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Endurance Technologies IPO – Review, Details, Subscription

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On Day 3 (final day) :  the IPO is oversubscribed 43 times (QIB – 53 times, NII 127 times, and retail portion over-subscribed 2 times)

On Day 2:  the IPO is subscribed 92%, with retail portion subscribed 82% (QIB – oversubscribed 1.70 times, NII only 13%)

On Day 1:  the IPO is subscribed 12%, with retail portion subscribed 21%

Endurance Technologies has announced its IPO and the IPO is opened on 5-Oct for subscription.

Issue Details of  Endurance Technologies IPO:  

  • IPO Open :  5th Oct – 7th Oct 2016
  • Issue Price: Rs 467 – 472 per share
  • Issue Size:  Rs 1161 crores
  • Minimum Bid – 30 shares
  • Maximum Bid – 420 shares
  • Minimum Investment:  Rs 14160
  • Book Running Lead Managers :  Axis, CitiGroup
  • Registrar – Link Intime
  • Listing: NSE & BSE.

The issue is an offer for share (OFS) for 2.46 crore shares, wherein promoter Anurag Jain will look to sell 53 lakh shares, while existing shareholders Actis Components and System Investments will offload up to 1.93 crore shares in the Rs 467-472 price band.

Background:

Endurance Technologies Ltd (Incorporated in year 2000) is in the business of manufacturing two-wheeler and three-wheeler automotive component.

The company also manufacture specified components for four-wheeler passenger vehicles, light commercial vehicles and heavy commercial vehicles. It is the complete solutions provider, providing end-to-end services by engaging its customers from conception to end-user delivery.

Companys development process includes design, development, validation, testing, manufacturing, delivery and aftermarket sale service for a wide range of technology-intensive auto component products.

The auto component maker has 23 plants in India and one highly-automated manufacturing facility each in Italy and Germany. It has 12 distribution centres and 256 distributors in India and exports products to 20 countries, directly and indirectly.

Objective of the issue:

  • To achieve the benefits of listing the Equity Shares on the Stock Exchanges and
  • To carry out the Offer for Sale.

Pros & Cons: Key dependency on 2 wheeler segment and main custoemr is Bajaj Auto

Financials:

In 2016, the revenue was Rs 5240 crores with Rs 3831 crores in 2012.

In 2016, the Profit was Rs 290 crores with Rs 182 crores in 2012.

Its consolidated EPS for FY 16 is 20.6 and last 3 years average is 18.7

  • Between FY14 and FY16, the company reported an 8.4% CAGR in total domestic revenue compared with a production growth of 5.6% and 6.1% CAGR, respectively, recorded by the two-wheeler and three-wheeler segments. European revenues jumped at a CAGR of 19.6% during the same phase.
  • PAT margin for FY16 stood at 5.5%, which was 40 basis points higher than 5.1 % for FY15 and 70 basis points higher than 4.8 % reported for FY2014.
  2012 2013 2014 2015 2016
Revenue *(in cores) 3832 3822 4212 4917 5241
Growth   0% 10% 17% 7%
           
Profit (In crores) 182 169 205 252 290
Growth   -7% 21% 23% 15%

Valuation as compared to its peers:

Bharat Forge, Munjal , Mahindra CIE Automotive and Rico Auto are some of the major listed peers of the company. These peers enjoy an average PE of 28.29. At FY16’s EPS of Rs 20.60 a share, the stock would trade at 22.91 times at the upper limit of the price band.

ETL is available at a multiple of 22.8x based on FY16 earnings, which is at a discount to its peers Sundaram Clayton (24.1x) and Bharat Forge (35.6x).
Anchor Investors

The company on Tuesday finalised allocation of 73.83 lakh shares to anchor investors, including Goldman Sachs, Nomura, HSBC, Merrill Lynch and Government of Singapore, among others, at a price of Rs 472 per share, aggregating to Rs 348.52 crore.

Should you invest:  
ICICI Direct Subscribe
Reliance Securities Subscribe
Angel Broking Subscribe
Centrum Broking Subscribe
SPA Securities Subscribe
KRChoksey Subscribe
GEPL Capital Subscribe
Hem Securities Subscribe

Many brokerage houses are recommending to Subscribe to this issue, as the price is competitive as compared to other listed peers giving potential for upside. However, the I am not too excited about the issue as the last year growth was low both in terms of revenue & profit. So, only Long term investors with a view of 2-3 years should subscribe.

Disclaimer:  The articles on this website should not be constituted as Investment advice. Please consult your financial advisor before making any investment decisions.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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