line, Margin Compression on Commodities

• Consolidated total income of Rs.4,811 Cr (+33% YoY) — EBITDA of Rs.584 Cr (+17.3% YoY) at a 12.1% margin; PAT of Rs.274 Cr (+21% YoY) at 5.7% margin.
• PAT quality was flattered by one-offs — a Rs.36 Cr gain on early acquisition of the remaining 32% Stepele stake was largely offset by Rs.31 Cr of accelerated depreciation on a European OEM program.
• India standalone income of Rs.3,761 Cr (+40% YoY) — EBITDA margin of 10.5%, down ~2% as raw material cost rose to 70% of sales vs 66% in Q2 FY 2025-2026; PAT Rs.213 Cr (+14% YoY).
• Europe income of Rs.1,029 Cr (+13% YoY) — EBITDA Rs.183 Cr at 17.8% margin (+13.7% YoY); PAT Rs.57 Cr (+39.6% YoY).
• Maxwell revenue of Rs.85 Cr (+95% YoY, +50% QoQ) — H1 FY 2026-2027 turnover of Rs.141 Cr already exceeds the Rs.161 Cr recorded in all of FY 2025-2026; PAT-positive in consecutive quarters.
• Market backdrop was strong — Indian 2W sales +18% YoY (motorcycles +13%, scooters +30%), PVs +24%, 3Ws +25%; EU new car sales +5.6% YoY with 27% BEV, 11% plug-in hybrid and 34% hybrid powertrain mix.
• Revenue mix of India incl. Maxwell 78.5% / Europe 21.5% — India standalone EV sales +185% YoY to Rs.229 Cr, now 5% of net sales.

Commodity Headwind Largely Behind; Recovery from Q3

• Q2 FY 2026-2027 was a challenging quarter on commodities — customer price increases are coming through with a 0.5% positive impact expected from Q3 FY 2026-2027, and discussions ongoing with other customers.
• Raw material side to add a further 0.5-0.6% in Q3 FY 2026-2027 — management expects steel prices to rise and aluminum alloy prices to soften, with an absolute 0.6% reduction in RMC% of sales expected in Q3 FY 2026-2027; the two impacts stack.
• Conversion-cost recovery is lagging — Q1–Q2 FY 2026-2027 increases (diesel, PNG, LPG, cutting tools) were not adjusted by most OEMs; certain OEM settlements effective only from Q3 FY 2027 (1 October 2026). Some customers may give price increases only in Q4 FY 2026-2027 or possibly FY 2027-2028.
• Greenfield drag of ~0.5% on EBIT margin in Q2 FY 2026-2027 — four greenfield facilities with cumulative capex of ~Rs.1,100 Cr incurred; the drag is expected to progressively narrow, with facilities turning positive contributors in FY 2027-2028.
• Maharashtra PSI incentive enhanced from Rs.600 Cr to Rs.858 Cr — under the Maharashtra Package Scheme of Incentives 2019, to be availed via state GST refund broadly over a 7-year period; Rs.75 Cr booked in H1 FY 2026-2027, a further Rs.50 Cr expected in H2 FY 2026-2027.
• Demand outlook described as reasonably good from most customers — management characterized this as encouraging, with margin trajectory expected to improve from here on.

Rs.6,372 Cr Cumulative Wins; Mix Shifting to 4W and EV

• H1 FY 2026-2027 order wins of Rs.748 Cr (excluding Bajaj) — from HMSI (Honda), Tata Motors, Hero MotoCorp, TVS, Ather and the US EV OEM; cumulative since FY22 stands at Rs.6,372 Cr (Rs.5,125 Cr new business), of which Rs.3,798 Cr still to be realized.
• EV share of new orders at 24% in H1 FY 2026-2027 vs 11% in FY22 — India 4W share of orders now 23% vs 16% in FY22, a marked mix shift.
• Four-wheeler order book of ~Rs.1,400-1,500 Cr (23% of ~Rs.6,000 Cr total) — per analyst Nishit Jalan's sizing, confirmed by MD Anurag Jain to translate into revenues over the next two years, i.e., by FY 2028-2029.
• European orders of €28 million won in H1 FY 2026-2027 — €10 million Mercedes hybrid-car order and €4 million Stellantis car/LCV order (both won Q1 FY 2026-2027, SOP 2027); two Mercedes orders totaling €14 million in Q2 FY 2026-2027 for hybrid LCV components with SOP 2029, aided by supply-chain consolidation favoring Endurance's strong financials.
• ABS capacity to reach 1.54 million units p.a. by Q4 FY 2026-2027 — 70% already booked by Bajaj Auto and Royal Enfield; dual-channel supplies to Bajaj Auto began October 2026; second Royal Enfield program SOP expected Q4 FY 2026-2027.
• Bajaj accounts for roughly 30-35% of group revenue — and is excluded from the order book; H1 FY 2026-2027 group income was Rs.9,159 Cr. Some proprietary programs are currently with only one customer; management is confident additional customers may follow.

Battery Pack Ramp Underway; EV Margins Not Dilutive

• Battery pack SOP for a leading 2W OEM with full ramp-up in Q3 FY 2026-2027 — peak sales for the program expected in the current quarter; letters of nomination received from two PV OEMs for 4W battery packs with SOP in Q1 and Q2 FY 2027-2028.
• Typical line yields ~18,000 2W packs/month and ~8,000 4W packs/month — management declined to quantify revenue capacity but noted adding lines is relatively easy once the large facility capex is done; battery packs are highly priced with "very good" return on capital, though no margin figure was given.
• EV business margins to be similar to existing levels — per Anurag Jain, no dilution expected as EV penetration in the order book/revenue rises; EV revenue comes from existing die casting, suspension and brake products plus new streams such as battery packs, and is margin accretive overall per management.
• Maxwell targeting double-digit margin in FY 2027-2028 — framed by management as a hope/target rather than a commitment; Bangalore R&D focused on IoT/B2X, CPMS and high-voltage BMS for 4Ws and e-buses.
• EVs carry far more components than ICE — Endurance is highly entrenched with leading (not all) 2W EV OEMs across castings, transmission, braking, suspension and alloy wheels, while clutch assembly remains mainly ICE.

Acquisitions Strengthen Europe; Structural Tailwinds Cited

• Europe Q2 FY 2026-2027 revenue of €93.9mn (+5.9% YoY) — EBITDA €16.7mn (+5.9%); net profit €5.2mn (+31.4%), but this includes a €3.1mn P&L benefit from the Stöferle acquisition (32% bought for €18mn against a liability of €21.2mn); excluding it, net profit would have been ~€2mn, down YoY, solely due to ~€3mn of accelerated depreciation on a specific Volkswagen Group project. Cash profit rose to €17.7mn (18.8% of turnover).
• Fonderpress acquired for €12.3 million — a historical competitor and major Stellantis Group supplier (€80 million turnover in 2017), effectively offset by €10.2 million cash and €2.5 million of stock; brings 16 fully automated 2,300-2,800 ton die casting machines, ~16,400 sq m of building and land, and a 5,000 sq m machining facility; 100% of parts currently bought externally for Stöferle can be insourced.
• Stepele stake raised to 100% and Fondel Press (Italy) acquired — Fondel Press has over €60 million revenue with a net outlay of just under €1 million; Vicoli (fleet-management software) divested for €2.2 million upfront plus future earnouts.
• European government has set a cap of 350,000 vehicles on imports of hybrid/plug-in/mild-hybrid vehicles from China effective December 1, 2026 — management cited "the cap allowed to grow only 6% over the next 4 years"; duties fixed on Chinese EV imports (BYD 27%, Geely 29%, SAIC 45%, Tesla 18%, others 21-35%).
• European Community expected to approve the Accelerator Act, management hopes by February-March 2027 — under which "at least 70% of the value of non-battery components in electric vehicles must originate in the US", which management sees as an opportunity to increase production capacity.
• Chinese OEMs exported more than 350,000 vehicles in the first 6 months of FY 2026-2027 — equal to the FY 2027-2028 import cap, so management expects they will be obliged to install production capacity in Europe, likely generating RFQ opportunities for Endurance. Endurance grew ~3-4x the European market, attributed to EV business wins over the last 5 years.

4W Proprietary Ramp, Non-Auto Diversification, Capex Step-Up

• 4W proprietary SOP roadmap is dense — 4W driveshaft SOP Q3 FY 2026-2027 (Tata Motors expected in Q3 FY 2026-2027), 4W brakes and suspension H1 FY 2027-2028; one 4W suspension customer SOP H1 FY 2027-2028, a second H2 FY 2028-2029, a third to be finalized Q4 FY 2026-2027.
• Cumulative 4W suspension/brakes/driveshaft revenue guided from Rs.100 Cr in FY 2027-2028 to Rs.800 Cr in FY31 — Anurag Jain does not see a challenge in proprietary 4W revenues crossing Rs.1,500 Cr by FY31, while hedging it "could be slightly less, it could be more"; standalone 4W revenue was ~Rs.600 Cr in FY 2025-2026, seen at ~Rs.800-900 Cr in FY 2026-2027 (analyst's estimate).
• Non-auto (solar, railways, industrial) guided from Rs.250 Cr in FY 2027-2028 to Rs.650 Cr by FY31 — management characterized this as current line-of-sight with the endeavor to increase these numbers; commercial production expected in most verticals within FY 2026-2027, with some spilling into FY 2027-2028.
• Solar damper and actuator technology developed in-house with two customers secured (Spain and US) — European client SOP started Q2 FY 2026-2027, US client SOP expected H2 FY 2026-2027, solar actuators SOP Q4 FY 2026-2027; solar business expected to carry very high asset turnover in excess of 8 per Aditya Jhawar. The solar railway business is import substitution displacing China-sourced material, giving a first-mover advantage.
• Aviation & defense remain under active consideration, not yet committed — indirect supply has just begun; components will be non-proprietary and primarily machining; Endurance is exploring (not yet committed to) inorganic opportunities in aluminum die casting for this space. Management declined to quantify non-auto contribution, expecting better clarity over the next few quarters.
• FY 2026-2027 India capex guided at ~Rs.1,100 Cr (consolidated ~Rs.1,250 Cr) — vs ~Rs.800 Cr in FY 2025-2026 (Rs.611 Cr in FY 2024-2025); management cites consistent FCF generation and a strong balance sheet (consolidated net cash Rs.436 Cr as of 30 September 2026) as positioning it to push the pedal on investment.
• Strategy: progressively move up the value chain from components to proprietary products and systems — including electronically controlled 4W braking, with selective diversification beyond automotive based on transferable competencies; India aftermarket grew +36% YoY in Q2 FY 2026-2027 (4% of consolidated income, significantly margin-accretive) with growth goals set out till 2030.