Motilal Oswal has started coverage on Endurance Technologies with a 'Buy' rating and a ₹3,350 price target. While the company reported a 30% jump in revenue for the first quarter, investors should monitor upcoming margin recovery as management addresses raw material cost volatility.
Motilal Oswal has officially begun coverage on Endurance Technologies, assigning a 'Buy' rating to the auto component manufacturer with a price target of ₹3,350. This initiation reflects a positive outlook on the company's growth path and valuation, based on expected earnings for the fiscal year 2028.
In its financial results for the first quarter of FY27, Endurance Technologies reported a consolidated revenue of ₹4,348 crore, marking a 30% increase compared to the same period last year. The company’s consolidated profit after tax (PAT) rose by 8% year-on-year to ₹244.52 crore. Despite this top-line growth, profitability faced some short-term pressure. Standalone operating margins were reported at 12.4%, which was slightly below market expectations. A major reason for this earnings miss was the higher-than-expected depreciation charges within the company's European business operations.
Endurance Technologies maintains a solid financial foundation with a net cash position of approximately ₹415.7 crore, which offers the company some buffer against operational headwinds. Looking toward the future, management remains optimistic about margin expansion starting from the second quarter of FY27. This expectation is tied to ongoing price settlement discussions with original equipment manufacturers (OEMs). These settlements are intended to help the company pass on or recover costs related to raw materials, energy, and fuel that have weighed on margins in recent months.
Investors should be aware of several business risks that could influence future performance. The company’s standalone business relies heavily on the two-wheeler segment, which accounts for about 70% of its revenue. This concentration makes the business particularly sensitive to demand cycles and sales fluctuations in the two-wheeler market. Furthermore, global macroeconomic conditions in Europe and the Middle East continue to pose challenges, and volatility in the prices of raw materials like aluminum and steel remains a consistent concern for the sector.
The most important monitorable for shareholders in the upcoming quarters will be the company's ability to successfully conclude OEM price settlements. Whether these agreements lead to the projected margin expansion will be a critical update to watch, as it will determine if the company can offset current cost pressures and sustain its growth momentum.