Ladies and gentlemen, good day and welcome to the Endurance Technologies Limited Q2 FY 2025 Earnings Conference call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. 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.
Thank you, Del. Good morning, everyone. Welcome to Q2 FY 2025 post-results conference call of Endurance Technologies. We are pleased to host the entire management team of Endurance. We have with us Mr. Anurang Jain, Managing Director, Mr. Massimo Venuti, Director and CEO, Endurance Overseas, Mr. Rajendra Abhange, Director and COO, Mr. Rajagopalan Sastry, Group CFO, and Mr. Raj Mundra, Treasurer and Investor Relations. I'll hand over the call to Mr. Anurang Jain for his opening remarks, post which we can have the Q&A. Over to you, Anurang.
Thanks a lot. Good morning to everyone. We thank you for joining us and appreciate your time and interest in our company. You may have seen from our financials that we had a fairly strong quarter two. India is expected to post a GDP growth of over 7% in FY 2025, on a strong base of 8.2% growth in FY 2024. For Q2, Indian two-wheeler numbers were strong, but four-wheeler numbers both in India and Europe were not. The quarter two volume sold by Indian OEMs rose 13% year-on-year for two-wheelers, with scooter growth at 17% and motorcycle growth at 11%. Three-wheeler sales grew by 5%. On the other hand, the commercial vehicle volumes fell 9%, and passenger vehicle volumes saw a drop of 1%.
I would now like to highlight the progress on a few strategic and operational actions taken, which have a strong bearing on our short, medium, and long-term performance. To begin with, I will explain our recent expansions taken up. We had mentioned that we are constructing a factory in the AURIC-Shendra industrial area, focused on four-wheeler and non-auto machined aluminum castings. The construction is progressing well. There is a very good interest from four-wheeler OEMs, both in domestic and export markets, and a few non-auto plants. This is evident from the large quantum of customer pre-qualifications and requests for quotes and our order intake. This progress makes us confident of meeting our business plan for the investment we are doing. You would have also noted our recent announcement on the new factory to manufacture two-wheeler alloy wheels in the AURIC-Bidkin industrial area. That is also in Aurangabad.
We are particularly excited about this project due to the success of our alloy wheel plant in Chakan, where we have seen profitable growth with volumes growing almost fivefold in the last five years. This project will double our volumes from existing volumes at our Chakan alloy wheel plants. Moreover, with key learnings and targeted operational improvements, including automation in the new AURIC-Bidkin factory, we are expecting a good profitable growth. It is important to note that only half of the 30-acre AURIC-Bidkin industrial land will be used for this two-wheeler alloy wheel project, and the rest will give us headroom for expansion. It is encouraging for us to see that automotive companies like Toyota, JSW, and Ather Energy are setting up greenfield plants also at the AURIC-Bidkin industrial area.
I would like to mention that as far as the sales to electric vehicle two-wheelers are concerned in quarter two of FY 2025, it has almost doubled to INR 739 million in quarter two over quarter one of this financial year, which was at INR 391 million. Our CAGR growth in the last three and a half years is 236% as compared to the electric two-wheeler industry three and a half year growth of 147%. This is as per the Vahan data. This growth in our sales is across all our product segments, including suspension, aluminum castings, braking, as well as alloy wheels. I will now speak on some important operational topics. First, I would like to speak on suspensions. In the past, we had mentioned about some of our suspension plants not running to full capacity.
With higher sales to our anchor OEMs in these plants and fresh orders for other models from various OEMs, the capacity being used is rapidly increasing, and at our Sanand and Halol plant, it is being almost fully used. At Waluj, our plant's capacity has been fully used, and now we are further expanding to service a large suspension order for Suzuki scooters for INR 1,650 million per annum. The SOP is planned from January 2025. The best Industry 4.0 tools are being deployed in these assembly lines. Last year, the design and development team of Endurance successfully developed a 48-millimeter diameter inverted front fork for a major European client. This is the largest diameter front fork being used worldwide and help us in our future growth. In our suspension business, we continue to undertake various projects to help in our profitable growth.
We have spoken to you in the past about our backward integration through aluminum forging. We are also engaging other levers as value engineering, right sourcing, and process innovation to lower our cost and remain competitive. Now, moving on to our braking segment, which shows a robust improvement in every dimension, namely scale, operational parameters, cost competitiveness, order acquisition from multiple OEMs, and increase in our share of business. These are our key strategic strengths. The total income from our braking business doubled in just two years from INR 5,950 million in FY 2022 to INR 11,610 million in FY 2024. The higher demand made us set up a second brakes factory at Waluj Industrial Area. The new factory has now reached close to peak volumes within two years of SOP, and now we are undergoing a further expansion.
Since we began the manufacture and sale of the single-channel ABS in September 2021, we have around 700,000 numbers of such ABS ensuring rider safety on the roads. The two-channel ABS is also at an advanced stage and is expected to start SOP in quarter four of this financial year. The manufacturing of brake systems and disc brakes is constantly being upgraded to improve our cost competitiveness, improving the product offering, and its applicability to the premium segment of two-wheelers. Some of the recent improvements are advanced heat treatment for brake discs, in-house manufacturing of ABS valves, as well as stainless steel-braided hoses. These both are in-house substitutions, and also the launch of our Grimeca brand brakes in the premium segment of two-wheelers.
Our technical capabilities are constantly being improved with enhanced R&D, collaboration in testing, and hiring of experts in braking, who are engaged, among other things, in the development of the ABS ECU, which is the electronic control unit for in-house manufacturing. Importantly, an advanced braking system development activity has been started jointly with one of our European OEM clients, which will help us to offer the best technology in braking systems both to Indian as well as our overseas OEM clients. Also, for enhancing our brake steel-braided hoses technology, we are setting up a facility for the same in-house at our second Waluj brakes plant, which will give us additional brake assembly orders for exports overseas and for Indian OEM requirements. And this is expected to start SOP in January 2025.
In the transmission product segment, several OEMs are upgrading their clutch technologies to the assist and slip technology, which is of higher value add and will contribute to our profitable growth. For the assist and slip clutches, we are offering technology from a European subsidiary Adler, with localization of the parts in India. This SOP will start in quarter four of this financial year. As far as our transmission drive shaft business is concerned at Waluj, the capacity is now being fully used. We at present manufacture for three three-wheeler OEMs and are targeting orders from two more OEM clients. We continue to maintain being a leader in the machined aluminum die casting business. In our Chakan castings plant, we are constructing a new building to cater to four-wheeler machine casting requirement. Here we will see improved quality standards and cost optimization because of automation.
We have also put an unmanned machining line for a four-wheeler application. A recent exercise of improving processes using TPM philosophy and other productivity tools is underway, and we are already seeing operational efficiency improvements. Our strategic venture into electronics is slowly gaining traction, and this quarter witnessed certain turnaround events. Our battery management system uptake by a key OEM client has picked up, leading to significantly improved financials for our subsidiary Maxwell and better use of our surface-mounted technology line we have set up for BMS at our Waluj plant. Further, our pursuit for electronics business other than BMS is also progressing well. I will now touch upon our order intake, which was part of our presentation that was uploaded last evening.
Our order wins and requests for quotes where we are targeting new business is a testimony to our market leadership and ability to increase our content per vehicle in several models across OEMs. In the last six months, we have valued INR 3,082 million of non-Bajaj orders, bulk of which are new orders. Only INR 334 million of these orders are of replacement nature. With this, the new orders booked over the last four and a half years have reached INR 29,268 million, which should reach peak in FY 2027. These orders involve diversification of our customer portfolio and expansion of our share of business with all the OEMs across our product range.
The major orders run till date in this financial year are for the Hero MotoCorp brakes business, TVS brakes business, Ather Energy battery parts aluminum casting business, and Generac USA aluminum casting business for their stationary engines. We are in the process of submitting our quotations for business totaling INR 22,153 million. In quarter two, Bajaj Auto, our major customer, has shown a healthy growth in volumes, both in two-wheelers and three-wheelers, and we also had a good growth in our sales, which was experienced by the use of a better premium product mix, especially in the areas of suspension and braking. Coming to our focus on ESG, Endurance is striving for being carbon neutral through solar and wind power and driving tree plantations. We are also seeing increased use of natural gas and LPG in lieu of diesel and furnace oil.
We have reached a carbon neutral percentage of 35% till date in FY 2025, and our aspiration is to reach a carbon neutral percentage of more than 50% by FY 2030. We are also focusing on lowering hazardous waste generation, achieving zero waste to landfill, improving water recovery percentage, and lowering resource consumption per unit of sale, not only in our plants but also in the value chain. On the social front, our focus and emphasis is on human capital management, labor practices, health and safety, and talent diversity. We are happy to induct in our board of directors of Endurance and its two direct subsidiaries in Europe, Mr. Alfredo Altavilla. He is an independent director. He is an industry stalwart with a commendable track record, serving in senior roles, including board seats in global automotive companies such as Ferrari, Texa, and Chrysler.
I also take this opportunity to thank our earlier independent director, Mr. Roberto Testore, for his contribution to Endurance in his role as an independent director. Endurance Technologies has been recognized by its OEM clients, its customers, and industry forums with several awards and recognitions. Some of them are the Best Delivery Management Award from Honda Motorcycle and Scooter India in 2024, Persistent Affiliation Award from Piaggio in 2024, the Value Engineering Award from Royal Enfield in 2024, and the Ford Q1 certification for the die casting and machining plant at Chakan in 2024. We are also making good progress on executing our strategy for growth, which focuses on firstly to further strengthen our presence as a two-wheeler tier one supplier, which at present is our core business in India, by supplying multiple products to all OEMs with high share of business.
Also, by improving the product mix, we are providing more high-value parts in this space. For example, paper-based clutch assemblies, the new assist and slip clutch assemblies, inverted front forks, rear monoshocks, single-channel and dual-channel ABS, machined castings, structural parts, and components for premium two-wheelers. Secondly, to increase our four-wheeler share of business from existing percentage of 25%-45% by FY 2030. I spoke to you earlier about the progress of our four-wheeler marketing team, which has made the new orders and added queues for our new AURIC-Shendra aluminum machine casting plant. We are also targeting entering into the four-wheeler drivetrain products. We are expanding our aluminum forging unit, where we will target more four-wheeler business. In view of products required by four-wheeler OEMs, we are adding an advanced friction welding technology in our aluminum forging plant. This is to supply to four-wheeler OEMs.
For products such as suspension, brakes, alloy wheels, where we are a leader in the two-wheeler space, our pursuit is to offer technology-intensive products now to the four-wheeler OEMs through technology agreements or through M&A or through joint ventures, which is progressing well. Our aim is to continue to grow our Europe business, which in any case focuses on four-wheeler, both organically and through M&A. Thirdly, in aftermarket, our focus is on further growing our distribution network, reaching out to retailers and mechanics with use of digital technologies, excelling in order fulfillment, and lowering the proliferation of spurious parts. We have also expanded to vehicle models where we do not serve the OEMs. Our success in these products puts us in a position of a ready choice supplier for these OEMs.
In the export markets, we aim to add new countries, expand our dealer network, target growth in each country for each product segment, and expand the product offering. In Europe, we intend to grow our aftermarket business in the two-wheeler space with our subsidiary companies, Adler, Frenotecnica, and Newfren. Fourthly, we will keep an eye on the pace of electrification in different vehicle segments and different markets. Our strategy is to ensure good order intake for the EV and hybrid segments, particularly in the areas where electrification is rapid. Finally, we are invested in electronics through acquisition of Maxwell and our investment in the surface mount technology line in Waluj in our Waluj plant and for our ABS electronic control unit requirement. We also have electronic control damping and suspension.
With greater use of electronics in our existing and future products, we will continue to invest in and launch new electronic applications. In Europe, in the first half of FY 2025, we won orders for peak annual sales of EUR 23.6 million. This includes machine castings for the BMW EV transmission of EUR 10.5 million and assemblies for the Volkswagen EV castings of EUR 7.6 million. Further, we have won orders for EUR 1 million of finished aluminum castings from a non-automotive client. Our European business has stood strong in spite of headwinds in the form of pandemic-induced lockdowns, extremely high energy prices, and low vehicle sale volumes due to demand or supply chain issues. Our focus on serving the OEM customers through product development, quality, competitive pricing, and professional service has been unwavering. Internally, we are focused on making ourselves financially stronger and more diverse.
Our OEM customers see this as a strength for their supply chain. With new orders and increasing market share, Endurance's Europe business is well placed in terms of combating the adverse market conditions. Now, coming to the financials, the quarterly information has been uploaded at the stock exchanges last evening, along with our presentation explaining the numbers. I will, however, describe a few key data points. The quarter witnessed a strong performance on all parameters. Our standalone and consolidated total income grew to INR 23.2 billion and INR 29.4 billion, respectively, which is a 16.8% and a 14.8% year-on-year growth. Our standalone and consolidated net profits grew to INR 1.85 billion and INR 2.03 billion, respectively, which is a 29.7% and 31.3% year-on-year growth. Our profit after tax percentage growth, which is twice the total income growth, reflects a healthy expansion of margins.
It is important to note that our European subsidiaries in euro terms achieved a total income growth of 6.5% and net profit growth of 12.8% versus the same quarter last year, which is commendable given the market scenario in Europe. Now, with these opening remarks, I would now like to invite questions from all of you. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead.
Yeah, thank you, sir, for the opportunity and happy Christmas to the management. Sir, can you provide some more details on how do you see the revenue ramp up for the new AURIC plant with the starting from the next year? And any details on what kind of products we are targeting? Also, on this, can you add for the four-wheeler segment you mentioned about the drivetrain products and forging aluminum forging opportunities? Can you share more on how do you see the revenue transition for these new products?
Yes, definitely. Sure. See, as far as the first project we had announced was for the four-wheeler aluminum machine castings as well as the non-auto aluminum machine casting, which was in the AURIC-Shendra area at Chhatrapati Sambhajinagar. And this plant, already the construction has started.
We are targeting that by second quarter of next financial year, we are able to manufacture aluminum die casting with machining for both overseas as well as Indian OEM clients, including non-auto clients. Now, we are at a very good stage, and that's why I said we are progressing well. I'm not allowed to give the names of the OEM customers to you because there are some NDAs we have signed. But we are at a very good stage of having one certain orders, some orders, and progress. And that's why I said that we are quite confident that we will meet our business plan in the next three years, which we have planned. And this business plan sales will start from, in fact, it will start from the next financial year, which is quarter two of FY 2026.
So I will not be able to throw much light on the customers, but the product, large aluminum die casting parts of various types, is for automotive, four-wheeler, as well as for non-automotive. And this is our focus towards the four-wheeler growth. On the second part, as far as the second project is concerned, which is on the two-wheeler alloy wheels, this is because we have a capacity of 5.5 million alloy wheels in our Chakan plant in Pune. And there's a huge demand for these products. And that's why, looking at the pressures which are there, we are putting up another plant of about 4.5 million wheels per annum. And this plant is going to start in September 2025. So these are two plants which will really add to our proper growth.
And it will really, I think, also increase our sales quite substantially. Now, which was your other question was on the drivetrain?
Yeah, drivetrain and aluminum forging, sir.
Yeah, as far as the aluminum forging is concerned, the history is that we have started as a backward integration required for our inverted front forks, which is there, and it's been a game changer, I said. Also for the rear monoshocks, where you have a hydraulic preload, this adjuster casting required. These are all import substitutes. But once we started this, we are finding a lot of interest from the four-wheeler OEMs, also both for India as well as export, as well as for the two-wheeler also. So this plant is rapidly expanding, which is in Aurangabad, which is, I mean, Chhatrapati Sambhajinagar. This will do quite well. I mean, and the margins are also quite good.
This is a very good growth. It's a strategic one for our inverted front forks, rear monoshocks. But now we are seeing opportunities to directly supply to two- and four-wheeler OEMs both in India as well as export. And we also won some orders, but the details of the customer, I don't know whether we have mentioned it. No, we are not supposed to. Okay. So I cannot give you the name of the customer. As far as the drivetrain is concerned, I'll request Mr. Rajendra Abhange, our director and COO, to speak a few words on that.
Yes. So first of all, thanks for asking more information about our journey into four-wheelers, specifically what you talked about, the drivetrain products. You see, drivetrain is considered to be one of the most critical components of any four-wheeler.
We have chosen to be in this space, taking into account that we have good experience already in two-wheelers and three-wheelers. Three-wheelers, we already make these kinds of products. Without mentioning the name of the customer and without mentioning the exact product, I can only tell you that we are in very advanced stages of making commercial production for these kinds of products early next year. All the CapEx and everything is in the pipeline. And once the SOP and LOIs are in place, we will make it public probably next quarter. It's not just one product in the drivetrain. There are multiple products, which also involves high-precision mechanical components as well as electronic components, which have got programs and the software inbuilt into it. This is all for the modern generation four-wheelers, which are being produced in India.
Perfect, sir. This is really helpful, sir. Is it possible to share what kind of CapEx we are doing for this aluminum forging and the drivetrain products, sir?
You see, it is a running CapEx. Okay, I will get back to you with an answer. Will I just give the answer in general afterwards? I'm just asking or do you have it? Okay. Right now, because I'd like to give you the right figure, but this I'll get back to you on this call itself.
Yeah? Sure, sir. Sure. Secondly, on the alloy wheels, sir, how do you see that this new capacity being utilized? I mean, how much period from FY 2026 do you see the utilization happening? And also, any more color on the new customer wheels we have, including the EV? Are there the new customers adding the capacity in the AURIC region? Also, how do you see the new market share changing with this new wheels, sir?
No, no. In fact, as far as two-wheelers concerned, the pressure is, I mean, tremendous. That's why there's a gun pointing at our head. I will just put it that way. In fact, people want it actually tomorrow. So to answer your question, it will be fully used. The question is, we also need a certain period to go to increase step by step, but that step by step will be very, very fast from September 25 onwards. In fact, the pressure is very high, and it will be to new customers also. Just to answer your question, I can't give you the names, but it will be to new customers also, including for EV, as far as the alloy wheels are concerned.
Okay. And so basically, in, say, the next one or two years, we can see the ramp up happening for this new addition also?
Sorry?
So we have ramp up happening.
Yes, yes. We have to reach full volumes by the second year. We don't have a choice.
Okay. Got it. And in terms of market share for the segment, do you see that has increased with the new alloy wheels, sir?
Yeah, see, right now, I mean, if you see our alloy wheel market share is 13.3%, okay? And this will take us, I think, to 25%. I think so. But the thing is, it depends on how much the growth will be there in the two-wheeler industry. So I can say, based on the existing volume, the 13.3% will become 25% with the new plant coming up.
Got it, sir. Sir, lastly, on the financial side, aluminum prices have increased in recent quarters. Has there any impact in the Q2 quarter? And just want to understand generally what is a pass-through like for the aluminum prices. And secondly, on the incentive part, what is the incentive expected for the second half, sir?
Okay. So I will request our Group CFO, Mr. Rajagopalan Sastry, to speak on this. But just to answer one question, the aluminum increase or decrease is a pass-through, 100%.
So if you look at comparing the first half of this year versus the first half of last year, aluminum alloy rates have gone up from INR 200- INR 213 on an average. And we have passed on every rupee of this increase.
We also had some marginal increase in steel and other products, but we have, as per our contracts, we have managed to pass on every single rupee of increase to our customers. Of course, it does have a load, a contribution load, as they call it, because we get a rupee-to-rupee advantage and all the contribution out of that. However, from a compensation perspective, the compensation is complete, and we have booked all the compensations. And we have amended purchase orders for this year.
Got it. So there's no impact of that in the current quarter?
Of the Mega Project Incentive of the total of INR 447 crore, which we had to book on the earlier Mega Project Incentives, we still have another INR 8 crore to book. Received of cash against that, we already have received about INR 283 crores, and we have to receive another INR 164 crores to receive out of that. The progress on the earlier mega project incentive is good, and we already are in an advanced stage of filing our applications for the next 2019-2024, which is now extended 2025 mega project incentive also. The entitlement for this incentive is higher than the earlier one. As we have more details, we will explain to you.
Got it, sir. Thank you so much for this opportunity. Yeah, yeah.
I think that answer is there for your question. No, it's not there. Okay, okay, okay.
I think they're finding out the exact CapEx. Okay, we'll get back to you on the CapEx.
Yes. Thank you so much for this.
Thank you. The next question is from the line of Aditya Jhawar from Investec. Please go ahead.
Hi. Thanks for the opportunity and congrats on good set of numbers. My first question is on our aluminum and on our alloy wheels. What is the expected contribution at INR 9.8 million in overall revenue? That is number one. Number second is that what would be the share of imported alloy wheels in India as we speak?
No, see, no. Aditya, we do not share the contribution figures. We don't share. I can only say that it's an important part of sales growth and profit growth. And so I cannot give you the contribution figures. It is a sensitive information. And import share in India? The import of alloy wheels?
Yes, yes.
Import, yeah. How much is imported? How much? See, as far as I know, there would be very small pockets where certain customers are importing, but I think it's practically zero now as far as imports are concerned. It's all bought from Indian OEMs or there are foreign players who are in India. But as far as I can think, I've not heard of any imports as of now. I think it's practically stopped, and I could be wrong. I mean, there could be few pockets. I mean, to add to what you said, you see, there is a BIS introduction in India, as you might be aware.
BIS?
BIS. BIS, Bureau of Indian Standards, against which the imports are not allowed. Only if you're exporting the vehicle, I think in that context, you can get some special alloy wheels. But now, almost everything is localized.
Sure. That's helpful. Second question is on the profitability of the standalone operation. So this time around, we saw a spike in OpEx, operating expenses. So it almost increased 20% YoY to almost about INR 400 crores. So is there anything that you would like to call out on this? Why this question? Because if you look at our margin expansion, it is largely driven by gross margin. We did not have a significant benefit of operating leverage despite our 16% top-line growth. So is there anything that you would like to call out in OpEx, number one? Number second, how should we look at standalone margin in the medium to long term?
So Raja, would you like to take that question?
So Aditya, good question. See, our standalone income went up by 16.8%. And if you look at our PAT, it has gone up by 29.7%. So I would still say there is an expansion in margin, however. Your question on the other expenses is correct. There has been an increase. Raw material costs have gone up by 15.2%. Other expenses have gone up by 19.6%. We do have a pretty detailed analysis into why this has gone up. There have been some special processes which we had to add to our production, like we had to have some anodizing processes for specific customers. We were impacted by the minimum wage increase and certain other topics which increased our other expenses. However, there are quite a lot of initiatives underway in terms of improving our efficiencies, and the Managing Director mentioned about the TPM exercises in some of our plants.
These are specifically aimed at improving our operational efficiencies, whereby we see that we are gaining more because of the volume increases which we are having and ensure that we have better expansion of margin. Does that answer your question?
Yeah, to some extent, because some of the items you mentioned are more part of COGS and employee cost. Now, one would expect that with a better utilization of some of our plants, especially the suspension plant, we could start seeing slightly better performance at the EBITDA level. But the EBITDA margin increased only by 40 basis points YoY. That was driven by gross margin. So I'm just trying to understand that is there this number of INR 400 crore? Is there anything one-time that you would like to call out? Or this is a recurring run rate from here on.
When we have to look at margin from FY 2025 or 2026 perspective, what are the drivers of margin expansion? Or are there any headwinds? Because multiple factors will flow with regard to production exchange, greenfield facilities coming on stream. If you would like to throw some light on how should we think about margin for the next two years.
I will go with your last question first. The greenfields which are being set up, right? Because if you look at the alloy wheel plant which we are setting up, all the lessons which we have learned in our existing facilities, which are manufacturing a significant portion of alloy wheels, are already implemented at a design stage. The aim of these new Greenfield facilities is to be margin accretive, point one. Second element is, do we see any headwinds because of different product mixes?
No, we only see tailwinds because the kind of order acquisition which we have is in the proprietary range and also some of our better product range. So we only see that it will be benefiting our margins from the product mix perspective. And the most important element is, as we now are looking at our operational efficiencies with much bigger, more powerful lenses, we are only seeing that our ability to get more out of our revenues in terms of margins will only improve. So overall, we only see good news as far as the margin expansion is concerned, unless something very untoward or something completely out of our control happens. But the aim and the trajectory from here on, we see a very strong performance from us.
Sure. Thank you. Next question is on Europe. It would be great if, Massimo, you can highlight. So clearly, there's a BMW auto win for E-Axle. It's a big development. So how is the commissioning, commercialization of this plant, number one? Number two, the new facility for transmission housing that we have made in Italy, if you can talk a little bit more about it in terms of where are we in terms of ramping up, what could be the potential revenue, and are we targeting new set of customers from this business line?
Okay. So the first question, we closed this agreement with a new customer for us. Aisin is a company inside of the Toyota Group. They took this important business for BMW, and we are their partner for the rough casting and machining of this component, transmission. This is a strategic project of BMW. They want to reach 500,000 parts per year starting from 2027.
The start of production will be in 2026, and we will do the foundry and machining activity in Germany. Speaking about the second project, transmission for Punch, Stellantis, as you know, we acquired two years ago, 850,000 parts per year. We started the production in July of the previous financial year. In this moment, we are reaching 45,000 parts per month. We will reach 65,000, the top of volume, starting from the second week of December of this financial year, and in this moment, we are discussing with the customer a possible increase of volume for this part. This is an absolutely strategic project for us because we are speaking about only machining, so the added value is very high.
This is the reason why in our profit and loss in this quarter, you see an important increase of the other expenses due to the fact that in this moment, we are using for this new plant rent people because we want to maintain flexibility. This is the reason why there is an increase of other expenses and no material costs. The total turnover of this project could be EUR 70 million, more or less, EUR 75 million. The peak of volume will be in February of the next financial year. I repeat, we are discussing this moment with Stellantis the possibility to increase on top of 850,000 parts other volume, which depends on the market. As you know, in this moment, in the European market, the main budget solution is the first one in terms of volume.
Yeah. Okay. That's quite helpful, Massimo. Final question is on outlook of Europe. This quarter, we did reasonably well despite a decline in registration. We reported a strong growth of about 6%. But looking at the next few quarters and the interaction with customers, what is your sense in terms of overall industry growth in Europe in the second half of the year? And what should be that number for Endurance?
So Aditya, the situation in Europe in this moment, frankly speaking, is not so good. But fast forward, the situation of Endurance is completely different. The market closed with a reduction of registration of 6.4% in the previous quarter, and Endurance grew 6.4% compared to the previous quarter. It means that we are gaining market share to our competitor, and this is due to the fact that in the last five years, we acquired an unbelievable number of projects, 260 million. We are starting production with this new project. Even if I analyze the single project compared to the volume of the previous year, we have seen a reduction that everybody has seen into the market. With the start of production of the new project, we are growing in an important way.
We closed in terms of turnover with EUR 6.9 million compared to 62.8%, with an increase of 6.4%. The EBITDA grew 15.1% compared to the previous year. We closed with 16%, EUR 10.7 million in the second quarter. The net result was EUR 2.9 million, 4.3%, with an increase of 13.7% compared to the previous year.
If you ask me, as you know, the second quarter in Europe is usually the lesser one in terms of volume because we have August. August is historically a month of holidays. And this is the reason why if you compare the quarter compared to the first quarter, there is a reduction. But in the previous quarter, there was a reduction compared to the previous quarter of about 20% of registration. And so Endurance is growing more than double compared to the market. And so also for the future, I see this scenario, and I repeat, I'm really optimistic for the fourth quarter of this financial year.
Perfect. That's very helpful. Thank you and all the best.
Thank you. The next question is on the line of Jinesh Gandhi from Ambit Capital. Please go ahead.
Yeah. Hi. First question is on the PV drivetrain business which we're talking about. So this is going to be through the aluminum die-casting technology, or we are looking beyond that and totally different products or technologies which will be coming into that? We talked about electronics as well, but can you shed more light on that?
Yes. Thanks for the question. The drivetrain products are not the die-cast products which we are already into. We are already supplying to major OEMs in India and overseas. These are proprietary products in nature, and they are engaged in transmitting the motion to the wheels. So the castings are stationary components, but these are rotating components. And it has also got electronics inbuilt into it because the vehicles are getting smarter. So we are offering a complete solution to the vehicle manufacturers.
And this is developed in-house, or we have a partnership with someone?
This is part of it is in-house, and part of it is going to be in partnerships.
Got it. Got it. Second question is with respect to the aluminum business. So clearly, there is a good amount of demand which is there, but there is a substantial amount of capacity addition happening, not just at Endurance, but other players as well. So in that context, how should we think about the margins for aluminum alloy wheel business? Would it be similar to the standalone margins, better or lower directionally about it?
No, I don't see it will impact the margins. And I think the capacities which are coming up are in line with the LOIs which the customers are giving to different suppliers. Now, of course, it will depend upon how the two-wheel industry grows.
But there is also a use of alloy wheels which were not being used. There were those steel, what do you call them, those steel wheels which were being used, which are getting converted to alloy wheels now. So there are many tools, so the demand is also coming from there. You know what I'm saying? Partly it's the growth, and partly it is the substitution of aluminum alloy wheels with the earlier steel wheels. And as far as margins are concerned, I don't see. I think industry has gone through, to be honest, a very turbulent time the last 15 years with the Chinese imports and everything. Now, I think the prices, I would tend to believe, are quite well settled, very competitive, and I don't see a change there.
Got it. Got it. With respect to ABS, how big is the ABS business now, given that we are already supplying single-channel ABS? Can you talk about the size of the business now and also the roadmap going forward on the dual-channel ABS? Any other wins on that side?
Yeah. See, right now, we are supplying at a run rate of 400,000 single-channel. Now, we have a capacity of another 240,000, which is for the dual-channel, which, as I said, is starting in quarter four of this financial year. So right now, you can say that the capacity which we will have is 640,000 in a market of maybe 3-3.5 million. Or see, I would say more towards 3.5 million. So we will slowly ramp up based on our technical capabilities and competitive pricing. We will slowly scale it up, partly with volume increases, partly from taking share from the competition. But that's our goal, to keep increasing this business by going step by step. So the next step is to go into dual-channel, the 240,000 ABSs per annum. That's the next step.
Right. And have you got orders for dual-channel already, or we are in the process of getting orders there?
Yes, yes. We have a dual-channel process. So that's why I'm telling you quarter four.
Okay. Okay. Got it. And a clarification on the incentive side. So would it be fair to say that by the time this balance INR 8 crore of incentive under old scheme gets recognized, probably maybe in Q2 or early next year, and the new scheme comes into operational, there will be a gap in FY 2026 where incentives may not be material? Would that be fair understanding?
The applications have been made. We are waiting for the eligibility certificates, and we will take it as it comes. So our anticipation and our expectation at work is to make it happen as quickly as possible. But given that there are elements where we have to allow the administrative mechanism to work through its course, we will make more comments or we'll give a confirmation as and when it happens. But the efforts from our side, the eligibility from our side, and all the collection collation of data, we have completed our part of it. We are just waiting for the administrative process to take its course, and then as quickly as possible, as and when it happens, we'll make a statement on that.
Got it. Got it. And last question on the European business side. We have seen material divergence between how the EV business has been shaping up in the European market, EV demand has been shaping up in the European market. And when we look at our order wins, almost 77% of our order wins are coming from EVs now as against much lower salience in the total order book. So how do we balance out with respect to our CapEx versus the order book built up towards EVs?
So Jinesh, your question is about CapEx versus the order intake? What exactly was the question? We couldn't hear you.
Sorry. Just give me a second.
Yeah. Is it better now? Yeah. Can you make a precise question?
Yeah. So the question for European business is that we are getting substantial orders for EVs. In first half, 77% of orders came from EVs. Whereas the EV volumes in the markets are not growing or rather moderating materially.
Okay. Ganesh, I understood. See, yes. So we acquired a lot of business in the last four years in the electric. But in this moment, one of the reasons why we are growing more than our competitor is that we are doing the same level of turnover with the internal combustion engine as in the past, and we are increasing due to the startup production of the electrical vehicles. This is the reality. The important effort in terms of the investment we have done in the last two years, I remind you that the last financial year, Endurance Overseas closed with EUR 62 million of investment. And in the first six months of this financial year, we invested EUR 28 million, for sure, with the support of our customer.
But the major reason of our increase of turnover is that, for sure, we are taking share of market from our competitor, but basically in the electric vehicle. Even if in this moment, a lot of countries are reducing the incentive in the electric vehicle, please consider that in the first quarter, in the second quarter, they reached 15% of the market. So it's absolutely interesting.
Okay. Got it. And lastly, on comment on M&A as a route to grow in the European market, can you talk about would it be only in the existing aluminum die-casting business, or we are open to look at new areas beyond aluminum die-casting in the European market from a M&A perspective? Thanks.
In this moment, we are seeing the market at 360 degrees. There are thousand and thousand opportunities. We are working in a soft way in this direction, and I hope to give you interesting news in the next core conference, but we are working 360 degrees. As you can imagine, the major problem in this moment is the saturation capacity into the market. A lot of companies are financial problems, and so for Endurance is an opportunity because every day we are involved from our customer to consider partnerships to support them for the future increase of our product lines. In high-pressure die-casting, in machining, and also in other sectors.
Got it. Great. Thanks and all the best. Thank you.
Thank you.
Thank you. Well, I just like to give those CapEx figures. I think it was a gentleman from Anand Rathi. So the CapEx for aluminum forging, which is done to date is INR 63 crores, and for drive shaft, it's INR 40 crores. I just want to just give that reply.
Thank you. The next question is from the line of Arvind Sharma from Citibank. Please go ahead.
Thank you, sir. Good morning. Thank you for taking my question. Sir, the first question is on the ramp-up schedule that you've given in the presentation. A very strong ramp-up expected in FY 2026 for almost INR 23 billion. Would it be fair to assume this is driven by the expansion in the four-wheeler and non-autos, or what would be the key drivers for this big ramp-up in FY 2026?
See, the key drivers, one is, of course, on the four-wheeler front, which is the AURIC-Shendra project, four-wheeler and non-auto. That would be one driver. And the second, and then the other drivers, one is the increase in the business we are getting on suspension, braking, as well as a two-wheeler new alloy wheel plant which is being set up. But I think it would be both on the two-wheeler and four-wheeler space, yes. It is just not on the four-wheeler. But we are fully focused on FY 2030, reaching 45% of our group sales is in four-wheelers. And there are a lot of efforts being made. And as we go along, we will start informing you as it happens.
Mr. Rajendra Abhange, our Director and COO, has already talked about it briefly. But what you see right now, whatever we have talked, is a combination of two-wheeler and four-wheeler. Two-wheeler, it's largely alloy wheel transmission braking.
On the four-wheeler, it is this whole. It will be the drive train, and it will be the four-wheeler aluminum die-casting and machining at AURIC-Shendra, as well as in a plant at Chakan. I said a new building is coming up to cater to all four-wheeler casting space. So it's a combination of both.
Got it, sir. So it would be fair to assume a decent big ramp-up in FY 2026 revenue or FY 2025, purely based on the PPT that you shared.
Yes. Yes. Yes. Yes, sir.
Thank you. Sir, second question, just sorry I missed it. The revenue had been done back in euro terms. I missed that part.
Euro? No, you're saying sales if it's done back in euro.
It's the European business, sir. I think Massimo shared, but I missed that part.
Sure Second quarter, EUR 66.9 million total turnover, increase of 6.4% compared to the previous year. EBITDA, EUR 10.7 million, 16%, with an increase of 15.1% compared to the previous year. Net result, EUR 2.9 million, 4.3%, with an increase of 13.7% compared to the previous year.
Got it. Got it. Thank you so much, sir, for taking my question. That's all from my side. Thanks.
Thank you.
Thank you. The next question is from the line of Pramod Amte from InCred Equities. Please go ahead.
Yeah. Hi. Thanks for taking the question. So this is some clarification on this drive train migration which you have planned for four-wheelers. Is it going to be for ICE vehicles, and how do you see it with the risk of EVs or hybrids?
Sorry. Can you just make the question clear?
No. You said you are entering into a drive train components for four-wheelers, right, if I heard you correctly? So how do you see the risk of EV and hybrids when you are entering this new stream of business?
Okay. Almost no risk, first of all, because EV penetration is still very small in four-wheelers, and the ICE vehicles are produced in huge numbers, and it's not going to reduce anymore. So our products are ICE-agnostic. However, we don't see any risk of EV to these products, at least for the next 10 years.
Okay. Sure.
These are EV-agnostic products.
Thank you. Thanks for the clarification. But since you said it's more of a drive train, a little bit confusing in terms of how it can be more EV-agnostic, maybe I can take it offline to get more details on the system.
Yeah. We can take it offline.
Sure. The second one is with regard to European business. Interesting to see new products taking your technology competence to a new level. So how do you see this BMW axle components versus what you are already doing for the other car makers? One. Second, with regard to specialty plastics, is it a new avenue you are trying to look at as a business opportunity in the car space?
So regarding the first question, we are producing similar parts for other customers, axle part and transmission for Volkswagen and Mercedes, and so we don't see particular problem. The strategic reason for this acquisition is due to the new customer, Aisin. Aisin, as I told you before, is inside of Toyota Group, and so we are discussing other opportunities. This is the reason why, from my point of view, it's absolutely strategic.
But speaking about the complexity of the part, we don't see particular problem also because we will produce this component with existing technology in terms of foundry, high level of automation as in the last 20 projects in Endurance Overseas in Europe, and with the same machine in our machining plant. So no issue, particular issue compared to the existing product that we are producing. Regarding the second question, could you repeat the second question, please?
Sure. So you also talked about the specialty plastic product win for Volkswagen. So I wanted to ask you, is it a big opportunity for the Endurance group to enter into this new area of line of business, considering that you've been into metal forming all along?
Correct. As you know, we have Endurance Engineering that is our division of injection molding components. The importance of this acquisition is that it's the first acquisition with Volkswagen Group as Tier 1. As you know, in the past, in Endurance Engineering, we grew in an important way thanks to the reverse engineering from aluminum component to plastic. And this is the first acquisition that we do, Volkswagen Group directly in the plastic. And why it's strategic? Because unfortunately, the plastic component in this moment, there are a lot of production capacity free into the market, a lot of companies with financial problems. For this reason, the customer is considering the opportunity to start in production with the new supplier.
For this reason, I presume that if we are able, as I'm sure, to respect the quality and the due date for the start of production, we could be involved in other future projects in the plastic with Volkswagen Group, with Porsche, with Audi, with Skoda, with all the brands that we are serving for the aluminum high-pressure die-casting and gravity in this moment.
Sure. Interesting. Thank you, Massimo.
Thank you. The next question is from the line of Divy Agarwal from Ficom Family Office. Please go ahead.
Thanks for the opportunity. So I just wanted to know about the outlook on the entire aluminum casting sector and your current market share, if you can share it. And secondly, we are right now reading the articles of the auto dealers having inventory of around INR 80,000 crore. So do you see any risk of delay in offtake of any aluminum casting products and any risk to the entire aluminum casting sector?
No. As far as the stocks of the four-wheeler passenger cars are concerned, I can only answer for ourselves. We have not got any indication as such that there would be any impact on our sales or on our business. So I will not be able to tell you in general about the overall sector in India and the impact it will have. But we are not seeing much, much of an impact in India because in India, as you know, almost 80% we are for two-wheelers. So we are not seeing that kind of impact in our business in India. As far as the aluminum casting, if you ask me what would be our share of business, you asked?
Yes. We don't have that outlook.
We don't have a market share. I mean, we have a capacity of 100,000 metric tons per annum in our various plants, which is, of course, being largely used, and because you have so many number of players into smaller aluminum castings, different types of casting, low pressure, gravity, high pressure, it's very difficult to have a market share. There is no industry body which is giving these figures to us. So I will not be able to tell you, but as a company, of course, see, aluminum casting as a metal, whether it's casting or forging, is a huge opportunity because it is used more in EVs. We are finding whether it's hybrid EVs or the ICE passenger cars or two-wheelers, three-wheelers. The use is more, which I've explained in earlier quarters.
So we are in a very good space, and we are taking the opportunities where there is profitable growth. So that is our focus. But the opportunities are a lot in this space. So we are in a good space as far as aluminum casting because we have the expertise. We have our own engineering. We have our own tool room. So we are very competitive, and we have the technology. We have done in the past gravity die-casting, converted them to high-pressure die-casting, low-pressure die-casting to high-pressure. So we have a lot of expertise and a lot of experience over the last 30 years in this space. So I would say as far as aluminum die-casting is concerned, we are in a very good space for the future.
Okay. I got it. Thanks a lot, and all the best.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Well, I don't think I have any further closing comments. I just had my opening remarks. So I mean, thank you for the call, and thank you to everybody for taking your time out for this call. Thank you.
Thank you.
Thank you.
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.