E

Endurance Technologies Ltd (CN)
NSE:ENDURANCE

Watchlist Manager
Endurance Technologies Ltd (CN)
NSE:ENDURANCE
Watchlist
Price: 2 401.8501 INR -2.69%
Market Cap: 337.9B INR
Have any thoughts about
Endurance Technologies Ltd (CN)?
Write Note

Earnings Call Analysis

Q1-2025 Analysis
Endurance Technologies Ltd (CN)

Endurance Technologies Reports Strong Growth in Q1 FY '25

Endurance Technologies saw a robust performance in Q1 FY '25, with consolidated net income rising 15.9% to INR 28,593 million. EBITDA surged by 28.8% to INR 4,069 million, achieving a margin of 14%. Their profit after tax increased by 24.68% to INR 2,038 million, demonstrating significant growth. Indian operations contributed 74.8% of the total income, while European operations showed a 16.8% increase in sales in euro terms. The company remains focused on expanding its footprint in both 2-wheeler and 4-wheeler segments, with new business wins from major OEMs and a strategic shift towards electric vehicles.

Strong Financial Performance in Q1 FY '25

In the first quarter of FY '25, Endurance Technologies reported impressive financial growth. Consolidated total net income rose by 15.9%, reaching INR 28,593 million, while EBITDA surged 28.8% to INR 4,069 million, marking an EBITDA margin of 14%. Profit after tax (PAT) also increased significantly by 24.68%, totaling INR 2,038 million, reflecting a PAT margin of 7.1%. Notably, this profitability was bolstered by a INR 227 million incentive from the Mara state mega project.

Domestic and International Market Insights

In India, the automotive market showcased healthy growth, with two-wheeler industry sales increasing by 19.8%, while the overall automotive segment saw a rise of 16.3%. Endurance's domestic operations accounted for 74.8% of total income, indicating a robust local presence. Meanwhile, the company's European operations also performed well, achieving a currency-adjusted sales growth of 16.8%, aided by a 4.1% increase in passenger car volumes across the EU and UK.

Strategic Focus on New Business Development

During this quarter, the company secured new business wins in India valued at INR 1,843 million, focusing on OEMs beyond its primary client, Bajaj Auto. This includes a significant INR 1,061 million from the electric vehicle sector and several other key contracts across various applications, such as suspensions and brake assembly for notable players like Mahindra & Mahindra and Tata Motors. This focuses not only on diversifying clients but also on tapping into future growth sectors like electric vehicles.

Future Growth Plans and Market Positioning

Endurance aims to enhance its contribution from the four-wheeler segment to 45% of consolidated revenue by FY '30, with emphasis on organic and inorganic growth strategies. Expected contributions will come from aluminum die castings and proprietary products. Specifically, the company has a current request for quotes amounting to INR 17,705 million, showcasing robust future business potential. Additionally, significant new business from electric vehicles, totaling INR 8,421 million, highlights Endurance’s proactive approach in a growing market.

Translation of Financial Growth into Business Strategy

Despite facing challenges in some segments, such as a slight decline in the four-wheeler business due to market variations, Endurance remains optimistic. The company has forecasted that by FY '27, it will reach INR 24,425 million in peak sales primarily driven from suspension and braking product areas. This adaptability is underpinned by ongoing investments in technology and capability enhancements to maintain competitive edge in both domestic and international markets.

Sustainability Efforts and Market Position

Endurance Technologies is also committed to sustainability goals, aiming for over 50% carbon neutrality in operations by FY '30. The firm is leveraging renewable energy resources significantly while focusing on reducing waste production, signaling its preparedness to align with global environmental standards. This strategic commitment to sustainability not only enhances its corporate responsibility image but is increasingly a market differentiator.

Investment in New Technologies

Recent strategic acquisitions, such as Maxwell Energy, reflect Endurance’s commitment to entering the electric vehicle sector more profoundly, with the goal of surpassing INR 2,500 million in sales by FY '27. Its focus on advanced battery management systems and automation positions it advantageously for the shift towards electrification in the automotive industry. With strong order pipelines and ongoing sustainable technology investments, Endurance is poised to leverage future market opportunities effectively.

Earnings Call Transcript

Earnings Call Transcript
2025-Q1

from 0
Operator

Ladies and gentlemen, good day, and welcome to the Endurance Technologies Q1 FY '25 Results Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you, and over to you, sir.

N
Nishit Jalan
analyst

Thank you, Lizan. Good afternoon, everyone. Welcome to Q1 FY '25 Post Results Conference Call of Endurance Technologies. We are pleased to host the management team. We have with us today are Mr. Anurang Jain, Managing Director; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Rajendra Mange, Director and COO; Mr. Raja Gopal Sastry, Group CFO; and Mr. Raj Mundra, Treasurer and Investor Relations.

I'll hand over the call to Mr. Anurang for his opening comments, post which we can start in the Q&A. Over to you, Mr. Jain.

A
Anurang Jain
executive

Thank you very much, and good morning to everybody. I would like to share certain details of how we have done in the first quarter of this financial year. In India, this quarter of FY '25, as per the CM data, the 2 [indiscernible] industries sales grew by 19.8% compared to quarter 1 of the previous financial year. Motors grew by 27.9%, and motorcycles grew by 16.5%.

The automotive industry in India had a growth of 16.3%. In our overseas operations in quarter 1 of the financial year, the EU and the U.K. market saw an increase of 4.1% in the volume of passenger cars sold, while [indiscernible] sales, including tooling income grew by 16.8% in euro terms. I will now review on the financials of the first quarter of FY '25.

During quarter 1 of this financial year, as compared to previous year's same quarter, our consolidated total net income grew by 15.9% from INR 24,666 million to INR 28,593 million. Consolidated EBITDA grew by 28.8% to INR [ 3,328 ] million to INR 4,069 million. Consolidated EBITDA margin was at [ 14% ]. The profit after tax grew by 24.68% to INR 1,635 million in the previous year to INR 2,038 million, and the PAT was at 7.1%. This included the income from Mara state mega project incentive of INR 227 million. There was no consolidated net debt, and the company had a net cash available of INR 6,127 billion.

During quarter 1, our standalone total income grew by 16.26% from INR 18,361 million to INR 21,346 million. Standalone EBITDA grew by 19.74% from INR 2,409 million to INR 2,884 million with an EBITDA margin of 13.5%. Standalone profit after tax grew at 24.76% and was INR 1,628 million at 7.6%. This included the Mara state mega project incentive of INR 227 million. There was no net debt and there was a standalone net cash available of INR 5,818 million.

I would like to mention that Endurance is focused in both its Indian and European operations for profitable growth. The detailed financials are available with the stock exchanges and on the Endurance website. I would now like to share certain key points of the first quarter of FY '25.

In quarter 1 FY '25, 74.8% of our consolidated total income, including other income, came from Indian operations, and the balance, 25.2% came from our European operations. With India till date in FY '25, INR 1,843 million of new business was won from OEMs other than Bajaj Auto, which included TPS, [indiscernible], Mahindra and Mahindra, Kawasaki, Piaggio and Tata Motors. These included INR 1,061 million of electric vehicle business won, which includes INR 795 million business from Mahindra and Mahindra for their EV 3 dealers INR 300 million of suspension business, 1 from HMSI, which is the new business for our 160 cc no-cycle; INR 257 million worth of brake assembly business won from HMSI and euromotocopto; INR 87 million casting orders, aluminum casting orders from a Japanese multinational or Mahindra 4-wheeler application; and INR 68 million business, 1 for TBS electrical dealers for suspension, brakes and price shops.

Despite the volumes are low for the steel vehicle, this is a very significant view from a future perspective. I would like to mention that we have INR 17,705 million worth of request for quotes from OEMs. Since FY '21 in India, INR 36,774 million of bills has been won, out of which INR 28,364 million is new business and replacement business is INR 8,410 million. Out of this INR 28,364 billion new business, INR 24,425 million will reach peak sales by FY '27 and it will be mainly for our product areas of suspension, castings and brakes.

Our TBS business has reached a cumulative of INR 5,389 million, and this business is growing. The business won has been for brakes, aluminum alloy deals and suspension. The INR 5,389 million sales will reach peak sales in FY '26. The total business win for electric vehicles till date is INR 8,421 million. This order mainly from HMSI, [indiscernible], Bajaj Auto, Hero MotoCorp, Mahindra and Mahindra, Tata Motors, PBS and Aptiv. This is apart from the res INR 4,242 million business by a subsidiary company, Maxwell.

The significant new business, which will start in this financial year are INR 719 million of new business from TBF in FY '24, outage INR 309 million was for inverted Fan Fox and mono shocks. The INR 404 million was for the TBS writer and the HLX spikes, and this was a front work and shop absorber business. So these SOPs are planned for this year in October 2024 onwards.

In FY '24, we also won the Hero MotoCorp ring business, where the inverted front fork of the business win of INR 24 million, the SOP is planned from next month, which is from September 2024. The Beswick assembly new business of INR 263 million has already started from April 2024. And also the front fork in rail shock of business wins at Halol INR 900 million has also started from April '24, and this will reach peak by quarter 4 of this financial.

Also the Suzuki new scooter front fork business, which was won earlier, we have been won in FY '24 INR 253 million is in addition to the INR 1,400 million front fork business, which was on earlier. And both these combined SOP business value of INR 1,653 million will start in quarter 3 of this financial year.

We also won the HMSI district assembly new business of INR 294 million in FY '24, and SOP is planned in quarter 3 of this financial year. Also the Royal Enfield [indiscernible] business of INR 96 million in FY '24. The SOP has started in April of this year. The 35 dial suspension inverted from Fundos was supplied to PPM Austria will also start by quarter 3 of this financial year. And this -- the value of the business is INR 400 million per annum, and it will be directly exported to KTM in Austria.

We also won INR 876 million per annum business from Hyundai in FY '24 for aluminum castings with SOPs in quarter 3 of FY '27. HSMI has also awarded us 2 new businesses in quarter 4, which had 100 cc shine motorcycle front fork and rear shock of rubber business, or INR 343 million per annum, with SOP in February 2025. Second is the first electric vehicle scooter of HMSI for the front fork real shock absorber business, which SOP is also in quarter 4 of this financial year.

As far as electronic vehicles market is concerned, it offers a very significant opportunity for the future and the growth in the auto components sector. And as you know, Endurance has executed a share subscription and purchase agreement for acquiring 100% of equity share capital of Maxwell Energy in a phased manner by FY '27. So 60, we have increased -- so 61.5% is the stake in Maxwell, which we have recently increased in July from 56% and which is as per the agreement.

And as you know, Maxwell is in the business of advanced electronics, particularly in the battery management system, for 2-wheeler EVs and for battery packs. At Maxwell, we have won the battle management system business of INR 457 million till date in this financial year and we have a pipeline of RFQs of INR 1 billion. Till date since FY '22, INR 4,242 million business has been won by Maxwell. Despite the later strength in the EV market, we believe that these orders will help us achieve a sale in excess of INR 2,500 million in FY '27. I'm happy to inform you that in Maxwell, we have recently won an order of INR 344 million from motor control units, and the SOP of this will be in March 2025. We are in touch with a lot of customers who secure business for various electronic products.

So with the current order book, the order pipeline and our technical strengths between Endurance and Maxwell, we are confident of achieving our goals in this electronics space. This big assembly business is growing with addition of Bajaj Auto, TVS, Royal NPL, Yamaha, Euro Motor Pop, Ather as well as HMSI new business. Our second plant at Balos Aranga has been already set up for increase in volumes and has already started last year. We already started district assembly supply Studio Motor Corp in April in this year, and supplies will now start to HMSI from quarter 3 of this financial year.

So with this new plant, district assembly volumes have increased to 6.2 million numbers per annum at big disks to 8.1 million numbers per annum, as well as for 3 bitrate assemblies to 1 million numbers per annum. And we hope to reach these volumes in this financial year from these 2 plants.

We are also working on the product and process technologies to manufacture high-performance braking systems for catering to more than 350 cc motorcycle market. We are planning to start this business by March 2026. As you're aware, the supply of 2 ABS assemblies to Bajaj Auto and Royal has started. We have reached a run rate of 400,000 ABS assemblies per annum. As you know, the competition is mainly from Bosch and Continental, which concludes a major market share in this market. We are now in the process of supplying new channel ABS from next month onwards, and we have scaled up additional assembly lines by 240,000 ABS assemblies per annum, which has taken the total capacity to 640,000 ABS assemblies per annum to which run rate we will reach in the quarter 4 of this financial year.

We are further planning to increase these volumes to 1.2 million single and dual channel ABS assemblies by 2026. We've already started manufacturing both the stainless steel grade hoses and the ABS was in-house, which has helped us in loading our cost and stop the dependence on imports.

Due to increased orders in aluminum alloy deals from Bajaj Auto, Yamaha, India, DBS and now Royal Enfield, we are now at our 2 plants at Chakan going to supply at a run rate of 5.5 million per annum from this quarter onwards. In FY '25 to date, our business has won orders of EUR 3.1 million, including the first Volkswagen business win for a specialty plastic component for a hybrid TV. In the last 9 quarters, out of EUR 118 million order won, EUR 61 million orders are for the battery EV business and EUR 37 million is for the hybrid business. In the calendar year 2024, the battery EV penetration in Europe has been at 13% and hybrids at 36%. We are, therefore, well placed in terms of securing orders for this growing segment.

Also in the EV segment growth is slow. We have existing IC segment orders, which will continue. So there will be no loss of business for our overseas operations. Earlier this year, our Italian subsidiary acquired 100% stake in Ingenia Automation SRM. This is a very strategic acquisition as this bolters our strength in the industrial automation space which will help us in our existing ongoing business as well as in our future expansion, which will happen at the plant.

I would also like to point out that Endurance both in India and Europe is actively pursuing its focus on gaining access to new technology and focusing on new product organic and inorganic growth. So as I had mentioned earlier also, our future focus will be on the following projects for a better product mix and better profit margins, increase our mobile share of consolidated business from 25% to 45% by FY '30. This increase will come from aluminum die castings, aluminum forgings as they will be increasingly used for lightweighting and also from proprietary products through acquisitions, joint ventures and technology agreements.

We are also focusing on increasing share of business for premium bikes greater than 250 cc for paid assemblies and ABS suspension, match assemblies, as well as all deals for upgraded product technologies [indiscernible]. We'll focus on increasing business for electric vehicle existing and new products. We will increase our embedded electronics business by becoming a significant player in the battery management sector and electronic products required for electric vehicles as well as other listed applications.

We will be focusing to grow our aluminum alloy wheel business in the future. We will focus on nonautomotive business, which has had opportunities, especially in aluminum castings. We are in the process of setting up a new plant at ORIC industrial area in Aurangabad, where SOP will start in FY '26. And this will focus on 4 wheelers as well as non-auto [indiscernible] casting business.

As far as our aftermarket is concerned, our focus is to reach 10% of India sales by FY '28. In quarter 1 FY '25, aftermarket sales grew by 14.94% from INR 922.25 million in the previous year to INR 1,060 million in quarter 1 FY '25. We are now exporting aftermarket parts to 37 countries with addition of Costa Rica in June of this year. So aftermarket sales growth will always be a large focus area for us and we are targeting a good growth in this financial year.

On the environment front, I would especially like to mention that Endurance is striving to be neutral in its plants, by effective use of solar power and wind power, creating carbon 6 by driving pre plantations and thereby creating dense forest and driving use of natural gas and LPG in place of electric power and furnace oil. We have reached up a new percentage of 35% till date in FY '25, and our aspiration is to reach a carbon-neutral percentage of more than 50% by FY '30.

We're also focusing lowering hazardous waste generations and to achieve 0 waste to landfill. In Endurance, it continues endeavor to grow through organic and inorganic growth with a focus on technology operations and product in process, quality improvements, costs as well as focus on our environment, health and safety. We will do our best to fulfill our stakeholder expectations by following our 5 values of customer centricity, integrity, transparency, teamwork and innovation. We are very positive about the future outlet in both in India as well as in Europe, and we are really excited about the future. [indiscernible] opening remarks, I would like to invite questions from all of you. Thank you.

Operator

[Operator Instructions] The first question is from the line of Aditya Jhawar from Investec.

A
Aditya Jhawar
analyst

I have 2 questions. One is when we look at our India business for 4-wheelers, we are seeing some decline. So if you had last 1 year FY '24, it's reported a decline of about 13-odd percent. Even in this quarter, there is a decline of 3%. So if you can help us understand that is there any specific customer-specific issue? That is one. And also you can add on that, if you look at our cumulative order book, say, about, say, INR 37 billion, what could be the proportion of 4-wheelers in that? That is question #1.

A
Anurang Jain
executive

Yes. So if you see the new all wins, the 4-wheeler business, which has been acquired is, I think, about 15% to 18%. I just give you that figure, which is there, which is for mainly the [indiscernible] is Hyundai, Kia, Tata Motors and Mahindra and Mahindra. There's also in our punch powertrain, which is for a tieback.

And so if you see -- so if you ask me right now, you may see a decline because the -- I mean, 4-wheeler business on the whole has increased, but you see a decline as far as the percentage is concerned because the other businesses are growing very much faster.

A
Aditya Jhawar
analyst

Sorry. So here is good absolute. I understand that percentages would decline. But when you look at absolute numbers, from INR 600 crores in FY '23 on standalone, it has come down to about INR 511 crores in FY '24 to an absolute decline of 13%. And even in this quarter, the absolute number is down by about 3%.

A
Anurang Jain
executive

So you're talking about quarter 4 to quarter 1?

A
Aditya Jhawar
analyst

No, no, no, no. So firstly, first question is full year FY '24 versus FY '23 in the 4-wheeler revenue.

A
Anurang Jain
executive

Okay. So if you see the full year revenue, and you see the run rate of that, then yes, we are down, mainly because of the decline in sales in Ford Getrag. That will be the major reason because of the slowdown there in Europe. So that has been the main reason for that.

A
Aditya Jhawar
analyst

Okay. Okay. And even in this quarter, that was a drag?

A
Anurang Jain
executive

Yes. So in this quarter was the drag, and I think this drag will continue. As far as [indiscernible]. I'm talking about the 4 to 4, right? That's been the major reason.

A
Aditya Jhawar
analyst

What's the proportion of that roughly?

A
Anurang Jain
executive

What is the proportion before Getraq, the exact number.

R
R. S. Raja Sastry
executive

We don't have that exactly. But in the India business, we have not got any share in the 4-wheeler market.

A
Anurang Jain
executive

But that figure, we will tell you later Getraq, what difference it has made.

A
Aditya Jhawar
analyst

Sure, sure. Perfect. Second question is that this FREEDOM 125. What could be Endurance's content per vehicle in FREEDOM 125?

A
Anurang Jain
executive

I would say it's -- I can only tell you it's large everywhere. I cannot give you -- I can't give you these figures. But Endurance, we are normally the first choice for all our products. So it's -- so it will make a big difference for sure.

A
Aditya Jhawar
analyst

Yes. Okay. Now final question is on forging business.

A
Anurang Jain
executive

All our product area, it's for all product area.

A
Aditya Jhawar
analyst

Yes. Okay. Okay. Perfect. My final question is on the forging business. So if you can help us understand that now we have commissioned our fourth press. So out of the total capacity that we have set up for forging, what would be roughly for internal consumption for a backward integration? And what would be for external sales. And since the fourth press has come to, what could be the peak revenue potential from this capacity?

A
Anurang Jain
executive

Okay. That figure of aluminum forgings, do we have it with it's a backward integration? What is the total sales figure?

R
R. S. Raja Sastry
executive

[indiscernible] in forging.

A
Anurang Jain
executive

Yes, that figure, I will get back to you. So you want the figure for this year, right, for the coming year?

A
Aditya Jhawar
analyst

Yes. So my question is that if you look at, if I say fourth press coming on stream. So what could be the total revenue potential of forging? And out of that, some would be, say, 15%, 20% could be for internal. So just wanted to understand the split.

A
Anurang Jain
executive

No, no. One thing is very clear, the aluminum forging business has been set up as a backward integration for our inverted front forks. Not only to be cost competitive to get new business, but to be derisked imports. So apart from the Jaguar and Range Rover order, which we got, which is about, I think, INR 260 million or INR 290 million, which will be starting in this financial year itself.

Apart from that, everything as of now in the fourth -- including the fourth press will be done as a backward integration for the -- for our inverted fund Fox, axle plants required for inverted front froks. And now we are getting to hydraulic pro adjusters, which also require aluminum forging. So it is more to, I would say, sustain and be competitive and grow our inverted front fork business. But like we quote the Jaguar Range Rover business, now we are getting RFPs and opportunities from others, especially in the 4-wheeler field. We also got in the 2-wheeler field, 2-wheeler grow business. But to answer your question, this is largely as a backward integration, the aluminum forging.

Operator

[Operator Instructions] The next question is from the line of Jinesh Gandhi from AMBIT Capital.

J
Jinesh Gandhi
analyst

A couple of questions from my side. One, can you talk about again on the passenger vehicles and the non-auto business on the aluminum die-casting given that has been the focused growth area for the aluminum die-casting business. How has been the aluminum from the subsequent for us?

A
Anurang Jain
executive

So see, right now, we are in the process of acquiring orders, both for the nonautomotive and 4-wheeler for ARC as far. As this new project is concerned, we have a separate deal for that. And maybe I think -- let me see if I try and in this call is going to be right to share anything right now. But I think I should be in a better position to share the kind of order wins, which are getting for both nonautomotive as well as the 4-wheeler in the next call.

But we are highly focused and there are many projects, some are resourcing, 1 is new business. So there are quite a few things happening there on that. But I think there'll be no specific by the next call.

J
Jinesh Gandhi
analyst

Okay. Okay. But clearly, there, we are on track for increasing share of business for the next 3 to 5 years of the last quarterly basis, things will be different?

A
Anurang Jain
executive

We are very committed here to -- because this will be a part of our 4 to 4 wheelers, okay? It will be a step-by-step journey. But this is a focus which I said from now to FY '30, not to read that 45% consolidated of business. And of course, it could be along the way, some inorganic growth because it cannot just happen by greenfield, as you know.

But this is 1 of the steps as a part of our future growth journey to increase share of consolidated business to 45% for 4-wheelers.

J
Jinesh Gandhi
analyst

Got it. Got it. And second question is on Max sales. So congrats for [indiscernible]. So can you talk about how would be the content difference between BMS motors and motor control unit, if you can talk about that.

A
Anurang Jain
executive

Content between the?

J
Jinesh Gandhi
analyst

BMS and motor control unit.

A
Anurang Jain
executive

Majorly, it's BMS.

J
Jinesh Gandhi
analyst

Yes. Obviously, currently BMS. I'm saying what would be, say, ASP of BMS versus MCU you've got?

A
Anurang Jain
executive

Is it the vehicle price, you're saying?

J
Jinesh Gandhi
analyst

Yes, or absolute on per unit basis, how much does it -- would be our content there?

A
Anurang Jain
executive

Are you saying is the MCU better than a BMS?

J
Jinesh Gandhi
analyst

That's what I'm trying to understand, is MCU contained higher than BMS, how it would be?

A
Anurang Jain
executive

No, I can tell you that MCU will be a good profitable product for us. The total value is what I -- you want the total value, which I mentioned?

R
R. S. Raja Sastry
executive

MCU value will be less compared to the total sale of Maxwell. The main business is going to be BMS.

A
Anurang Jain
executive

Is this the answer to your question or you want to have something else?

J
Jinesh Gandhi
analyst

I'm trying to understand per unit, say, ASP or MCU versus BMS?

A
Anurang Jain
executive

I cannot give you the per unit value or what is a percentage of the vehicle if you want to know that. I know the total value, which I mentioned was about 343 -- it's about INR 340-odd million is starting in February '25.

R
R. S. Raja Sastry
executive

And it is just starting, by the way.

J
Jinesh Gandhi
analyst

Right.

A
Anurang Jain
executive

We are definitely -- I'll just tell you 1 thing about Maxwell. We are -- like I said, we have the INR 1 billion of RFQs, which we are discussing. Not discussing. I mean, looking already won -- I mean a good part of it. And we are looking at other products, even motor control unit, we have been working, but now we just announced it to you after the order win. Like this, there are other products and we really engage with different customers.

So basically, the whole idea is that this has to have a profitable growth, you know what I'm saying. At Maxwell was a strategic acquisition, as you know, in July 22 because we wanted to be a part of the EV journey. And I'm sure the EV journey will continue. It will increase. We want to be a part of their journey. There are not many players what we are doing. There are not many players.

Our advantage is the whole -- the technology Infosys product is in-house. It's not a collaboration. There's a plus point. But we were a bit later in the day. But slowly, slowly, we are showing our, I would say, strengths to our customers and slowly getting in and getting the businesses. So it's been a bit of a slow start, but you will see that in future, you can see a lot more of this.

J
Jinesh Gandhi
analyst

Got it. And for the order book of Maxwell, can you talk about the client concentration in that order book, how much would be coming from the new players or the players who have the lower market share today versus the incumbent.

A
Anurang Jain
executive

But today, our biggest customer is motor pump for the dealer. We are our largest customer. But going forward, of course, there will always be a large customer, but we have a lot of things in the pipeline going on. Basically, this company started with them and certain exports to battery pack makers as well as to 2-wheeler companies as well as in India, battery pack makers. But the larger share of business today is motor.

And let me tell you that since last month, there's been a very good improvement. And really, the volumes are now really going up from this month onwards. But it's going to do well.

J
Jinesh Gandhi
analyst

Yes. That's [indiscernible]. And last question is on the European business. So a 2-point question over there. One is, obviously, you have seen a very good growth in the European revenues. But is that partly because of aluminum cost inflation? Is that the reason for such a strong growth? Or we have seen actually very strong growth in the core business itself?

M
Massimo Venuti
executive

The aluminum is the same part of the previous quarter, no different. And so the increase of turnover compared to the previous year that is more or less EUR 11.5 million, 16.8% is due to the business for 50%, and the increase of more or less 8% is due to the important investment we have done.

And certainly, that's considering that the market grew 4.1% in terms of registration compared to the previous quarter, the quarter 1 of the previous financial year and Europe due the double considering the production and 4x considering also the tooling.

J
Jinesh Gandhi
analyst

Okay. Okay. So in that context, our margin performance has been, I would say, relatively weaker considering the strong revenue growth? I mean, there has been a Q2 decline in margins despite having a strong revenue outcome. And by the way, also, it's just about 40 bps incremental margins. What would...

A
Anurang Jain
executive

So my question is, what would be your expectation? We have done about 16.5%. So what is -- you're expectations in a market like this.

J
Jinesh Gandhi
analyst

No. My question is, I mean, you've seen a sequentially strong volume growth in that business as a reasonably good operating leverage. Would not there be benefit of that? Just that's what I'm trying to understand.

M
Massimo Venuti
executive

No, let me say, considering the total value of EBITDA we closed in this quarter with EUR 13.3 million compared EUR 11.1 million the previous financial year. So we grew 20%, 20.2% in terms of EBITDA with an increase of turnover of 16.8%.

In terms of net results, we closed with EUR 4.9 million compared with EUR 4.2 million the previous year and set with the same percentage of 6.1% in terms of net result. But please consider that we are changing completely our organization in Europe. We started in January of this financial year with a new plant from 0 Forelands, where we will produce [ 850,000 ] clubhouse per year. And certainly that the fixed cost is not at the same level of the previous quarter. And certainly, the benefit of Endurance overseas will be clear in the next 2 years, where we will reach the maximum production capacity. So we are doing EUR 50 million investment per year. So the structure of our profit and loss is changing completely apart. But I repeat, the profitability in this moment is higher 20% compared to the previous quarter.

A
Anurang Jain
executive

But to be honest, Jinesh, we are quite satisfied in all in this whole challenging environment, which is there in Europe. We are quite satisfied. [indiscernible] is to keep improving.

J
Jinesh Gandhi
analyst

There's obviously the new plant [indiscernible] for this relatively lesser expansion. And lastly, we have talked about this specialty components, specialty plastic component of orders from Oxford. So can you talk about the kind of investments we need to make on the capabilities and capacities for this business tend to be a material new technology for the European business? How do you think about this as an opportunity?

A
Anurang Jain
executive

The technology is the same that we have in our hand with other customers Stellantis and also Naredi finance customer. the important news is that it's the first order as Tier 1 platform for Volkswagen Group in the plastic injection molding. And in this moment, [indiscernible], let me say ultimately for us, there are a lot of problems into the plastic market due to the increase of raw material and a lot of companies are in financial. And this was an important acquisition for us because this is the first acquisition, but we are discussing for future growth, and we can use the existing production capacity for this business, or there is absolutely strategic for us.

We're in about EUR 22 million, but is 20% of the total turnover of the company. So you can imagine, which is the potential for the future.

J
Jinesh Gandhi
analyst

Okay. So the specialty plastic is already 20% of the turnover today? Is that what that you mentioned?

A
Anurang Jain
executive

In this moment, the total turnover of the U.S. engineering is more or less EUR 10 million plus. Please remind to you that we bought U.S. engineering as technical conversion from aluminum to [indiscernible] of specific products for the higher part of the engine. And we are moving now in component for the hybrid vehicle for the vehicle also in the plastic content.

So to answer your question, Jinesh, this is a small value. This business is about EUR 12 million. So it's a small value in our overseas scheme of things is about 5%. But when you win a EUR 2 million order from a customer like Volkswagen, it opens up many new opportunities for a profitable growth in this business. That's the point.

Operator

The next question is from the line of Pramod Amthe from InCred Capital.

P
Pramod Amthe
analyst

So continuing on this European business, some of the manufacturers, especially Porsche, [indiscernible] for a very soft next quarter. Will it have what type of repercussion for you?

A
Anurang Jain
executive

So in this moment, we have seen a reduction of volume, electric component and Taycan and specific with the port. We are compensating this reduction increase of volume in percussions in technology. And so for speaking, is so that they had a problem and you care the newspaper, which was the issue with a specific supplier.

In this moment, Volkswagen and Porsche are confirming the -- more or less the same volume of the previous quarter also for the next 2, 3 months. And so we don't see a particular problem. Probably the major problems in their assembly of the car and not in the powertrain and transmission division.

P
Pramod Amthe
analyst

Sure. Second one is with regard to India business. When you look at these alternative powertrains, especially like CNG bikes, does your content per vehicle drastically increase? Or is the same as any other ICE vehicle?

A
Anurang Jain
executive

It is the same.

P
Pramod Amthe
analyst

Okay. And the third one is with regard to your car ambitions. Considering that there is a GM plant being now acquired by Hyundai and Hyundai anyway, you are an existing client. Do you see more scope for you to add more components because you already have a ready capacity available. So how do you look at this opportunity?

A
Anurang Jain
executive

It's a very good opportunity. It's next to our plant at Chakan, which is doing 4-wheeler parts, including for exports. They are very similar parts. So it's a very, very good opportunity, I mean, for us.

P
Pramod Amthe
analyst

So you will continue the same products, sir? Or do you have an opportunity to add more components, content per vehicle?

A
Anurang Jain
executive

We have the opportunity. So it's not finalized, but we have the opportunity.

P
Pramod Amthe
analyst

Okay. And would you be able to indicate which line you are looking at? Is it still being the metal forming or...

A
Anurang Jain
executive

.

No. This is in aluminum die casting.

P
Pramod Amthe
analyst

Okay. So which is like an existing line and you are [indiscernible]?

A
Anurang Jain
executive

Chennai and Banda plants, probably similar.

P
Pramod Amthe
analyst

Okay. Sure. But you have headroom capacity or you have to add capacity in the existing plant?

A
Anurang Jain
executive

Capacity. So we look at the business quantum which we'll get. Based on that, we take a call by the existing capacity is enough or we need to add new customer machines.

Operator

The next question is from the line of Diviya Agrawal from [indiscernible] Family.

U
Unknown Analyst

So my question is regarding the aluminum die-casting business. So I just wanted to know what proportion of the total order book would be in the aluminum die-casting? Do we have that figure?

A
Anurang Jain
executive

And we tell them the total business win. You are talking about since FY '21, which we have done, which has not gone into the production.

U
Unknown Analyst

Yes. Right now, how much -- whatever the total order base we have, what would be the proportion of aluminum die-casting in that? .

R
R. S. Raja Sastry
executive

So we have the data year-by-year. So it will take a while for me to give you a cumulative number.

A
Anurang Jain
executive

No, you want for the last 1 year or you want right from the beginning?

U
Unknown Analyst

Right fromt he beginning.

A
Anurang Jain
executive

FY '21?

U
Unknown Analyst

Yes, yes.

A
Anurang Jain
executive

Okay. Then we have to come back to you on this. We don't have that figure right now.

U
Unknown Analyst

Okay. No problem. And secondly, regarding the order wins in the -- new order win in the aluminum casting. I actually missed the part of you in that and for the new order that you got in aluminum casting. So can you repeat that?

A
Anurang Jain
executive

In the aluminum castings, the orders -- mainly, the orders are ones for the aluminum alloys, which we have got. We have -- then we have got castings from various customers, right, from HMSI to Hero MotoCorp to [indiscernible]. And except for [indiscernible] entry, all the other customers, it is with machines because we are only taking orders from machining. Then of course, we have the punch power train business, which I've been saying in the last 2 quarters, which is an order of about INR 1,000 million. It's that in a small way, but really, it will pick up now in future. And there are other opportunities coming also to punch power train as we go in a lot.

And of course, I told you about a big Hyundai business of about, I think it was INR 830 million or INR 870 million, that would start in FY '27 only, which is there. And see, the business which I've talked about is non-Bajaj. So in Bajaj, what happens is any new business comes for new products, new growth. And there are also very, very, I mean, there are also structural casting items, like subframes, you have structure with bearings, you have swing arms.

So one is LOBs, one is cranes covers machine. Then you have part for EVs with the [indiscernible] growing. There are a lot of parts for EVs, which we are doing for them. So Bajaj is 1 part, which is growing. But for the other customers, it's some of the points which I told you, which come to my mind immediately. So the combination of alloy meals, question of castings largely with machining for 2-wheelers, 3-wheelers and 4-wheelers for different customers.

U
Unknown Analyst

Okay. Sir, got it. And in regards to the domestic competition in the aluminum passing itself. So I mean there are players, listed players who are the sole providers in the cylinder [indiscernible] and many other OEMs. So do we have any kind of relationship like a sole provider to OEMs?

A
Anurang Jain
executive

Yes. So we are for many segments of, say, 2-wheelers, mainly for, I would say, 2-wheelers, 4-wheelers also, there may be there are a few segments for [indiscernible] that. But we are 100%, because 100% supply depends basically on the volume of business per year.

So our volumes beyond, say, the volumes per month are beyond, say, 10,000. Then there would be a single source. I'm just taking 1 example. Just as an example. Then beyond a certain volume, they will have 2 sources in general. So we have a combination of both. And the one thing I'll tell you on the aluminum die-casting business that today in the last, I would say, 35, 36 years, we have been there. We have got a very strong, I would say, operation in die-casting in terms of a good engineering center with a lot of very engines happening, the development is happening, all 2 room.

And of course, a very strong based [indiscernible] technology and product itself, process had product itself. So we're in a good space. And to be honest, we don't see so much of competition for us in India as of now. There has been a consolidation over the years. But there is a -- but there is a lot of business if you asked me to take. I can think is a CapEx-intensive business, we are quite choosy about it.

Operator

The next question is from the line of Akshay Karwa from Anand Rathi.

A
Akshay Karwa
analyst

So my first question is regarding the 4-wheeler segment. In the other comments, you mentioned that you expect the 4-wheeler segment to each 45% in the next -- by F '27, F '30. Sir, what type of margins would be to generate on EBITDA margins? So what -- when we move to more aluminum die-cast products. So would there be -- what margins will -- what would be the margin profile at this point in time?

A
Anurang Jain
executive

See, I can only tell you the margins will be higher. The margin will be higher. I mean, I can't put a figure to that. But the margins will be higher and that -- so we are getting to 4-wheeler for 2 reasons. One is to derisk from the 2-wheeler industry in India as well as to improve the profit margins.

And yes, like I said earlier, they do happen only from organic growth. Orexin is a first step apart from growing our existing 4-wheeler businesses, which we mainly do in the aluminum die-casting in our [indiscernible] and the 2 plants in Tamil Nadu. But it will happen also inorganic growth opportunities, we are looking very actively in Europe as well as in India. So it won't happen by that, but we have produced the right product where we can really grow. It's a technology product. There are few players, like I've said, it is EV agnostic. There are some of the criteria. So it maybe taking time. I know I've been saying this for the last 3 quarters. It may be taking time. But when it happens, we will know immediately, you know what I'm saying?

A
Akshay Karwa
analyst

Right. The BT business wins that we have had recently with Jaguar and Hyundai [indiscernible] be clear. So by FY '27, '28, I just wanted to get an idea like by what this year?

A
Anurang Jain
executive

See, the thing is the percentage will definitely increase. Our focus is on that 45% consolidated is today, the '25. So this will definitely increase, both India as well as Europe. But of course, it will happen from inorganic also in a large way. They not just happen from organic.

A
Akshay Karwa
analyst

Sir, my second question is regarding Europe business. I just wanted to make the top line number in euro terms, the revenue number?

A
Anurang Jain
executive

As we closed the first quarter with EUR 80.3 million of turnover compared to EUR 68.8 million of the previous financial year, an increase of 16.8%. In terms of EBITDA, we closed with EUR 13.3 million compared to EUR 11.1 million the previous year, and sequenced 20.2% of increase compared to the previous year. And the percentage of EBITDA was 16.5%. In terms of net result, we closed with EUR 4.9 million compared to EUR 4.2 million in the previous financial year with an increase of 15.7%. The percentage of the profit was 6.1%.

Operator

Mr. Karwa, are you done with the question?

A
Akshay Karwa
analyst

Yes.

Operator

Ladies and gentlemen, for the questions, I now hand the conference over to the management for their closing comments.

A
Anurang Jain
executive

No, I don't have any further comments. I said what I had to in my opening remarks.

Operator

Thank you, members of the management team. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

A
Anurang Jain
executive

Thank you.

All Transcripts

Back to Top