Portfolio Rebalancing | Sold this Stock | CA Rachana Ranade - YouTube

Hey folks!!! CA Rachana Ranade here and I  welcome you all to a very interesting video  

which is about endurance tech fundamental analysis  returns so in this video I am going to talk about  

a lot of updates that have happened about  endurance technologies and I had discussed  

this video on our channel on this date and that's  how this entire video was published on the channel  

so if you have not watched that video ideally  you should be watching that video first and then  

understand about the updates on endurance  before we move on with the updates I would  

really like to tell you that we have completed  two years of our YouTube Memberships as on date  

I told about this in the previous video as well  but feels very good to tell you again that this  

basket of 25 stocks has given a return of more  than 30 percent in spite of the recent fall  

and so many requests were coming up to me that  Rachana could you please disclose at least  

five to six stocks that you still hold in your  portfolio from a longer term perspective so this  

10th of December at 9 00 pm I will be doing a live  stream wherein I will talk about six stocks that I  

hold in my portfolio out of the 25 stocks that  I have discussed with the pro investor members  

so don't forget to join in in this live stream  and if you are still not a pro investor member  

do not forget to click the Blue JOIN button on  the channel. Well in that 45 minutes long video  

on endurance technologies I have actually talked  about the entire kundali of the company whatever  

is required for an investors perspective right  but then what are we going to do in this video  

since that video what what additional points  have happened in the company till date we are  

going to talk about five key points number one  we are going to talk about new product additions  

number, two we are going to talk about whether  there is any update on the capacity expansion  

or capacity utilization, we are also going to  talk about the order book status of the company  

we will cover the risk factors and finally we'll  be talking about the financials of the company. 

Let me remind you all one more time that  all these creative people are spammers,  

that's how my account looks like also remember  I never give my mobile number in any chat  

I neither have an advisory  nor do I give any stock tips. 

Now let's have a quick recap of what products  does endurance offer and any additional products  

that they have for aid into right so the  very first one you here you can see is that  

they are they're the tier one supplier of diverse  product offerings to various OEMs and what is OEM?  

Original Equipment Manufacturer so if I talk about  two wheelers especially they are into four major  

subsets I can say which are the four major ones  aluminum casting and machining in suspension,  

transmission and braking systems okay so if I  am talking about aluminum casting and machining  

so here you can see this is with dark blue and  all those with dark blue are mentioned in the  

diagram so something like a cylinder head will  come up under aluminum casting and machining.  

In suspensions we have shock absorbers and front  forks and what not okay. In transmissions you have  

the clutch in braking systems, you have disc brake  assembly components and what not oh my god again  

getting a feeling of being an Engineer but which  I am not okay anyway so I hope you have understood  

two wheelers what all things are they making  and supplying. If I talk about three wheelers,  

they are giving all these, they are manufacturing  all these parts like hydraulic shock absorbers,  

drum brake assembly, clutch assembly okay. For  four wheelers also they are manufacturing this  

gearbox housing small commercial vehicle clutch  and uh quadra cycle shock absorbers okay. If I  

move on with uh four wheelers now here you can  see uh not only in India but also in Europe they  

have a diverse product offerings to OEMs so  here you can see in suspension and body parts  

they are making head axles cross members steering  houses and housing and few more if I am talking  

about engine parts they are manufacturing oil pan,  various brackets specialty plastic covers and few  

more things and if I am talking about transmission  parts they're into the gearbox housing uh torque  

converter housing transmission housing and very  important what is that EV parts that is something  

which was not present when I did the member  special fundamental analysis video so this  

is something which has come up as a new product  thing okay EV parts related supply anything else  

that they have poured into yes they are folded  into non-automotive machined casting business  

so basically they were originally only and only  auto angst company auto ancillary related company  

but now they also want to supply certain parts  to uh companies which are into gen sets companies  

which are related to 5G telecom okay and this  company endurance technology has already received  

business of 1100 million rupees. They are going  to start commencing the supply of these products  

from April 2022 and this they are saying that  these die-casting plants are located in Chakan and  

Vallam. One more product that they are fore aided  into is the trading of two wheeler and three  

wheeler for both exports and domestic markets the  company is 97 distributors for tires complementing  

its 377 strong distributor network for other after  market products. In simple words what I did right  

now quick recap number one we did talk about  existing products, number two we talked about  

additional products, three major parts related to  EV number two, we talked about parts related to  

5G telecom and gen sets and number three we talked  about tires cut trading but not manufacturing.  

Now let's talk about the strategic locations of  all their plants we will start off with India,  

here you can see in India there in totality 18  plants, if you remember when we did the video they  

had 17 plants, they have added one new plant at  one Vallam near Chennai which started operations  

from February 2021 for the production and supply  of aluminum castings to OEMs okay. Now if you have  

a look at Europe you can see that right now they  have a total of nine plants including Germany and  

Italy right. If you remember in the previous  video there were 10 plants now what has happened  

they basically consolidated the foundry activities  of two plants in Italy took it down to one because  

of which there was a saving of 600,000 Euros so  that was a very positive sign for the company  

any other uh additional points answer  is yes they have increased the capacity  

in the disc brake assembly from 2 lakh 85,000 units per month to 5 lakh 70,000  

units per month this is almost doubling their  capacity in the disc brake assembly space  

what about brake disc capacity? Now in the brake  disc capacity also their capacity is increased  

from three lakh seventy five thousand per month to  six lakh seventy five thousand per month now these  

capacities could make endurance the largest disc  brake supplier to Indian two wheeler industry so  

that's a very good update in this company. Moving  on to the next update basically ABS market size  

is 3.5 million assemblies and 85 percent  of a two wheeler. ABS market is controlled  

only by one multinational company right now the  company is initially installing capacity of four  

lakh assembly so what is basically endurance  technology is doing is that currently in the abs  

space it's mainly led only by one MNC endurance is  pouring into that space as well they are initially  

installing a capacity of four lakh assemblies and  uh by the end of 2023 March they're expecting to  

reach the installed capacity for this specific  plant and with this they could become the only  

supplier in India that manufactures  the entire assembly with the abs unit.  

Moving ahead if you remember I had talked  about one important point in that video  

wherein company was also going to enter into  the wire braided hose plant wherein that wire  

braided hose will act as an import substitute  the operations have already begun in June 2021  

also I talked about the Adler Grimeka IP  acquisition why they were going to do that because  

they wanted to enter into 200cc motorcycle segment  and yes they have started production of breaks  

from September 2021 and they are planning to  start the production of clutches in the same space  

by quarter one of financial year 2023 if I  am talking about a capex update uh capital  

expenditure update uh in India it's 2 billion  rupees and in Euros it is 24 million in Europe. 

Now let's talk about the order book update. Now  why is order book important? please understand  

that gives us an analysis that gives us an  interpretation of the revenue visibility  

for the next year higher is the order book  higher are the chances of revenue okay so let's  

understand what are their order book updates first  we'll start off with India. In India they have  

received new orders worth 6,380 million from which  OEMs, OEM such as Honda Motors, RE, Hero, Yamaha,  

TVS, Hyundai, KIA right these are the few major  names they've also won EV business the hot topic  

electric vehicle business from Bajaj, Mahindra,  Tata and others they also started supply of brakes  

expansions and castings for two wheeler and three  wheeler also I am sure you might have heard about  

Aether right ether is again an EV OEV they have  received an order of about 500 million per annum  

regarding the break assembly order so all these  were the key orders there are there are many more  

but I talked talked about major three in  India. Now what about Europe? In Europe they  

have received new orders worth 19.3 million euros  from OEM such as Audi, Daimler, Volkswagen, FCA,  

Maserati and in q1 FY 22 orders worth 7.13 million  were won from Porsche, Daimler, CNH and Celantis  

uh orders in hand currently they have uh  which is almost about 30 million euros for  

electric cars from Audi, Porsche and Euro  90 millions for hybrid models of Volkswagen,  

Daimler, BMW, FC and Maserati and peak volume  is expected to be reached by financial year 24.  

What about after market related segment?  Their exports are currently to 30 countries  

and four more countries will be added in this year  all in all I feel that their order book looks to  

be pretty strong plus with the entry in the EV  space this is going to be really interesting. 

Now let's move ahead with the risk factors we are  going to talk about two major risk factors for the  

company number one is Chip shortage and number  two is Covid lockdown now you might be wondering  

uh what what is the scenario about chip shortage  that is the reason why I am showing you an entire  

screenshot directly from the management commentary  okay now there was an analyst which asked about  

the impact of this chip shortage on their overall  European business now management has very clearly  

mentioned that the new car registrations have  seen a very bad result and their production  

degree means fell down by almost 30 to  40 percent if I am talking about Germany.  

In fact they have also mentioned that management  believes that based on customer feedback this  

might bottom out and might come back to normalcy  by second quarter of financial aid 22 but  

even if you check the last line it mentions  that customers apparently want to confirm the  

volumes for 2022 as per their producer forecast  in simple words anyways there was a production cut  

they believe that things might come back to  normalcy but customers are not really sure  

they are saying we will confirm the volumes  with you all all in all I can say this is too  

early to talk about the bottoming of the chip  shortage thing okay so is that a risk or more  

of an uncertainty thing to I think more of  uncertainty which might lead to a risk okay.  

Second one is again pretty important which is the  Covid lockdown scenario right now in Europe I am  

sure you might have read in the news that right  now corona is spreading very fast in Europe and uh  

right now a WHO has warned Europe and Central Asia  they could face another seven lakh Covid19 deaths  

by March. One more point is that uh in Germany  right now their Health Minister has described  

the situation as a National Emergency and uh  their official figures released on Thursday  

show that Germany has become the largest country  to pass the grim milestone of one lakh deaths from 

Covid19 since the pandemic began in fact in  France also the situation is deteriorating more  

than 30 000 new daily cases being reported Belgium  hospitalization admission has increased by 30 per  

week many of their patients are also in ICU more  of the more than a quarter of their hospitalized  

patients are in ICU right now so all in all if you  see unfortunately the scenario in Europe as far  

as pandemic is concerned it's very grim you might  be like why Rachana is focusing so much on Europe  

30% almost almost 30% of companies  revenues come from Europe now if if  

majority of the countries in  Europe again go in a lockdown  

can that badly impact the revenues for endurance  for this year at least? My answer is possibly Yes. 

Now let's move on with the finances I am not  going to talk about each and every point in detail  

three major points first we'll talk about sales  we'll talk about EBITDA then we'll talk about pat  

as far as PN is concerned right now have a look at  the total revenue uh chart here you can see that  

all in all CAGR is just of 4.9 for total revenue  it was increasing but in 20 and 2021 it has been  

decreasing if you talk about EBITDA and EBITDA  margins also the same you can see EBITDA margins  

are more or less at 15 to 16 percent but in  absolute terms it has gone down in financial  

2021 as compared to 2020. Even if you talk  about PAT and PAT margins same old story PAT  

margin somewhere around seven-eight percent  but again in absolute terms it has gone down  

from 5655 to 5196 obviously all are Indian Rupees  in Millions okay whatever figures I told right.  

Now if I am talking about two key ratios ROCE and  Net Debt Equity. First one is ROCE here you can  

see a very bad position because ROCE is going down  from 24.8 percent to 21.7 percent to 16.9 percent  

is this alarming? Not liking this figure right see  still anything about 15% is good but see the drop  

that is pretty much high right now if I talk  about net debt to equity ratio uh that is also  

uh going down is that a bad sign? Answer is No,  net debt to equity lower the better so this is  

a good number right. If I talk about after market  related things here you can see that the overall  

CAGR is 11% from 2016 to 21. Here you can see  continuously revenues are rising Happy!!! Yes,  

but what is the problem then problem is that  after market sales revenue is contributing to  

only 4.7 percent of the total consolidated  revenue so even if the growth is good here  

problem is that it's forming a very tiny  part of the total consolidated revenue. 

And now the big question is endurance stocks  still in my portfolio or not? Now looking at the  

entire overview of whatever we discussed right  now we did talk about uh the product portfolio  

being increased that was a positive sign we did  talk about increase in capacity utilization and  

additional install capacities that was a positive  sign but then we talked about two important risk  

factors number one we discussed was about the  chip shortage and number two was about corona  

pandemic and we also talked about financials which  are not performing good off late again because of  

the reasons that we discussed right now so Do I  still continue to hold this talk in my portfolio?  

answer is NO. I have booked a decent enough profit  in this uh specific stock but does it mean that uh  

I have banned it in my portfolio for a lifetime  answer is no if I feel that the concerns which  

are bothering the company right now fade away  I might think about re-entering the stock at a  

different level. So I hope you have enjoyed this  one if you have don't forget to check out my other  

videos or for the pro investor members also don't  forget to check out some interesting videos so if  

you want you can share it with your friends as  well till then take care, Jai Hind and bye, bye.

you