Bullish analyst view on Endurance Technologies IPO as autos seen gaining

Endurance Technologies IPO, which opens for subscription on 5 October, has earned a positive word from equity research experts. While analyst view on Endurance Technologies IPO is positive, some brokerage houses reckon that the IPO is fairly valued which is another way of saying that not much should be expected in terms of returns. This is something that we have also highlighted in our review of the IPO.

A total of INR1,161.7 crore will be raised by issuing 24,613,024 shares in the price band of INR467-472 per share. Stay here to read analyst opinion but head to this page on Endurance Technologies IPO if you want to get more details about the public offer.

Read Also: Endurance Technologies IPO Review: Endearing valuations?

Analysts at Ajcon Global have recommended investors to subscribe to the IPO citing factors like market dominance and strong balance sheet. “With due consideration to factors like a) India’s largest two – wheeler and three – wheeler auto component manufacturer in terms of revenue for FY2015, b) consistent track record of organic and inorganic growth, c) largest two-wheeler and three wheeler auto component player in India, d) strong customer relationships with marquee clients both domestic (Bajaj Auto, Hero, Eicher) and globally (Daimler, FCA Italy, S.p.A, Chrysler, Jeep, Yamaha, Piaggio etc.), e) growing and profitable European business, f)strong R&D capabilities with 4 patents and 3 design registration applications, g)going forward focus on high-growth markets: two-wheelers and three-wheelers in India and passenger cars in Europe, h)strong profitability with scale, i) delivering consistent returns to shareholders – FY16 average ROE of 22.5% and FY16 average RoCe OF 21.9%, we believe that the Company is strongly positioned against its peers both domestic and globally. Thus, IPO valuation of 23x on FY16 EPS is justified and we recommend to “SUBSCRIBE” the issue,” said Ajcon’s IPO note on Endurance Technologies IPO.

Analyst view on Endurance Technologies IPO is positive at IIFL which has also put a subscribe rating on the IPO. “ETL has been generating strong operating cash flows, healthy return rations and has a robust balance sheet. At the higher end of the price band, the issue is valued at 22.9x FY16 EPS and 17.4x FY18E earnings. While the valuations appear rich, we believe the business model is robust and has multiple growth opportunities. Recommend Subscribe for long term investors,” the brokerage house said in its research report. Its report also noted that the company has reduced its dependence on Bajaj Auto and has been growing the lucrative aftermarket business.

Subscribe is also the call from HEM Securities which noted that the company is fundamentally well-placed to take advantage of sales gains in the local automotive market. “At price band of Rs 467-472,p/e multiple will turn out to be 20 on post issue annualized Q1FY17 eps of Rs 23/share of company.Co looks reasonably priced when compare to its peers Bharat Forge (p/e of 35),Gabriel (p/e of 22), Motherson Sumi (p/e of 34). Co being the largest two wheelers & three wheeler automotive component manufacturer looks fundamentally strong. Also, co’s financial performance looks attractive. Hence, we recommend “Subscribe” on issue,” said its analyst report.

Analysts at KRChoksey said that Endurance Technology’s focus on improving R&D capabilities in order to focus on advanced technology, high value-add products will ensure consistent profitable growth. “We maintain a positive view on the company with long term upward bias and expect the company to deliver healthy profitable growth going forward. We advise investors to subscribe the IPO and remain invested in ETL’s long term story,” maintained its research note.

Analyst view on Endurance Technologies IPO is also positive at Mumbai-based Choice Broking which noted that the company’s P/E and EV/EBITDA multiples at higher price band are below its peers. “Considering the bright automobile industry outlook, Endurance’s track record of consistent profitability & return ratios and better financial performance as compared to its peers, we recommend a “SUBSCRIBE” rating for the public issue,” said the brokerage house’s report.

Analysts at GEPL Capital also like the IPO citing that the company “stands to gain from operating leverage”, adding to the list of positive analyst view on Endurance Technologies IPO.