Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA+/Stable/Crisil A1+’ ratings on the bank loan facilities of Endurance Technologies Ltd (ETL).

 

The ratings continue to reflect the leadership position of ETL in aluminium die-casting components (ADCC; the company's largest product segment), healthy market share in other components such as brake discs, front forks, rear shox and disc brake systems, healthy relationships with major customers, strong clientele comprising of two-wheeler (2-wheeler and 4 wheeler) original equipment manufacturers (OEMs) in the domestic market and four-wheeler OEMs in European markets and well-diversified revenue streams. The ratings also factor in ETL's large scale of operations and the sustenance of healthy operating efficiency followed by the strong financial risk profile as reflected in robust capital structure, comfortable debt protection metrics, and large cash reserve. These strengths are partially offset by moderately high customer concentration in revenue and exposure to cyclicality in demand in the domestic and global automobile (auto) segments.

 

In fiscal 2025, consolidated revenue increased around 13% on-year to Rs 11,561 crore on the back of ~12.5% on-year growth in domestic operations (including Maxwell Energy Systems Pvt Ltd; Maxwell; Crisil A+/Stable) and ~16.7% on-year growth in overseas operations. The increase in revenue was aided by all-round growth across product segments catered to by ETL. The growth in domestic operations was aided by healthy industry volume expansion in 2-wheelers and 3-wheelers. Apart from this, commercialisation of new business wins of the past also led to revenue growth in domestic operations. Revenue from European operations increased on account of various new business wins from OEMs.

 

Operating margin (operating profit before depreciation and amortisation, interest, and taxes) improved by 40 basis points (bps) on-year to 13.4% for fiscal 2025. The company is leveraging its research and development (R&D), automation, and operational strengths to improve margins despite competitive pressures and macro headwinds.

 

In the first half of fiscal 2026, consolidated revenue grew by ~20% on-year to Rs 6,902 crore driven by inclusion of revenue from Stoferle GmbH, and Stoferle Automotive GmbH (‘Stoferle) which is consolidated from April 2025. Excluding Stoferle’s revenue, growth was driven by content addition in key segments such as brakes and suspension for some major OEMs, broad-based growth across India and Europe, and sustained traction in proprietary and electric vehicle (EV)-linked products.

 

In the first half of fiscal 2026, operating margin remained flat at 13.3% on-year. This can be attributed to a combination of factors, including the pass-through increased commodity prices, which led to increased sales but compressed margins. Additionally, the company incurred incremental expenses related to employee costs, aimed at bolstering its R&D, strategy, aftermarket, and sourcing teams. Furthermore, consulting expenses were incurred to drive growth in the aftermarket segment and improved sourcing strategies. However, these headwinds were partially offset by the high margin profile of Stoferle.

 

ETL is likely to register healthy revenue growth of 12-14% in fiscal 2026 on the back of first-time inclusion of Stoferle’s revenue. Over the medium term, consolidated revenue is expected to grow 6-8% on the higher base of fiscal 2026, driven by a robust order book with Indian operations expected to expand at a higher rate while growth in European operations likely to remain moderate. Growth also factors the management’s aim to increase 4-wheeler mix to 45% from 25% at present and partnership with a Korean company for 4-wheeler suspensions sales. A proposal by the Ministry of Road Transport and Highways to mandate Anti-lock braking system (ABS) on all 2-wheelers could increase ETL’s addressable market substantially, with the company targeting a 25% share, potentially boosting revenue. Operating margin is expected to sustain at 12-13% over the medium term on the back of improvement in gross margins, and additions of new businesses with higher margins, which is likely to be moderately offset by the aggressive scaling up of the products resulting in margin pressure during the initial ramp-up.

 

The financial risk profile continues to be robust owing to low balance sheet leverage marked by gearing of 0.18 time as on March 31, 2025, and 0.24 time as on September 30, 2025. In addition, major debt is only at the overseas operations level as domestic operations do not carry any long-term debt and short term debt is only availed in certain cases to bridge cashflow mismatches while keeping liquid investment intact. Gearing and total outside liabilities to tangible networth (TOL/TNW) ratios are expected to remain below 0.2 and 0.75 time, respectively, over the medium term owing to strong cash accruals, healthy coverage of debt re-payment obligations and capital expenditure (capex) spends, and modest working capital requirements, thereby resulting in limited dependence on external borrowings. Net cash accrual to total debt (NCA/TD) is expected to improve to 3.5 times over the medium term against 1.3 times in fiscal 2025. With regular servicing of debt obligations, interest coverage is expected to improve to 68 times over the medium term from 35 times in fiscal 2025. However, any large capex or inorganic acquisition impacting reduction in overall liquidity or resulting in higher debt remains monitorable.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of ETL and its subsidiaries. This is because all the entities, collectively referred to as ETL, are under a common management and are engaged in related businesses.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Leading market position in ADCC and alloy wheels, healthy relationships with major customers and well-diversified revenue streams

In India, ETL is among the leading suppliers of ADCC (including alloy wheels), with revenue of Rs. 3,397.2 crore in this product segment in fiscal 2025. Apart from ADCC, domestic operations also include supply of suspension products, transmission products and braking systems, wherein ETL is among the three largest suppliers for the 2-wheeler and 3-wheeler auto segments in India. The company supplies to major OEMs such as Bajaj Auto Ltd (BAL; rated 'Crisil AAA/Stable/Crisil A1+'), Royal Enfield, India Yamaha Motor Pvt Ltd, Honda Motorcycles and Scooters India Ltd (HMSI), TVS Motor Company Ltd (TVS Motors), Suzuki Motorcycle India Pvt Ltd and Hero MotoCorp Ltd (HMCL; rated 'Crisil AAA/Stable/Crisil A1+') in India. ETL has been increasing its share of business with the OEMs for all its product segments. During fiscal 2025, the company received new orders (excluding BAL) of Rs.1,260 crore in India. The company is increasing its presence in the 4-wheeler segment with new orders from Kia Motors and an overseas EV player.

 

The overseas business (primarily in Germany and Italy) also benefits from healthy relationships with leading global OEMs, including Volkswagen AG (Volkswagen; rated 'BBB+/Stable/A-2' by S&P Global Ratings), Stellantis NV (rated BBB/Negative/A-2 by S&P Global Ratings) and Mercedes-Benz Group AG (Mercedes; rated A/Negative/A-1 by S&P Global Ratings). The well-diversified revenue profile in terms of geographical spread and product segments lends stability to the overall business profile. Domestic and overseas businesses contributed ~76% and ~24%, respectively, to overall fiscal 2025 revenue. In terms of products, ADCC accounted for around 42.4% of the consolidated revenue, followed by suspension products (25.5%), braking (11.7%), alloy wheels (7.6%), transmission products (4.0%), and aftermarket sales (5.1%).

 

The company’s product line other than transmission is not disrupted following 2-wheeler electrification in the domestic market and 4-wheeler electrification in the overseas markets owing to higher usage of ADCC in EVs as compared to ICE (internal combustion engine) vehicles. Also, suspensions and brakes are EV agonistic products. Among newer products, driveshafts are EV agnostic and battery management systems (BMS) are EV-centric.

 

Healthy operating efficiency to sustain over the medium-term as reflected in stable operating margin, healthy return metrics, and low net working capital cycle

As on March 31, 2025, ETL’s domestic order book at standalone stood at Rs 4,692 crore (excluding BAL) and overseas order book at EUR 248 million. Gradual ramp-up of order book shall ensure healthy asset utilisation and translate into revenue growth of 6-8% over the medium term. Operating margin is expected to sustain at 12-13% over the medium term on the back of improvement in gross margins, and additions of newer businesses with higher margins, which is likely to be moderately offset by the aggressive scaling up of products resulting in margin pressure during the initial ramp-up. Healthy revenue growth and stable operating margin shall ensure adjusted return on capital employed (RoCE) of over 15%, which ETL has sustained over the five fiscals through 2025.

 

In addition, ETL has also managed its working capital cycle effectively by maintaining a negative net working capital cycle of around 23 days as on March 31, 2025. The company has historically maintained a negative net working capital cycle and thereby translating to strong cash conversion. Over the medium term, the sustenance of optimum asset utilisation, stable margin profile, and low net working capital cycle, will ensure strong coverage of internal cash accrual vis-à-vis working capital and capex requirements with limited reliance on external borrowings.

 

Strong financial risk profile

The capital structure remains robust with adjusted gearing and TOLANW ratios of 0.18 and 0.63 time, respectively, as on March 31, 2025, and 0.24 and 0.85 time, respectively, as on September 30, 2025. Prudent working capital management, and high coverage of internal cash accrual vis-a-vis capex and debt repayment obligations, has ensured low dependence on external borrowings, and the same is also reflected in the capital structure as marked by adjusted gearing. Annual capex of Rs 1100-1400 crore is expected to be incurred over the medium term (excluding Stoferle’s acquisition). The annual capex is expected to be largely funded through internal accruals. In the absence of any large debt-funded capex plans, the company’s key financial metrics i.e., adjusted gearing and TOLANW ratios are expected to remain below 0.20 time and 0.75 time, respectively, over the medium term.

Key Rating Drivers - Weaknesses 

Moderately high, though reducing, customer concentration

While the revenue profile of ETL benefits from healthy geographical and product diversity, the company remains susceptible to customer concentration in each of its markets. BAL contributed about 50% to the domestic revenue and 38% to the overall revenue of ETL in fiscal 2025, as against 51% and 39%, respectively, in fiscal 2024. The top three customers in Europe accounted for nearly 72% of the revenue from the region. That said, ETL’s efforts through R&D and wide product portfolio have not only ensured increasing share of business with key customers but also inclusion of new customers, which shall help the company reduce the overall customer concentration.

 

Exposure to cyclicality in demand in the domestic and overseas auto industries

The business prospects of ETL are susceptible to cyclicality in the auto industry and the ability of the OEMs to sustain their market share in the domestic and overseas markets, given that over 90% of ETL’s revenue is driven by auto OEMs. That said, the company is focusing on increasing its presence in the aftermarket segment and increase the revenue share to 10% in fiscal 2028 from 5-6% currently through expansion of distribution network and entry into new domestic and overseas geographies. In addition, efforts are being undertaken to increase the revenue share of non-auto applications. The active efforts of the management shall aid in countering the cyclical demand patterns in the auto industry.

Liquidity Strong

Expected cash accrual of Rs 1,200-1,600 crore per annum coupled with unencumbered cash surplus of Rs 1,537 crore as on March 31, 2025, will sufficiently cover debt re-payment obligations amounting to Rs 200-300 crore over the medium term. Domestic fund-based bank limit utilisation was ~5% over the 12 months through September 2025. Capex requirements will be largely funded through internal accruals, with limited reliance on external funding. Working capital intensity is expected to remain low owing to the sustenance of a negative net working capital cycle. Furthermore, healthy capital structure enables the company to grow inorganically via acquisitions, which shall also be covered prudently.

ESG Profile

Crisil Ratings believes ETL’s Environment, Social, and Governance (ESG) profile supports its already strong credit risk profile.

 

The auto component sector has a moderate impact on the environment owing to moderate emissions, water consumption and waste generation. The sector’s social impact is also moderate considering the impact of operational activities on the company’s own employees. The company is focusing on mitigating environmental and social risks.

 

Key ESG highlights:

• The company has set a target of 50% renewable energy consumption in its total energy mix by 2030. In addition, the company also aims to achieve 50% carbon neutrality by 2030. During fiscal 2025, ETL increased carbon neutrality to 45% and the proportion of renewable energy in total energy at 13%. Also, with focus on reducing emissions the company saw reducing trend in scope 1 and 2 emission intensity by ~10% and energy consumption by ~2%, over fiscals 2023 to 2025.
• The overall waste recycled by the company is high at ~96%.
• ETL’s share of female workforce (~8% female employees and ~11% female workers) in fiscal 2025, is higher compared to peers.
• The company’s lost time injury frequency rate (LTIFR) reduced from 0.11 in fiscal 2024 to 0.05 in fiscal 2025. Further, it reported zero fatalities in fiscal 2025.
• ETL’s governance structure is characterised by 50% of its board comprising independent directors, 20%-woman board directors, split position between chairman and managing director (MD), dedicated investor grievance redressal system and extensive financial disclosures. 

 

There is growing importance of ESG among investors and lenders. ETL’s commitment to ESG principles will play a key role in enhancing stakeholder confidence, given the share of overseas borrowings in its overall debt and has access to both domestic and foreign capital markets.

Outlook Stable

The business risk profile of ETL will continue to benefit from its established market position in the ADCC segment and healthy market share in suspension, brakes, transmission, and alloy wheels. Implementation of mandatory ABS for all 2-wheelers as per the draft notification issued is expected to have a positive impact on the overall revenue of the company. The business risk profile will also continue to benefit from the increasing share of business with existing customers and inclusion of new customers on the back of a wide product portfolio, followed by the sustenance of healthy operating efficiency. The financial risk profile is expected to remain robust on the back of net debt free balance sheet, strong debt protection metrics, and large cash reserve.

Rating sensitivity factors

Upward factors

• Significant increase in revenue and substantial diversification in customer profile while maintaining operating profitability at 13-15%.
• Sustenance of strong financial risk profile and build-up of cash surplus.

 

Downward factors

• Significant impact on the operating performance and debt protection metrics of the company
• Large, debt-funded capex or /acquisitions leading to gearing of over 0.8 time on a sustained basis

About the Company

Incorporated in 1985 in Aurangabad, Maharashtra, ETL is a leading manufacturer and supplier of ADCC for the auto industry. The company also manufactures suspension, transmission and braking products for mainly two- and three-wheeler OEMs in India and derives nearly 76% of its revenue from the domestic market. Overseas operations are managed by two direct subsidiaries: Endurance Amann GmbH (Germany) and Endurance Overseas Srl (Italy). The company supplies machined aluminium die casting and machining products to leading 4-wheeler OEMs in Europe and also caters to the aftermarket for 2-wheeler components. In addition, the company also has 100% stake in Italian companies, namely Endurance Adler SpA, Frenotecnica Srl, and New Fren Srl, which shall not only strengthen its technology base in proprietary 2-wheeler components but also enable ETL to establish a presence in European aftermarket. ETL has 34 plants across India and Europe. Company is also equipped with an in-house tool room, a 29-acre proving ground, 5 Department of Scientific and Industrial Research approved R&D facilities in India, and two technical centres in Italy.

 

Mr Anurang Jain, the promoter, along with his family members and / trusts, owns 75% of the company's equity capital; the remaining is held by the public.

Any other information: Not applicable