Endurance Technologies Limited (ENDURANCE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Endurance Technologies Limited Q3 and 9 Months FY '25 Results Conference Call hosted by Axis Capital. [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 so much. Good morning, everyone. Welcome to Q3 FY '25 Post Results Conference Call of Endurance Technologies. We are pleased to host the entire management team -- senior management team of Endurance. We have with us today are Mr. Anurang Jain, Managing Director; Mr. Massimo Venuti, Director and CEO, Endurance Overseas; Mr. Rajendra Abhange, Director and COO; Mr. Raja Gopal Sastry, Group CFO; and Mr. Raj Mundra, Treasurer and Investor Relations. I'll now hand over to Mr. Anurang Jain for the opening remarks, post which we can start the Q&A. Over to you, Mr. Jain.

Thanks a lot. So good morning to everyone. As we look at the broader economic landscape, our GDP growth for FY '25 is expected at 6.4%, which is a downturn from last year's 8.2%, with quarter 2, marking a 7-quarter loan at 5.4%. However, the index of industrial production grew to 5.2% in November, signaling manufacturing recovery. Further, the measures taken in the Union budget and in the RBI MPC meeting would leave higher disposable income for discretionary consumption, and this offers us a hopeful outlook for our industry. In India, in quarter 3 of this financial year, as per the CM data, the 2-wheeler industry sales grew by 7% compared to quarter 3 of the previous financial year. Scooters grew by approximately 13.3% and motorcycles grew by 4.6%. The Passenger Vehicle segment grew by 6.6%, while Commercial Vehicles witnessed a 2.3% growth, while 3-wheelers grew a modest 0.7% as compared to quarter 3 of the previous year. Against this macro environment and the industry performance, I would like to explain various strategic actions in Endurance and their potential impacts on the company's future performance. First, I would like to touch upon our acquisition of Stöferle in Germany. You must have read the announcement, and hence, I will not go into the details. This is an important acquisition for us. The company is highly profitable, has good customer presence and is vertically integrated as they manufacture also their own machines. This, along with our existing presence in Germany, holds significant promise in terms of not only revenues and profitability, but also creating a strong presence with our German OEM customers leading to higher business and opportunities. The Stöferle acquisition and the Ingenia Automation company, which was done earlier this year, brings onboard in-house machine building and automation expertise, which can also be used in our Indian operations. Mr. Massimo Venuti and I will be happy to take questions from all of you on this topic. Having spoken about Stöferle and before we go deeper into some of the highlights, I would like to touch upon certain key topics which impact our business. Continuing on Europe, despite the difficult market where the year-to-date new car sales have dropped by 0.4% compared to the same period of last year, our subsidiaries grew their revenues by 16.1% and EBITDA by 22.1%. This is the effect of the astute management of a net positive financial position in spite of investing substantially on new business wins. The OEM customers in Europe trust our companies in Europe and are considering us for various new business. These business wins which gave us growth of 21.8% in revenue and a growth of 27.4% in EBITDA in quarter 3 financial year '25 versus quarter 3 FY '24, are executed with a very robust control on cost and cash. We note with pride that the European operations are managing the acquisition of Stöferle, largely with internal approvals and will achieve early payback of the same. I will also have to explain and give you a status update of our important customer, KTM. As you would be aware, certain entities of KTM have filed for financial restructuring and the progress so far is very smooth. Ahead of the court hearing on 25th of February of this month, we have clear indications that KTM will soon start operations in second half of March, and we have started to get schedules. We are positive about the outcome, which is evidenced by our growing sales to the KTM entities in Austria and China. Our sales to KTM India are expected to grow close to INR 120 crores in FY '26 based on schedules, which we have got. We will also be starting sales of braking systems to KTM in India and overseas in the second half of the next financial year, which is FY '26. As KTM has often given us an opening for our advanced technology products, we also see opportunities for expansion of these advanced technology products to our other OEM clients. The major dimension of our business is our strong business partnership with Bajaj. While we are growing from strength to strength with all our OEM customers, our sales to Bajaj is always keeping pace with the quantity and quality of revenue earned. From financial year '22 to financial year, which is expected of this financial year, our sales to Bajaj have been growing at a robust compounded annual growth rate of 10.8%, in spite the high base and the content per vehicle, whereas sales to our other OEM customers have grown at a CAGR rate of 13%. Even in the recent quarters, if we remove the effect of commodity price changes, our sales to Bajaj have been growing every quarter in spite the vagaries of the external demand. The influence of our Bajaj partnership is very positively impacting our inroads into other OEM customers where we have been securing orders in all our product verticals. All the OEMs are introducing high-quality models into the market, ranging from the premium high-capacity motorcycles to budget-friendly models with drivetrains across various options of petrol, CNG and electric motors. We are happy to know that Endurance is figuring as a key partner in many such new offerings, and we are in various stages of winning orders and nominations with some orders already won. These are the precursors of the details, which I will now explain to you. These will clearly indicate our approach, which is towards keeping our growth continuing in various markets and demand situations. Now let me update you on significant expansion projects. We are making excellent progress at our AURIC Shendra 4-wheeler casting plant. The plant infrastructure is set to be ready by the end of February 2025 with the SOP, which is planned for June 2025. This facility will be a landmark in the Indian die casting industry being our first green building with zero waste to landfill. This plant will use 1,100 to 2,500 tonne fully automated die casting machines with advanced machining and finishing equipment. The state-of-the-art facility underscores our commitment to sustainability and innovation as we have discussed in our previous calls. For this plant, we have won business from 2 large global customers. We have won a machine casting order from Valeo with peak annual sales of INR 730 million as they localize an e-axle for a Mahindra EV. At AURIC Shendra, we have introduced India's first die electric powder coating service for electric vehicle platforms. The Shendra facility gives us an edge in tapping high-value opportunities in the EV segment. The other order is for a peak sales of INR 1.5 billion for export to a global renowned OEM with strong presence in the premium segment and the EV segment. We will discuss more details once we have the clearance to do so. Our AURIC Bidkin 2-wheeler alloy wheel Project 2 is progressing as per schedule, and we are excited about this as it widens our OEM customer base for 2-wheeler alloy wheels as we capitalize upon the growing demand of 2-wheeler alloy wheels in India. Speaking about a new future-ready R&D facility, which is for 2-wheeler, 3-wheeler and 4-wheeler suspensions, which we call G45 based on its address. We are on track to start this by March, April of this year. The existing R&D space will then be used for expanding our suspension manufacturing lines, ensuring we continue to meet the growing demand and help in profitable growth of our suspension business. The new R&D facility will be a game changer with a testing facility that is 4x larger than the existing one and office space 3x the size for a planned capacity of 220 subject matter experts and R&D engineers, which is 3x our existing team size. This expansion aims to leverage the fast-growing automotive market by enhancing our OEM customer trust, share of business and establishing our leadership in suspension technology. There will be advanced labs for innovation, electronics, benchmarking, road-load data acquisition, noise vibration and hardness labs, ride and handling, metallurgy and FMEA, ensuring that we can offer designs that not only meet but they exceed the global specifications. It will serve as a one-stop solution for promoting homegrown future-ready suspension technologies focusing on affordable innovation and value engineering. By internalizing advanced vehicle level suspension R&D and validations, currently done in-house by OEMs, it helps us to co-create and engineer win-win solutions, solidifying our role as a trusted technology partner to our OEM customers. Now I would like to focus on our product segments. Please note that the business value from new orders that I would disclose are without including orders from Bajaj Auto. Starting with suspension, I just spoke about the new G45 suspension R&D facility. In FY '25, so far, we have won orders to the tune of INR 1,413 million of peak annual sales. These are from various OEM customers and for the various platforms. These wins signify our increasing expansion within each OEM and augurs well for the increase in our content per vehicle. Needless to say, our zealous perseverance towards quality standards, quick turnaround of new products, value engineering exercises and strong governance standards are aiding this. Significant in the suspension business is our continued expansion of the inverted front fork business with wins of the TVS Apache model, Euro 250cc plus models amongst others. We've also won orders for e-scooters. On Braking, this is our most exciting segment, and we continue to enhance capabilities. We have won INR 1,710 million of new orders till date in FY '25 from multiple OEMs. With these inroads, we would now be supplying to every prominent 2-wheeler OEM in the country. Just reminding you that our capacities at present are 6 million 2-wheeler braking systems, 8 million 2-wheeler brake discs, 1.5 million 3-wheeler tandem master cylinders, 1 million 3-wheeler drum brake assemblies and 650,000 2-wheeler ABSs or the anti-lock braking systems. Key capability and backward integration projects will also aid in lowering our costs and better serviceability are also being implemented. Our range covers vehicles right from 100cc all the way till 800cc. We have also kickstarted a project to manufacture the 4-wheeler brakes. In transmission segment, in spite of increasing electrification, we continue to win new orders for our clutch assemblies. A couple of significant new wins are the clutches from Hero MotoCorp and Royal Enfield, which will help us to increase our annual sales of 1 million more clutch assemblies and increase sales value by more than INR 1,000 million in the next financial year. We continue to invest on the improvement in quality and performance of our clutch assemblies. We now have orders for our Adler technology assistance slip clutches. As far as the driveshaft transmission business is concerned, we have won INR 450 million of new orders in this year from 2 key OEM customers. Despite this being a new vertical with no 2-wheeler end use, we soon expect to hit an annual revenue run rate of close to INR 1,000 million per annum, including orders from Bajaj Auto. We expect to start SOP also of a 4-wheeler driveshaft in the next financial year. In our aluminum castings business, we continue to win orders in castings. These orders are across 2-wheeler, 4-wheeler and non-automotive business and also for the ICE electric vehicle business. I've already spoken earlier about the AURIC Shendra orders, which we have won. On the embedded electronics, we are accelerating the development of innovative mid- and high-voltage BMS platforms, which is Battery Management System platforms that cater to a broader range of market segments and geographies. Our XP safe and the HP safe products, which are under development, incorporate functional safety measures and draw on our existing XP platform know-how. The XP safe BMS platform addresses applicative segments ranging from cars, buses and trucks to grid scale co-storage applications, while the HP safe focuses on high-performance 2-wheeler, 3-wheeler and 4-wheelers as well as smaller backup and UPS systems. These solutions are in collaboration with semiconductor partners to offer cost-effective and reliable platforms for diverse market requirements and regions. Beyond the battery management system, we are in advanced phase for a suite of motor control and power electronic solutions. The expansion of our product lineup opens up opportunities with new OEM clients in both established and emerging markets, while simultaneously strengthening our business growth with existing partners. In the recent past, we have seen a slew of announcements by the 2-wheeler OEMs, including -- introducing the electric vehicle models. We have always maintained that our product range except clutch assemblies are EV agnostic, which is almost 96% of our range and used in both EV and internal combustion engine models. I will briefly touch upon our recent sales and order wins. Our sales to electric vehicles in quarter 3 FY '25 was INR 722 million, which is about 3.5% of our sales. This is close to double our quarter 1 FY '25 sales. We have won orders for electric vehicles from various OEM customers amounting to INR 9,631 million since FY '22. Now this is after considering the removal of INR 1,580 million of business wins from 5 electric vehicle OEMs who we don't feel, due to their financial issues, can give us this business. So INR 9,631 million is a net figure. This is across all our products with aluminum castings and brakes, which are leading with INR 4,273 million and INR 3,524 million business we've won, respectively. Suspensions orders stand at INR 1,305 million and transmissions at INR 529 million. We also state here that given the volatility of the markets, particularly for electric vehicles and the status of some of the OEM clients, we further tone down these numbers down for our internal business plans. We are also actively quoting and pursuing the request for quotations for an annual sale value of INR 32 billion from various OEM customers other than Bajaj. And across all our product segments, this also includes a significant percentage to -- for electric 4-wheeler customers. Our subsidiary, Maxwell, has also received orders to the extent of INR 2.5 billion. This value is after removing business from customers who have seen headwinds such as sharp fall in market share. You are aware that we have won large value orders in electric vehicle and hybrid space also at our European plants. Overall, we are well poised to make the best the shift in powertrains from ICE to electric vehicles. On the 4-wheeler front, Endurance is strategically working to capitalize on both the ICE and the EV markets with a focus on niche and proprietary products. One of our entry strategies is to enter into technical assistance agreements with global players, where we leverage expertise to enhance our offerings. We are happy to state that one such technical assistance agreement for 4-wheeler suspension has been signed last month with a leading Korean entity. This technical assistance agreement will give Endurance Technologies the complete capabilities to manufacture and sell shock absorbers and struts to a large range of 4-wheelers. We are pursuing opportunities to enter into joint ventures with existing global players and thus combine our strengths on technology, cost competitiveness and the growing Indian market. These pursuits at various stages of maturity, and we will announce the same as and when they are finalized. We are also tapping our own R&D capabilities to pioneer new solutions. To this end, we have and are modernizing and enhancing our R&D facilities at G45 to cater to the 4-wheeler requirements also. We have added to our skilled inventory and many subject matter experts to our roads in the field of our target 4-wheeler products. Our discussions with global leaders are advancing well, and we're optimistic about concluding business awards for 3 to 4 products within the next 6 months. This aligns with our strategy to increase the share of 4-wheeler as a segment in our total income. At present, our focus is on 4-wheeler suspension, 4-wheeler brakes, 4-wheeler driveshafts, 4-wheeler alloy wheels, while we continue to increase our 4-wheeler casting and aluminum forging business in the 4-wheeler domain. We are implementing several key strategies to elevate our presence in the aftermarket business. We have just embarked on a special project, which will span over the next 2 years to multiply our aftermarket sales. This is being done in collaboration with one of the top global consultancy firms. The approach is to operate all levers, namely the market spread, new product introductions, merchandising, exports and 4-wheeler products to achieve the targeted growth. We are revamping our distributor policy to ensure it aligns with our growth objectives and fosters strong partnerships. Our focus on retailers and mechanics is more targeted now with a focused milestone-based incentive plan while addressing critical pain points like inventory management to improve the service levels and satisfaction. We're actively identifying and planning to introduce new value-add products, which are trading products, areas for both 2 and 4-wheelers, expanding our product portfolio to meet evolving market demands. We are also targeting and aiming to increase our market share in high potential regions, both in India and our export countries by leveraging our understanding of the local market dynamics. Our efforts to improve product quality and market share and value-add products within our existing geographies are yielding good results, reinforcing our commitment to excellence and customer satisfaction. I would like to touch upon our order wins till date of this financial year. This is excluding Bajaj Auto. This year, we have won a total of INR 7,806 million of business, including the business win secured for our AURIC Shendra plant for 4-wheeler castings. We're actively pursuing, like mentioned earlier, business worth INR 3.2 billion, which are in the form of request for quotes in our hand. Out of the INR 7,806 million business won this year, our aluminum casting business led from the front and won INR 3,779 million of new orders till date this year. This was from various customers, including Tata Motors, Valeo, Ather, HMSI, Piaggio and others. On suspension, we have won INR 1,413 million of new orders, the OEM customers being Hero MotoCorp, HMSI, Kawasaki and TVS. I would specifically like to mention that 50% of this INR 7,806 million business, won till date this year, is for electric vehicles. Also, 40% of the INR 7,806 million business, which has been won is for 4-wheelers. Our brakes business won new orders of INR 1,710 million, which includes orders from Hero MotoCorp, Honda Motorcycles & Scooters India, Mahindra, Royal Enfield, TVS and others. On the transmission clutch assemblies, our order wins amount to INR 524 million in this financial year. We have also won substantial orders for our drive shops worth INR 450 million, mainly from Mahindra. It would be worth mentioning that we are moving towards supplying all our product segments to all OEMs. Further, close to INR 14 billion of new orders, won in the past since FY '21, are expected to have the SOP by this financial year and around a further INR 10 billion are expected to have SOP in the next financial year. At Endurance, our focus on people and work culture is absolutely important to our success. We have been actively rightsizing our organization pyramid to ensure agility and accountability. On talent acquisition, we are focusing on strategic workforce planning at all levels with a focus on gender diversity, which is at 20% of our total hiring. Our Winning the Women program is focused on empowering our women employees with workshops on self-care, self-awareness and financial wellness. Our potential management framework is robust, including development centers by top consultants, career discussions and mentoring high-potential employees for leadership roles. We also launched the [indiscernible] program, which is a capability building program for reskilling and upskilling program to prepare our workforce for facing future challenges. We also have a wellness and happiness programs by way of health talks, yoga and mindfulness, diversity mix to help promote physical, mental and emotional well-being. On the ESG front, we're actively working on a net zero target in collaboration with CII, aligned with SBTI guidelines. I'm happy to say that we have achieved a carbon-neutral percentage of 43% and are well poised to achieve our target of achieving a carbon neutral percentage of more than 50% by FY '30. The life cycle assessment for 5 products is in progress, conducted by TÜV SÜD. Validation of 6-0 waste to landfill sites are underway through an external agency. We have increased sourcing of captive solar power from the SPV that has been formed with Tata Power from since October 2024. The capacity at this SPV has doubled to 25 megawatts. We have achieved significant improvement in loading thermal and electric energy consumption, along with achieving 91% and 90% hazardous waste recycling. Through our CSR arm, which is the [indiscernible] Trust, we are committed to fostering sustainable development and mutual growth with our stakeholders with a special focus on education, livelihood generation, health and sanitation and environment. We have transformed 51 schools with solar energy digital literacy through our World on Wheels program, touching over 17,500 lives. Our efforts have led to higher attendance and better education outcomes with a focus on hygiene and health. We've empowered over 3,500 farmers with sustainable agriculture training and supported hundreds of youth through our eco vocation training center at Aurangabad by achieving over 75% employment for nearly 1,800 youth. Our health program has reached 42 villages, treating over 15,000 people, and we have built over 2,300 toilets to improve sanitation. On the environment front, we have enhanced water storage capacities to canal deepening and created lush biodiverse forest across 38 acres, planting over 300,000 trees. I would also like to mention some of our special projects. Our Balwadi school project in Aurangabad is nurturing the young minds of underprivileged children, while our [indiscernible] project will celebrate the art of handmade paper. The [indiscernible] revival project is a tribute to ancient [indiscernible] offering new opportunities for viewers. On the awards front, I'm happy to tell you that our IPR team has won the CII Intellectual Property Award in 2024. Our 2 brake plants have secured Platinum and Gold quality awards at the recently held Bajaj Auto [indiscernible] Meet. And recently, on the 11th of this month, our company won the Innovation Award at the Mahindra Meet. I will now talk about our European operations. The story there has always been one of capable business leaders, intelligent investments and strong balance sheet management. We achieved growth in sales and also in profits in spite of flattish market in Europe in quarter 3. In this quarter, new orders to the tune of EUR 12.4 million were won. This included large orders from Volkswagen and BMW, both in the hybrid segment. As mentioned earlier, Stöferle acquisition will give us up to EUR 80 million in sales and EUR 15 million to EUR 16 million of EBITDA. This gives us significant strategic advantage when we acquire a profitable company like Stöferle and that we get access to a larger OEM customer base. Also, the key skills and capabilities of Stöferle will give us significant synergies and has major growth opportunities for us in our German business. The German region experienced inflationary pressures due to high energy costs, which the management is finding mitigation actions for. Now coming to financials. The quarterly information has been uploaded at the Stock Exchanges last evening, along with our presentation explaining the numbers. I will, however, highlight some key numbers. During this quarter, the company performed well and turned in revenues of INR 21.9 billion and INR 28.8 billion for the stand-alone company and the consolidated company. This translates to a year-on-year growth of 9.2% and 11.3%, respectively. The company earned a profit after tax of INR 1.57 billion and INR 1.84 billion for the stand-alone and consolidated company. This is a growth of 18.5% and 21.1%, respectively. This expansion of margin is achieved through lower material costs in India, and lower other costs in Europe. It is important to note that our European companies have defied many odds to post an impressive year of -- impressive year-on-year growth of 21.2% in quarter 3 revenues and a growth of 26.7% in quarter 3 EBITDA. I would like to also mention specifically that our consolidated earnings per share has more than doubled from our IPO year, which was FY '17 of INR 23.48 earnings per share to INR 48.38 earnings per share in FY '24. Further, for the trailing 12 months, the earnings per share is at INR 56.97. With these opening remarks now, I would like to invite questions from all of you. Thank you.

[Operator Instructions] We'll take the first question from the line of Aditya Jhawar from Investec.

So my first question is on the suspension. So congratulations on the big breakthrough and suspension. Can you just talk a little bit more about it in terms of the tech tie-up that we have done? The outcome of this tie-up can be used for other OEMs as well. And if you can give some time lines, order size and CapEx required for this project?

Yes. So I think I will request Mr. Rajendra Abhange, our Director and CEO, to speak on this topic. I think he will give a better view as he is in touch with all the customers. So Mr. Abhange, can you throw some light on the 4-wheeler business of suspension with this new technology agreement we have with the Korean company?

Yes. So Aditya, first of all, thank you for asking this very relevant question. And I think the investor community has always been very curious that what do we do in the 4-wheeler proprietary product line, where our presence was different there so far. So this breakthrough of getting into suspension has happened very recently. We have a global company who is having diverse interest other than suspension as well, but they are market leaders for one of the largest car manufacturers globally. And we have been able to make a deal with them in terms of providing end-to-end product technology. You see the suspension for 4-wheeler is a very complex product. The entire vehicle stands on this particular part, and it is supposed to do many things other than absorbing shocks, okay? It's also supposed to do the vehicle dynamics. And this high-end product technology is only possible if we have a very formidable partner. And we found one company in Korea. And this news is very exciting for most of the OEMs. Wherever we have gone, they have been very happy about it. The space is -- suspension space in India is very less crowded. There are not many players, hardly 1 or 2 players are there and, that too, OEMs are looking for very formidable companies who can offer products that are affordable and they are also world-class. So the current status is that the license agreement has been signed successfully and OEMs are offering us the tech review discussions that are going on. Our team is very busy in finalizing the product configuration. And if all goes well with them in terms of commercial and technical commercial side, we are going to set up a greenfield facility very soon, which will be probably India's finest shock absorber company. That much I can assure to the investor community.

Yes. So just -- so as of now, we are in discussion stage with OEM for orders. And the greenfield facility, any CapEx that you would like to talk about? And where would it come? Would it be Chennai or any other part?

Mr. Jain probably can answer the facility in the event I would like to tell.

No, no. See, we have finalized the location, but I think I may talk about that in the next call. We have finalized it. We have the land also for it. And there are certain things ongoing. As we have not told the customers yet, okay, we have maybe mentioned it. Once we finalize the customer the location, then it's the correct thing to tell you.

I understand. The second question is on Maxwell. So the performance has been quite encouraging, both on a growth and profitability perspective. So if you can throw some light on what kind of customer base currently we have? And any new addition in customers that we have seen recently? And what is the plan of ramp-up of Maxwell business in the next 1 to 2 years?

I will request Mr. Raja Sastry to throw light on this.

Aditya, we have been focusing very closely into Maxwell's operations. And what the most important thing we have been doing is -- the R&D function of Maxwell has a significant level of product in their pipeline, which cater to a varied range of applications. And as you see right now -- what we now see is that there is an improvement in the results of the company. We are focusing on projecting this product range, which go for multiple customer configurations and which have enhanced safety in them. Right now, we have only 1 or 2 customers to whom we are supplying on a mass production basis. But the quotations to a wide range of customers who produce 3-wheelers, who produce 2-wheelers is in its various stages of becoming commercial businesses. That, along with the motor control unit, which we spoke about earlier, and some ventures which are allied to the battery management systems are also in progress right now. And we do see good interest from some customers on these product lines, and we should see growth going forward. And as and when they become mature, we will be very happy to make that announcement.

Yes. That's quite helpful. My final question is for Massimo. Europe performance was pretty solid, very, very encouraging to see the trend. If you can talk about what -- any new incremental orders that came for execution in this quarter? Or if you can just explain the reason of such a strong performance in Q3? And if you can particularly talk about the outlook for our European business and overall industry for the medium term, that would be good.

Okay. So the situation in Europe in terms of the market is not very good. As you know, the demand is very weak. 9 months, the volume has been stable compared to the previous financial year. But let me say, in Endurance, we are in a different position, thanks to the acquisition of the last 5 years. Please consider that we acquired EUR 244 million. We invested EUR 160 million in the last 5 years. So the future from my point of view is absolutely positive. I'm optimistic for the next quarter. We grew double digit in the past 3 quarters, and the expectation for the future is more or less the same. For sure, the acquisition of Stöferle can enforce our position with our customer because it's absolutely strategic. And let me say, I want to underline that this acquisition is part of the strategy started during the COVID period as Ingenia acquisition. It's not a decision of the last 2 months. And let me say that the process of acquisition is not finished. Every month, starting from 2022 with our colleague in India with [ Rajendra, ] we have had several meetings to discuss acquisition process, to reinforce our product and customer portfolio. And in parallel, every month with [ Rajendra ], we have several meetings now also for sure with Ingenia to share our expertise with our Indian plant and to quote profitable new business for Europe and also for India. We don't want to lose opportunity to grow. This is the reality. And let me say, you will see in our new plant in India for automotive and automotive components, we are installing high level of technology and automation, state-of-the-art technology. And this is due to the acquisition that we have done in the last 5 years in Europe. And I repeat, this is part of the strategy that started during the COVID period. This is the only reason why Endurance, in this moment, is performing very well compared to the previous year. Please, I want to underline that we closed the previous quarter with 21% of increase of turnover, 27% of EBITDA and 17.5% of net results. And these are results that possible only because we acquired a lot of business in different segments. When we acquired 5 years ago, 7 years ago, business in the electric, everybody told me you are crazy. But now on top to the existing product range in the internal combustion engine, we are performing very well with a high level of profitability and with a level of technology that is not reachable for everybody because you have to spend a lot of money. Please, I underline EUR 160 million of investment in the last 5 years. I've not seen that. So let me say, I'm absolutely optimist for the future month and for the future quarter.

We'll take the next question from the line of Jinesh Gandhi from AMBIT Capital.

My question pertains to, firstly, on the 4-wheeler suspension agreement, which we have done. So there would be [indiscernible] customer in form of Korean OEMs. Just any inputs on whether that anchor customer will -- is currently having single source of supplies for suspensions or -- and we'll be getting a second source supplier? Or how should one think about that?

See, we will definitely be a second source supplier unless there are some new models looking at how we do in performance in future. Right now, definitely, the customers we enter in India will be as a second source.

Okay. So they currently only have a single supplier, of course.

Yes, yes. Yes.

Okay. And secondly, you also talked about the 4-wheeler braking business. So any inputs on who is the technology partner? And how should one think about the ramp-up in that segment as well because that, again, is a very large opportunity?

So I think this -- maybe as we go along, we will share more and more data, but we will definitely, I think, start the brakes business, maybe our target is the last quarter of the next financial year, but because it takes time for testing and development. But that is something which is already at an advanced stage, and that's going to happen for sure.

And do you have a [indiscernible] this is...

Jinesh, your line is not very clear. Can you use your handset mode, please?

Sorry, I'm on handset mode only, but yes, sir. So is there any technology partner for 4-wheeler braking or we have done it in-house?

The technology for the high-end braking systems will come from BWI, who is already our partner, as you know, for the 2-wheeler ABS. So they will be the partner, and we've already talked to them. So we are at a very advanced stage for that.

We'll take our next question from the line of Shagun Beria from Anand Rathi.

Congratulations on a good set of numbers. So on the recent acquisition of Stöferle, can you just help us understand and elaborate more on what this acquisition brings to the current business in terms of products, technologies and customers? And also, how should one look at the revenue growth for this entity over medium term and also the EBITDA and PAT profitability?

Okay. Sure. So I will request Mr. Venuti to answer that question. It's for Stöferle.

Okay. So first of all, on 12th of December, we signed the SPA with the Stöferle family. Now we are waiting the confirmation from the authority of antitrust in Europe because this is a strategic customer -- supplier for our customer. And so as I told you before, as Endurance, we reinforce our position in one of our major customer in our portfolio. And so we are waiting the answer from the authority. But I presume that within the end of this financial year, calendar year, we can reach the closing. The company is a strategic competitor of Endurance, was a strategic competitor of Endurance in the transmission component. And they have a high level of technology due to the fact that they produce the machine. And so it means that this is absolutely important for us because, as you know, we invested a lot of money in the last period of time, starting from greenfield with new projects. And now inside of our company, we will have also the expertise to reuse the existing production capacity. This is absolutely strategic for us in parallel with the acquisition of Ingenia that can improve the automation in the process. The company has, as Mr. Jain told you, a total turnover of EUR 80 million and an EBITDA that is more or less 18%, 20%, EUR 15 million, EUR 16 million of EBITDA. The company was absolutely cash free. And the acquisition will reinforce our position in Germany that is becoming a market very difficult because you can be competitive only with high level of volume. And the portfolio -- the product portfolio of Stöferle is very similar to the existing portfolio of Endurance. It means that they are, in 60% of their product range, sole supplier and in the rest, 40%, they are -- they were a competitor of us. And so it means that we reinforce the product portfolio, and we will increase our sole supply chain with our customers. We will become sole supplier for 80% of our product range in Endurance. This was the strategy, and this was the reason why we decided, as I told you 3 years ago, to focus in the potential acquisition of the company. For sure, now the moment is the correct moment, the right moment also because the family Stöferle understood very well that in this world, the only possibility to survive is to make synergy with a strong partner. And they are very happy because the feeling with the team in Germany, in Massenbachhausen and in [indiscernible], the new plant is absolutely positive.

Okay. That's helpful. My next question is on the improvement of the gross margins quarter-on-quarter despite lower state incentives. So you had mentioned earlier that INR 80 million state incentives will be provided for H2. Will that be booked in quarter 4? quarter 4?

Actually, we couldn't -- we couldn't hear you clearly.

Yes. Am I audible?

Now it's better. Question, continuing to Massimo, on this margin getting added in Q4, right?

Yes. So basically, the state incentives that you had mentioned earlier to the tune of EUR 80 million, would that be booked in Q4?

So we are at a stage where we have submitted our applications and our documentation is complete. We are waiting for the eligibility certificate from the government. And it will be subject to the receipt of eligibility certificate that we would book any amount in Q4. And I can only tell you that our applications are complete, and we are at an advanced stage, but we have to wait. We'll Let you know -- once we get it, we'll let you know.

Okay. Got it. My next question is about the TLA that you mentioned with the Korean player for 4-wheelers and suspension. So can you talk about this partnership as we didn't have much presence in 4-wheeler suspension? And which are the key customer wins that are expected from this TLA?

I will request Mr. Rajendra Abhange to speak on this. But the customers, we are not allowed to mention the names yet. We are sensitive to it because of the competition. So I cannot tell you the customers, but Mr. Abhange can tell you about the relationship, technology, I mean, whatever he can say.

Okay. Thank you. Once again, I really appreciate the investor community's interest in the suspension business, which we are going to get into. This Korean partner is -- has been handpicked and identified with a lot of internal deliberations that who is the right company who can work with us in India and provide the niche and affordable technologies. You see India market in 4-wheeler is very cost competitive. And we have to be mindful of the fact that we cannot bring something which is a rocket science, something that will not sell in the country. The average price of a car in India is close to $10,000, which is very, very low. But the demand of the products are extremely high. So in order to meet such diverse requirements, we needed a partner who is actually going to help us in meet these requirements. There are already some formidable players. I think one player is definitely very strong in India. And as Mr. Jain has said, we will see the second source in most of the OEMs in India to start with. But let me tell you, that for the new platforms, we will get RFQs very soon, where we will be the first supplier. And this company's name is so formidable. The OEMs have absolutely no hesitation to work with Endurance. Does it answer your question?

Yes. Yes, that does. Just my last question. Can you also talk about the new large orders [indiscernible] to INR 2.4 billion for e4-wheeler applications from the likes of Valeo and Yazaki.

Yes. You are talking about our new project, AURIC Shendra, which is starting in June '25. So this plant, the orders which we have got is from Valeo and there is, of course, a very large customer whom we cannot name, which we've got a INR 1.5 billion business. And as we talk, we are talking to others. And as we get the orders, we are allowed to speak about it. We will talk about it on these investor calls. We are at advanced stage with even other customers. So right now, the business, which has been won for the AURIC Shendra plant is INR 2,200 million, and this will be increasing because we have targets. And of course, our focus was to get into customers we don't have, exports, try and improve our profit margins in the casting business. And we are very, very excited about this move because we are a very strong player. As you know, we are buying almost -- I mean, we produce -- I mean, look, we need almost 120,000 metric tons of aluminum. We are the largest in the country as far as aluminum die casting is concerned. We need strong engineering capabilities, tool room. This Mahindra award we got for innovation is we -- which is 2 days ago, was on the hydraulic lifter, which is used behind the tractor. And it used to be a casting part. I think it was 30 kg. We have lowered the weight to, I think, 4 kg, 4 or 5 kg; huge saving, getting new opportunities. So we are looking at our strengths, we are very excited to be in this -- in the new area, new customers, export customers, higher profit margins. I mean -- so I can only tell you that this is a very high focus area for us. And see, luckily, these orders, like I said, are mainly for EVs. That is an exciting part. And so we are in a very good space. And so you will see -- so as we go along every quarter, we'll share more and more with you.

We'll take a next question from the line of Pramod Amthe from InCred Equities.

So in continuation of the same e-axle discussion, sir, I wanted to understand because traditionally, the conventional transmission used to be made by 4-wheeler companies in-house. So this completely opens up a new opportunity for you because of EV, one; second, what is the content you are supplying to the e-axle because -- what type of parts you have won? And what is the scope of expanding this content within the e-axle because many of the players are yet to localize e-axle in India.

No, I would like to clarify, we are not going to supply the e-axle. We're supplying die casting machine parts for the e-axle to Valeo, who will supply the complete assembly to the Mahindra EV. So ours is still an aluminum casting business. It is not an e-axle business. And so just to clarify, we are not getting to e-axles. We are [indiscernible] aluminum die casting supply to e-axles to Valeo, which is the supply to Mahindra for the e-axles.

Yes. But at least earlier, all these things to be in-house. So people used to do it even those castings in-house. So hence, I thought -- but is there a scope for you to move up considering the aluminum content is higher?

There's a tremendous scope. All the customers we are getting into, the scope is just tremendous. You can't imagine. And metals, the best part about metals is -- to be in a metal industry, I had mentioned in the past calls also, whether it's EV, it's ICE, it's hybrid, there's a huge requirement because aluminum is a light-weighting material. And why we went into more of export-oriented and these kind of models is because we want to increase our margins in the aluminum casting business. In fact, our focus is, if we can be higher than proprietary business. I'll be very honest about it.

And sir, further to this 4-wheeler suspension, considering that many of the 4-wheeler OEMs are very closely working with their own country-based partners and India is more ruled by Japanese than the Koreans. So does it restrict your market presence, the suspension, which you'll be addressing because of your partner?

No, I don't think so. I don't think so. I mean we are very optimistic. We are in touch with many companies, including also are Japanese. So we'll make all efforts to see that we can make inroads based on our cost competitive technology products and the performance which we will offer. So we will do our best to see that the Korean entity doesn't come in the way of companies.

We'll take the next question from the line of Jinesh Gandhi from Ambit Capital.

Yes. Mr. Jain, my question was regarding ABS for 2-wheelers. Can you talk about the progress with respect to how is acceptance of our product with customers beyond Bajaj and RE in the sense that where are we in terms of RFQs and testings in those states?

I will not give you the customer names.

No, that's fine.

But I can tell you Bajaj and Royal Enfield have been our historic customers. And we are in touch with all the existing OEMs. But I can only tell you there are 2 other customers we are in very -- at quite an advanced stage. And that's more for the [indiscernible] channel, of course, it's there as well as single channel. We want to launch a dual channel ABS, which we hope to do, if not in this quarter, but in the next quarter, will be in FY '26 quarter 1.

Got it. Got it. And second is, any debt, which that company has?

Sorry?

Debt at Stöferle?

So what is your question on Stöferle?

Does it have any debt on its book?

It's got no debt.

As I told you before, the company is cash free. The agreement is to buy the company without cash and without debt. I told you this is one of the most profitable company in the European market. We are seeing about, as I told you, EUR 15 million, EUR 16 million of EBITDA considering EUR 80 million turnover for sure, due to the fact that they do only machining. But as you know, machining for us is the added value of our process. And in the future, we will decide for the potential verticalization also with the high pressure die casting component. But we will buy the company without financial debt.

Ladies and gentlemen, we'll take that as a last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

Yes. No, thank you very much. No further comments. I mentioned -- I mentioned that in my opening remarks. So I want to thank everybody for their time on this call. Thank you.

On behalf of Axis Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.