Endurance’s ABS and battery SOP milestones for Q2/Q3 FY27

Endurance Technologies Limited — Q1 FY27 Earnings Call (held 14 Aug 2026)

1. Overall Tone of Management: Optimistic

• Management repeatedly emphasizes “on track”, “progressing as planned”, and “confident” outlook improvements (e.g., “we should see a better Q2 and Q3 for sure”).
• Despite acknowledging a “mixed picture” and “challenging global environment,” they highlight multiple SOPs, order wins, and ramp-ups across India and Europe.

2. Key Themes from Management Commentary

• Macro & cost environment: Domestic steady; global tougher due to West Asia conflict → higher energy + freight + supply chain costs. RBI stance described as neutral with inflation forecast adjustments.
• Growth strategy = technology-intensive proprietary + selective M&A/greenfield
• Focus areas: 2W proprietary products, 4W aluminium castings/forgings, 4W proprietary (suspension/braking/driveshafts), and electronics (BMS, MCUs, DC-DC, battery packs).
• Brakes/ABS expansion execution
• ABS capacity add: reduced from 12 lakh to 9 lakh units/year due to brake assembly demand; SOP timing reiterated (ABS expansion “progressing as planned” with SOP “September or early October 2026”).
• Dual-channel ABS: Bajaj Auto 120,000 units SOP scheduled “this quarter”; second program in Q3 FY27.
• Chennai disc brake plant: civil works final stage; SOP Royal Enfield “next month”; other OEMs in Q3.
• Multiple plant ramp-ups with defined SOP windows
• AURIC Shendra (4W aluminium castings): peak annual potential ₹513 cr, SOP from September 2026, “significant pickup by Q4 FY27.”
• Battery packs: SOP started for Hero 2W BMS/battery packs; battery pack plant ramp to peak in Q3 FY27; 4W battery packs SOP expected Q4 FY27 with capex ₹62 cr.
• Suspension: inverted front forks/mono shocks ramp toward 100,000 units/month by end of FY27; Hero/Suzuki SOP in Q3 FY27.
• Maxwell (electronics/BMS): PAT positive in Q1 FY27; strong pipeline and RFQs.
• Margin narrative = commodity headwind but improving sequentially
• Q1 impacted by geopolitical-driven commodity inflation; management argues pass-through lag and expects settlements in Q2/Q3.
• They also provide a “normalized” view: excluding non-value-add commodity impact, EBITDA margin is higher (see below).

3. Q&A Analysis

Theme A: Europe order quality, integration, and demand outlook

• Core questions
• Quality/type of Europe order wins (€13.9m in Q1), and how demand/outlook looks given earlier challenges.
• Integration progress of Stöferle and when full impact shows up.
• Management response
• Order quality: Mercedes hybrid transmission component; competitor bankruptcy drove 100% transfer to Endurance; SOP January 2027.
• Stöferle integration: “100% complete on the managerial and commercial side”; production/capacity agreement hoped by January 2027; full impact “starting from September 2027.”
• Demand outlook: Europe remains difficult; Chinese OEMs driving registrations but production down → dealer stock run-down; yet Endurance expects no important volume reduction and continues to grow vs prior year.
• Assessment of answer quality
• Strong specificity on SOP timing and integration milestones.
• Some qualitative hedging on demand (“don’t see important reduction” / “situation remains very difficult”).

Theme B: India margins—commodity pass-through and Q2/Q3 improvement quantification

• Core questions
• Can they quantify commodity pass-through and incremental cost inflation in Q2?
• Offsetting factors to commodity headwinds.
• Management response
• They expect raw material increases from OEMs in Q2: “we are surely going to get all the raw material increases from every OEM in this quarter.”
• Aluminium alloy softening: 12–17 ₹/kg gain (as of now).
• Steel/rubber/plastics and conversion costs: “being talked to all the OEMs” and expected to conclude in Q2/Q3; may be partly Q2 and partly Q3.
• They refuse to quantify overall margin impact: “if you tell me to give an amount… I cannot give a figure right now.”
• Assessment
• Partial/evasive on quantification of margin uplift; provides directional confidence and some unit economics (aluminium softening).

Theme C: 4W scaling—Shendra progress, EV/casting mix, and margin focus

• Core questions
• Progress in 4W die-casting journey; OEM engagement; acceleration and exports/EV.
• How 4W revenue share can scale from ~6%.
• Management response
• Q1 4W castings ~₹180 cr; 4W share 6%; Shendra SOP starting next month; peak early FY29.
• Focus shift: “more on 4W and non-automotive castings and not that much on the 2W castings space going forward” to improve margins.
• They reiterate growth drivers: Tata/Mahindra traction, Hyundai/Kia orders, Isuzu hybrid engagement.
• Assessment
• Clear strategic pivot toward 4W/non-auto for margin improvement.

Theme D: Battery packs profitability and integration with BMS

• Core questions
• Expected battery pack margin profile (with/without BMS), and whether they’ll use own BMS for 2W/4W.
• Management response
• Margin: “very high-value business”; pricing started; still working on raw material/BOM; won’t give margin % yet (“better positioned… next call”).
• Volume confidence: battery pack line capacity 17,000–18,000 packs/month fully used by October.
• Integration: for existing 2W order, BMS is theirs and aluminium casting is theirs → “incremental margin.”
• 4W: step-by-step approach; target to reach average margins but no numbers.
• Assessment
• Strong volume confidence, but withholding profitability guidance.

Theme E: Capex discipline vs customer capex; scooterisation/TAM; Europe order book decline

• Core questions
• Why capex stays ~₹800 cr if customers are increasing capex?
• Does scooterisation reduce TAM?
• Why Europe order book declining—what products?
• Management response
• Capex: no gap—capacity already exists; mix includes outsourcing; Tier-2 suppliers also invest; capex may increase for large opportunities.
• Scooterisation: no TAM reduction; scooters share rising to 14.3%; they’re growing share (scooters grew ~32.7% in Q1).
• Europe order book: Chinese OEMs increasing presence and importing powertrains from China; Endurance expects opportunity when they start sourcing locally; also emphasizes M&A opportunities.
• Assessment
• Defensive but coherent explanation for Europe order softness; ties to Chinese sourcing behavior.

Theme F: Alloy wheels capacity/utilization and EV product expansion

• Core questions
• Alloy wheel capacity after expansion and utilization level.
• Plan to enter EV-specific products beyond ICE-agnostic offerings.
• Management response
• Chakan fully used: ~3m sets/year.
• Bidkin utilization: ~60% now; ramp with Royal Enfield/Ather/Suzuki/Piaggio; expected full capacity by end of FY.
• EV product expansion: “step-by-step”; battery packs + Maxwell BMS + electronics (DC-DC charger etc.) as EV enablers; also mentions other OEM meetings.
• Assessment
• Quantified utilization (60%) and clear ramp path.

4. Guidance / Outlook

Explicit guidance (quantitative)

• Capex: FY27 capex expected to remain similar to FY26: ~₹800 crores (stated as “remain similar to FY 26 capex of ₹ 800 crores”).
• ABS expansion / SOP timing
• ABS hydraulic brake expansion progressing; SOP expected September or early October 2026.
• Dual-channel ABS SOP: Bajaj Auto 120,000 units “this quarter”; second program Q3 FY27.
• Plant ramp/SOP timing
• Chennai disc brake plant: Royal Enfield SOP next month, other OEMs Q3.
• AURIC Shendra: SOP September 2026, “significant pickup by Q4 FY27.”
• Battery packs: ramp to peak Q3 FY27; 4W battery packs SOP Q4 FY27; capex ₹62 cr.
• Suspension: reach 100,000 units/month by end of FY27.
• Alloy wheels: Bidkin utilization 60% now, expected full capacity by end of FY27.
• Europe financial run-rate (qualitative but with numbers)
• Europe Q1 turnover €104.3m, EBITDA €18.9m, EBITDA margin 18.2%; net result €4.4m (decline due to depreciation).

Implicit signals (qualitative)

• Sequential margin improvement expected: management expects better Q2/Q3 as OEM settlements and rate adjustments flow through.
• Execution confidence: repeated “on track,” “progressing as planned,” and multiple SOPs clustered in next 1–2 quarters.
• Europe remains difficult but stable: they do not foresee major volume reduction; emphasize M&A as a growth lever.

5. Standout Statements (directly revealing)

• Margin improvement expectation (but not quantified):
• “we should see a better Q2 and Q3 for sure.”
• Commodity pass-through stance:
• “we are surely going to get all the raw material increases from every OEM in this quarter.”
• ABS capacity reallocation due to brake demand:
• “The reason for the decrease from 12 lakhs to 9 lakhs… due to the strong demand in the brake assembly system business.”
• Shendra ramp narrative:
• “SOP will start in September 2026 and we expect significant pickup… by Q4 FY 27.”
• Battery pack volume confidence:
• “assembly line… capacity of almost 17,000 to 18,000 battery packs a month will be fully used up by October.”
• Europe integration milestone:
• “integration is 100% complete on the managerial and commercial side” and full impact “starting from September 2027.”
• Europe demand caution:
• “The situation continues to remain very difficult… we don’t see important reduction in volume” (tension between difficulty and confidence).

6. Red Flags / Positive Signals

Red flags
– Margin uplift not quantified despite being a key analyst focus (“cannot give a figure right now”).
– Pass-through reliance: confidence that OEMs will settle fuel/gas/conversion costs; execution risk if negotiations slip.
– Europe order book softness acknowledged: opportunities “come down” and are tied to Chinese OEM behavior and future local sourcing—timing uncertainty.
– Battery pack profitability withheld: margin % guidance deferred to “next call,” leaving profitability risk unpriced.

Positive signals
– Multiple SOPs with near-term windows (Sep/Oct 2026, Q3/Q4 FY27) across major growth engines.
– Operational efficiency/cost controls credited for EBITDA growth despite commodity headwinds.
– Maxwell turning PAT positive in Q1 FY27 for the first time.
– Alloy wheel utilization quantified with a clear ramp plan to full capacity by year-end.

7. Historical Comparison & Consistency Analysis (vs prior 3 calls)

a. Change in Tone Over Time

• Current (Q1 FY27): Optimistic.
• Prior calls:
• Q4 FY26 (May 15 2026): cautious on global complexity but still confident; emphasized volatility and pass-through challenges.
• Q3 FY26 (Feb 13 2026): optimistic on execution; highlighted waiting for ABS clarity and multiple plant timelines.
• Q2 FY26 (Nov 13 2025): optimistic but more focused on margin compression drivers and “target to normalize.”
• Shift classification: More Optimistic / No Change → More Optimistic
• Q1 FY27 adds stronger near-term execution confidence (“better Q2 and Q3 for sure”) and more SOP clustering.

b. Tracking Past Commitments vs Outcomes

• ABS SOP timing (earlier):
• Q2 FY26: expected ABS expansion lines and SOP progression; dual-channel SOP timing discussed.
• Q1 FY27: confirms Bajaj dual-channel SOP “this quarter” and second program Q3 FY27.
• Status: ✅ Delivered/On track (at least for Bajaj dual-channel timing).
• Chennai disc brake plant SOP (earlier):
• Q2 FY26: SOP expected Q2 FY27.
• Q1 FY27: now says Royal Enfield SOP next month, other OEMs Q3.
• Status: ⏳ Slightly shifted but still within FY27; appears on track with minor timing drift.
• Battery pack SOP (earlier):
• Q4 FY26/Q3 FY26: battery pack SOP planned around Jan/early 2026.
• Q1 FY27: Hero battery pack SOP started June 2026; ramp to peak Q3 FY27.
• Status: ⏳ Delayed vs earlier “Jan 2026” narrative; now operational but ramp timing moved.
• AURIC Shendra SOP (earlier):
• Q4 FY26: SOP staggered between Q1–Q3 FY26/27 with peak by FY29.
• Q1 FY27: SOP start September 2026 and pickup by Q4 FY27.
• Status: ⏳ Still consistent with “staggered/peak FY29,” but near-term SOP moved to Sep 2026 (timing evolution).

c. Narrative Shifts

• From “ABS capacity build” to “brakes demand + margin improvement”
• ABS capacity reduced (12L → 9L) due to brake assembly orders—shift from pure regulatory-driven expansion to commercial demand reallocation.
• 4W focus sharpened
• Q1 FY27 explicitly deprioritizes 2W castings: “focus… more on 4W and non-automotive castings.”
• Battery packs profitability guidance deferred
• Earlier calls emphasized technology/IP and SOP; now profitability is still “next call,” suggesting learning curve / margin uncertainty.

d. Consistency & Credibility Signals

• Medium credibility
• Strength: repeated SOP timelines and operational milestones (e.g., alloy wheel utilization, dual-channel ABS SOP).
• Weakness: some timing drift (battery pack SOP) and lack of quantified margin guidance despite repeated commodity pass-through claims.

e. Evolution of Key Themes

• Demand/macro: still “mixed,” but domestic described as steady; Europe remains difficult with Chinese OEM pressure.
• Margins: earlier calls discussed margin compression drivers; now management leans on settlement timing + aluminium softening for sequential improvement.
• Expansion: continues to be execution-led with many plants entering SOP windows in FY27.
• M&A: increasingly emphasized as a growth lever in Europe (more explicit in Q1 FY27).

f. Additional Insights (cross-period intelligence)

• A subtle pattern: management increasingly frames risks as “settlements in next quarter” rather than structural margin fixes—this can mask negotiation delays.
• Europe narrative has shifted from “market stagnation” (earlier) to “order opportunities declining but M&A + local sourcing later” (current), implying near-term organic order softness may persist.