Ladies and gentlemen, good day and welcome to the Endurance Technologies Q2 FY 2027 earnings conference call. 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 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, Rio. Good morning, everyone. Welcome to Q2 FY 2027 post-results conference call of Endurance Technologies. We are pleased to host the entire management team of Endurance for this call. We have with us 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, Mr. Aditya Jhawar, Head Growth and Business Transformation, and Mr. Raj Mundra, Treasurer and Investor Relations. I will hand over the call to Anurang now for his opening remarks, post which we will have the Q&A. Over to you, Anurang.
Thanks a lot. Good morning, everyone. As we close the second quarter of FY 2027, the Indian economy has continued to remain strong, supported by domestic demand and investment. At the same time, geopolitical tensions, particularly in West Asia, have increased the volatility in energy prices and added to uncertainty around global trade and supply chains. The global environment remains uncertain. The re-escalation of the conflict in West Asia has led to higher and more volatile crude oil prices and has added to uncertainty around energy costs, freight, and supply chains. Trade uncertainties and tighter global financial conditions also continue to weigh on the global outlook.
In quarter two FY 2027, in the Indian automotive sector, as per SIAM, two-wheeler sales grew by 18% year-on-year, with motorcycles at 13% growth and scooters at 30% growth. Passenger vehicle sales increased by 24% year-on-year, while three-wheeler sales rose 25%. In the European Union, new car sales saw a year-on-year rise of 5.6% in quarter two FY 2027, with each country recording a sales growth and France leading with a 9.6% growth. In quarter two FY 2027, new car volumes in Europe, there was a 27% share of battery electric vehicles, 11% share of plug-in hybrids, and 34% share of hybrids.
So, two out of every three vehicles being sold in the European Union are either electric or hybrid. On our quarter two financials, the information has been uploaded at the stock exchanges last evening, along with our presentation explaining the numbers. I will, however, highlight some key numbers. In quarter two FY 2027, our consolidated total income grew 33% year-on-year to INR 4,811 crore. The EBITDA grew 17.3% to INR 584 crore. Our margin was at 12.1%.
The consolidated PAT grew 21% year-on-year to INR 274 crore, with a PAT of 5.7%. In quarter two FY 2027, PAT growth was supported by INR 36 crore from gain from Stöferle, early acquisition of the 100% stake, the balance 32%. However, this was largely offset by the accelerated depreciation of an OEM program of INR 31 crore in Europe. On standalone basis, the company recorded a total income of INR 3,761 crore, a year-on-year growth of 40%. EBITDA grew 18% to INR 395 crore, with a margin at 10.5%. The PAT grew by 14% year-on-year to INR 213 crore, with a PAT at 5.7%.
Our European business reported total income of INR 1,029 crore, a growth of 13% year-on-year, and EBITDA of INR 183 crore at 17.8%, with a growth of 13.7% year-on-year. PAT was at INR 57 crore at 5.5%, which is a growth of 39.6% year-on-year. I would like to mention that our subsidiary, Maxwell, has reported a PAT positive in consecutive quarter financials. Their total income grew by 94%, INR 85 crore in quarter two FY 2027. In quarter two FY 2027, our consolidated net cash position as on September 30th, 2026 was at INR 436 crore. In quarter two FY 2026, standalone RMC was 66% to sales. In quarter two FY 2027, it is 70% to sales.
In spite of a 4% increase in RMC percentage in quarter two, our India standalone EBITDA percentage declined by 2% to 10.5%. The standalone EBITDA amount in quarter two FY 2027 has increased to INR 395 crore, implying a growth of 18% year-on-year. In quarter two FY 2027, the EBITDA amount was higher than quarter one FY 2027, which was at INR 358 crore. I would like to mention that for quarter one and quarter two FY 2027, conversion cost increase of fuels, including diesel, CNG and LPG gas, and cutting tools were not adjusted by most OEMs, and certain OEM increases we have got have been settled only from quarter three FY 2027 of October 1st, 2026 onwards.
We would like to mention that aluminum alloys and steel form a significant part of our RMC. In quarter three FY 2027, we expect steel prices to increase, and we see a softening of the aluminum alloy prices. Overall, as of now, we see an absolute 0.6% lowering of RMC percentage of sales in quarter three. In quarter two, we accelerated the acquisition of the remaining 32% stake in Stöferle, taking our ownership of the Stöferle entities to 100%.
In quarter two, we also acquired 100% stake in Fondalpress in Italy, strengthening Endurance's European aluminum casting and machining capabilities. Fondalpress offers a strong location, a track record of generating over EUR 60 million in highly profitable revenue, best-in-class quality and factory management processes, and a significant scope for expansion. The net acquisition outlay was just under EUR 1 million. In the coming months, we will realize the plant synergies. We will progressively bring externally sourced casting from Stöferle in-house, manufacture transmission housings for Stellantis, and expand truck segment business.
We expect these to lead to significant gains across our European operations. In quarter two, we divested our stake in Veicoli for EUR 2.2 million upfront plus future earnouts. Veicoli housed a fleet management software business, which, though niche, was quite small and not central to our core business. In quarter two FY 2027, the total consolidated income India share, including Maxwell, was 78.5%, and Europe's share was 21.5%. This is with Maxwell. I would like to inform you that our EV sales in India standalone for quarter two FY 2027 grew by 185% to INR 229 crore, which was at 5% of our total net sales.
At quarter four FY 2027, for ABS, we will have a capacity of 1.54 million single and dual-channel ABSs per annum, of which 70% is already booked by Bajaj Auto and Royal Enfield. For the dual-channel ABS, supplies to Bajaj Auto has started in October this year. The SOP for a second program of Royal Enfield is expected to start in quarter four of this financial year. We are enhancing our ABS product offering with new features. We have already started the ride modes, and now we are adding the traction controls for improved stability.
This will help in sales value and margin accretion in our ABS business. At our new Chennai plant for disc brake assembly systems, the SOP will start in March 2027. In quarter one FY 2027, we commenced SOP for the KTM brake systems. These programs also include export orders supplied from our Waluj brakes plant. This business will see a significant increase in future years. Also, to meet increased demand for Hero MotoCorp and TVS brakes business, we added a capacity of 1 million units at our Waluj brakes plant. The SOP for this started in quarter two of this financial year. The four-wheeler aluminum casting business is a very big focus area for us.
We are expanding our business at our Shendra, Chakan, Chennai, and Vallam plants. Our Shendra plant started SOP on September 25th this year and will serve four-wheeler OEMs in India, the U.K., and the U.S. This plant does high-pressure and low-pressure die casting, critical machining, and powder coating. The supplies to the U.S. EV OEM have also begun. We are expanding our four-wheeler casting business with domestic OEMs like Tata Motors, Mahindra & Mahindra, and helping Korean OEMs to localize.
We are also expanding in commercial vehicles, and we are in active dialogue with multiple OEMs. Capacity expansion across multiple locations is already under progress to capture this. There has been an encouraging progress in the four-wheeler non-auto die casting business as well as on the non-auto business. On the four-wheeler suspension business, there has been advanced engagement with two Indian and one overseas customers. Out of this, SOPs of one customer is expected in half one of FY 2028 and the other in half two FY 2029. The third customer SOP timelines will get finalized in quarter four of this year.
Four-wheeler brakes and drive shaft is also seeing good progress with passenger and commercial vehicle OEMs, with commencement of SOP for drive shaft in this quarter and for brakes from half one of the next financial year. We expect cumulative SOP for four-wheeler suspension brakes and drive shaft to increase from INR 100 crore in FY 2028 to INR 800 crore in FY 2031. We believe once we start execution in these new areas, engagement with customers will increase. Non-auto business includes supplies to solar, railways, and industrial applications for products like suspension and actuators. We expect cumulative SOP of INR 250 crore in FY 2028, which should be scaled up to INR 650 crore by FY 2031.
At our AURIC Bidkin two-wheeler alloy wheel plant, supplies to Bajaj Auto began in October last year. SOP started for Ather in September this year and Royal Enfield in October. SOP for Suzuki is expected to begin in this quarter. Our newly established battery pack business has made good progress, marking another important milestone in our diversification into emerging mobility technologies, a journey that began with our acquisition of Maxwell. We have commenced SOP of battery packs for EVs for a leading two-wheeler OEM, with full ramp-up expected in quarter three of this financial year, which is in this quarter.
Also, we have received letters of nomination from two passenger vehicle OEMs for four-wheeler battery packs, with commencement of SOP scheduled for quarter one and quarter two of the next financial year respectively. Battery pack business will also help increase our business for battery management systems and aluminum castings which we supply. In half one of this financial year, our wholly owned subsidiary, Maxwell, achieved a turnover of INR 141 crore as against INR 161 crore in the full year of FY 2026.
In quarter two FY 2027, Maxwell revenue grew by 95% year-on-year and 50% quarter-on-quarter to INR 85 crore. Our strong R&D and innovation cell at Maxwell at Bangalore is also focusing on the IoT and V2X solutions, TPMS, and high-voltage battery management systems for four-wheelers and e-buses. This is a tremendous profitable growth potential. Our premium segment suspension business continues to grow with upside-down front forks and monoshocks, with wider adoption across OEMs and a steadily growing OEM customer base.
We are adding capacities in line with the market growth for the upside-down front forks, and we are reaching the milestone of 100,000 units per month spread across seven OEM customers and including exports by quarter four of this financial year. Aluminum forgings has become an increasingly strategic part of our portfolio, serving both captive consumption for our inverted front fork business and a growing external customer base. To meet this demand, we are adding a fifth aluminum forging press with SOP expected in quarter four of FY 2027. In this segment, we have started catering to Indian and EU OEMs.
In the non-automotive segment, our state-of-the-art solar damper plant at Sanand, Gujarat is ready, and SOP for a European client from this plant has started in quarter two. For the solar U.S. client, SOP is expected in the second half of this financial year. We are also gearing up for the supply of solar actuators, and the SOP is expected in quarter four of this financial year. In the transmission segment, we are increasing our business for assist and slip clutches with our Italian subsidiary, Adler Technologies. We are already supplying assist and slip clutches to Royal Enfield and Kawasaki.
For Bajaj Auto, customer validation is in process, and SOP is expected in quarter four of this financial year. In the transmission segment of drive shafts, for a four-wheeler drive shaft program, the SOP for Tata Motors is expected in this quarter. Supplies had already begun for the three-wheeler drive shaft programs of Bajaj, Mahindra , and TVS, and we expect our drive shaft revenue to cross INR 100 crore in FY 2027. We are also seeing an uptick in our Bajaj EV drive shaft program, with volumes expected to grow.
Our India CapEx in FY 2026 was approximately INR 800 crore compared to INR 611 crore in the previous year of FY 2025, driven by investments in new growth areas. We expect capital expenditure in FY 2027 to be around INR 1,100 crore. Our consolidated CapEx is expected to be INR 1,250 crore. Under the Maharashtra Package Scheme of Incentives 2019, we had received an addendum taking our incentive up from INR 600 crore- INR 858 crore. These incentives will be availed by way of state GST refund broadly over a seven-year period. We are well placed to avail more incentives with several of our plants located in Chhatrapati Sambhajinagar and serving OEM customers within the state of Maharashtra.
In half one of this year, we have booked an income of INR 75 crore against this PSI incentives and expect to book a further INR 50 crore in half two of this financial year. Let me now give you a gist of orders won during half one of this financial year. Please note that the business value from new orders are without including orders from Bajaj. The total business win in half one was INR 748 crore, largely from HMSI, Honda, Tata Motors, Hero MotoCorp, TVS, Ather, and the U.S. EV OEM. The total business order since FY 2022 is INR 6,372 crore, of which INR 5,125 crore in new business.
This is in the last five years. From INR 6,372 crore of order win, INR 3,798 crore of business is still to be realized. Two things to highlight in the total business win order book of INR 6,372 crore as on FY 2027 half one compared to FY 2022 is as follows. The share of the EVs has increased to 24% as on half one FY 2027 versus 11% in FY 2022. The share of four-wheelers from India has increased to 23% in half one FY 2027 versus 16% in FY 2022. This is for the new business wins which I am talking about. This shows our company's increasing focus on electric vehicle and four-wheeler new order wins. While EU auto market continues to be slow, Endurance has continued to grow order wins.
Few things to highlight are consolidation in supply chain is also driving order win in Europe, considering Endurance's strong financials. Like the EUR 10 million order for Mercedes hybrid cars won in quarter one FY 2027 with SOP in 2027, and the EUR 4 million order from Stellantis won in quarter one for their car and LCVs, which SOP also is in 2027. In quarter two, marquee order wins includes two orders from Mercedes of EUR 14 million for specialized components for their upcoming hybrid LCV with SOP in 2029. In total, EUR 28 million new orders were won in half one of this financial year.
The aftermarket business remains a strategic priority for us with ambitious growth goals set out till 2030, guided by a comprehensive capability-focused blueprint built around the voice of our team, our channel partners, retailers, and mechanics. Our India aftermarket business grew by 36% year-on-year in quarter two FY 2027, comprising 4% of our consolidated income. It is a significantly margin accretive business for us. In four-wheelers, we are building on the steps taken in proprietary products such as drive shafts and braking, alongside the expansion of our existing casting capabilities. We also see electronically controlled braking in four-wheelers as an extension of our braking capabilities.
The larger objective is to progressively move up the value chain from individual components towards proprietary products and systems while remaining focused around technologies where Endurance has an underlying competency or a credible path to build one. Across two-wheeler, four-wheeler, and non-automotive applications, the common philosophy is therefore consistent. We start with Endurance's existing engineering and manufacturing strengths. We add electronics and software capabilities.
We partner selectively where technology gaps exist, and progressively we move from being a component manufacturer towards a broader solutions and technology provider. Finally, we are looking at selective diversification beyond automotive, again based on transferable competencies rather than diversification for its own sake. These include precision machined and structural components and dampers for non-auto applications. With these opening remarks, I would now like to hand over the call to Aditya Jhawar, our Head Growth and Business Transformation. Thank you.
Yeah. Thank you. Thank you, Anurang. Good morning, everyone. It is nice to be on this side of the conference call. I am quite excited to join Endurance and leverage a strong execution track record and a very strong balance sheet to push the pedal on growth and diversification. In the presentation, I would like you to refer to slide number three and four. We have put forward our strategic priorities with focus on expanding in four-wheelers, in EVs, and non-automotive expansion. The endeavor is also to benefit from regulatory changes. In all the growth vectors mentioned on slide four, we have already established business with customers or an advanced engagement with near-term commercialization, except for aviation and defense, which are under active consideration.
For example, we have started supplies to a large U.S. EV customer for their non-auto application. This is expected to start next quarter, while supplies for their automotive applications have already started. While we continue to grow in our existing business, these strategic priorities will help shape our future growth. On slide number five, we show that our CapEx and investments have gone up over the years. Despite that, we have generated FCF consistently and maintained a very strong balance sheet.
This positions us very well to further push the pedal on investment and expand in our strategic priorities. Our existing manufacturing capability in India and Europe, along with growing expertise in embedded electronics, positions us very well to tap the new growth areas in automotive and non-automotive. Thank you. Over to the moderator for questions.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchtone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from Arvind Sharma from Citigroup. Please go ahead.
Hi, good morning, sir. Thank you for taking my question. The first question would be on the domestic business, the India business. There has been a slight decline in gross margin. You did talk about commodity costs easing a bit, but exactly how should one look at gross margin going forward, especially the ability to pass through not only just the commodity cost, but also the conversion cost? That is my first question, sir.
Yeah. Hi, Arvind. This is Aditya. Yes, I think Q2 was a challenging quarter from a commodity perspective. How we are seeing is that some customers have agreed for a price increase from October 1st. Back-of-the-envelope calculation suggests that should also have a positive impact of about 0.5% on gross margin. As we stand, we are seeing favorable commodity basket, as Anurang highlighted, about 0.5%-0.6% positive impact it should have. These things and customer engagement is still ongoing. Some customers might give a price increase possibly in Q4. Some might give a price increase possibly in the next financial year.
I would also like to take this opportunity to draw your attention to the four greenfield facilities that are coming on stream. In that, the cumulative CapEx is about INR 1,100 crore that we have incurred. As you would appreciate that these greenfield facilities, as they come for commercial production, the profitability gradually improves.
These four facilities drag, had a negative EBIT margin of about 0.5% in Q2, which we believe that progressively the drag should come down, and in next financial year, we will have these facilities having a positive contribution. What I would like to highlight here is that we are seeing that the commodity headwind seems to be largely behind as we stand, and we expect margin trajectory to improve from here on.
Thanks, Aditya. Should we understand that because of the price pass-through, that is a 0.5% impact, and then on top of it would be the 0.5%-0.6% commodity basket impact? Is that the way to look at it?
Yes, that is the way to say it.
Sure, sir. Thank you. The second question, very interesting, the Endurance 2.0, it is a slide that you put in the presentation. If you could just talk a bit about it. What was the reason for diversifying into quite a few sectors? Among them, what would be the more near-term diversifications, next one to two years, and which one are more aspirational and more long-term?
Yeah. Arvind, I would like to draw your attention to slide number four. First question, why diversification? Clearly, Endurance has had a very strong track record in executing in two-wheelers, starting from die casting, moving to suspension, brake transmission. Then we progressed into four-wheelers, starting again with die casting and moving towards proprietary products. As you know, that aluminum die casting is a backbone of a lot of other industries. Our objective is to continue to expand into areas which are areas of strength, which is die casting for us, and aluminum as a material, the usage is expected to increase.
Now, on slide four, the diversification vectors that we have presented, we already have a customer engagement at an advanced stage in most of these verticals. For example, you talk about say, non-automotive application, non-automotive application in say, power backup, in robotics. We already have customer engagement.
You talk about railway, we already got approval for supplying suspension parts for railway. Other than aviation and defense, where we directly have not started supply, by the way, indirect supply have just started in this vector, but direct supply to aviations and defense have not yet started. So, most of these areas that we have mentioned, you will see commercial production within this financial year, and some will spill over to the next financial year.
Got it. Thanks, Aditya. Just one question on the numbers, if I may squeeze in. The euro revenue, EBITDA, and PAT, the ones you share normally in the calls.
Yes. So we close the second quarter in Europe with EUR 93.9 million turnover, compared EUR 88.7 million of the previous financial year, with an increase of EUR 5.2 million, 5.9%. In terms of EBITDA, we grew from EUR 15.8 million-EUR 16.7 million , with an increase of 5.9%. In terms of net result, we grew from EUR 3.9 million- EUR 5.2 million , with an increase of EUR 31.4 million , 31.4%. In the net result, there is the impact of the exceptional items linked to the acquisition of the 100% of a Stöferle company, where we have had a benefit compared to the liability of EUR 21.2 million . We bought 32% for EUR 18 million , and certainly with the benefit in the profit and loss of EUR 3.1 million .
Without consider this EUR 3.1 million , the net profit should have been EUR 2 million , but only in reduction compared to the previous year, only for the acceleration of depreciation in a specific project for Volkswagen Group for more or less EUR 3 million . Also in terms of net result, without consider this acceleration of depreciation, the result should have been higher compared to the previous year. In fact, the cash profit grew compared to the previous year from EUR 13.4 million- EUR 17.7 million , and certainly it's 18.8% of our turnover.
Got it, sir. Thank you so much for sharing this. That is all from my side.
Thank you. The next question is from Jyoti from Haitong. Please go ahead.
Thank you, sir, for the opportunity. Sir, my question is regarding this solar thing. Basically, the solar damper and actuator at Sanand that we are doing. What is the size of the large volume order, and who is the customer, and what kind of margin that we will be making it?
Yes. So, see, there are two customers who are there. One is in Spain and one is in the U.S. Solar dampers is a technology which has been grown in-house based on the experience of our R&D team. I think the potential of this business, which is there, and I mentioned I would not like to give one number, but I have said that with railways as well as with solar, we are looking at INR 250 crore next financial year and about INR 650 crore by FY 2031. This is a line of sight which we have now. Of course, our endeavor will be always to increase these numbers. So it is both the solar damper and the actuator. Both have been done in-house.
Okay. And what kind of the asset turnover that we are expecting?
The CapEx is not very high. How much is the business?
Yeah. EBITDA, CapEx?
No, no. CapEx.
Asset turnover.
Asset turnover.
The solar business would have a very high asset turnover in excess of 8x. We are looking at what we are investing on that because largely the capabilities are available with us, and it is more assembly lines. The asset turnover would be pretty high.
Okay. Thank you, sir. And sir, another question around Bajaj that is excluded from the order book, and I think largely we do around 30%-35% of revenue from Bajaj. How large that is 35%? Okay. Thank you, sir.
No. So, if you take in the first half, our sale has been about INR 9,600 crore, is it? I will just tell you. So, if you take our income in the first two quarters is INR 9,159 crore. You can take a figure of I will just tell you. The figure would be—
Give me that.
Yeah. No, no. I will say it. So if I take of the group Yeah, so you can take 35%. You can take 35%. 35%.
Okay. Thank you, sir. And another on the Maxwell side, when does it reach to double-digit margin?
Well, we hope to do it in the next financial year. That is our target.
Okay. Thank you so much.
Thank you. The next question is from Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead.
Yeah. Happy festive greetings to the management and congrats on the new order wins, sir. Sir, firstly, on this quarter, we could see the others segment has seen a good jump, sir. Just want to understand, is it largely driven by the battery pack ramp-up? And just want to also understand how you are prepared for the capacity for the battery pack for both two-wheeler and four-wheeler. And just want to understand also how the margins once you should proceed for this segment, sir.
Yeah. So, regarding the order wins, we will come later, but as far as the battery pack business is concerned, already for one two-wheeler OEM, we will reach peak sales in this quarter itself. We will achieve that. I said we have two business nominations we have got from two four-wheeler OEMs. I cannot name them. One is starting by March or April, and the other will start in quarter two of the next financial year. I just want to say that this is definitely a high-value business for us. As far as the margins are concerned, of course, our focus will be, because this is a new industry, it has a very good ROCE, I can say that.
But of course, margins, I think, would be decent margins, I would say. Of course, Endurance, once we start, our focus is to increase our margins. I think this is something we will be more clear maybe in the next call, which we have. But definitely, this is because we have just started this business, and we hope to make decent margins on this. I will not give you a figure, but this is a high-value business. The battery packs are very highly priced.
Got it, sir.
I just want to add one more thing. Sorry, I would like to add one more thing that one has to look at the business because the castings and the BMS are supplied by us. So we also have a margin on that.
Got it, sir. Just if possible to share, what kind of capacity would be there, sir, in terms of revenue side, sir, for both of two-wheeler and four-wheeler, sir?
No, see, as far as two-wheeler capacity, I cannot tell you a value because we do not give those numbers, but definitely, it is. I mean, look, you can understand what a battery pack price for a two-wheeler is and the range of a four-wheeler. Okay? Generally, one line is about 18,000 battery packs for two-wheelers. For four-wheelers, it is about 8,000 battery packs a month. The values are very, very high. That is what I can tell you as of now.
Just one thing to add. The larger CapEx for setting up the big facility, once it is done, it is relatively easy to add lines, as and when we have a visibility from customer side.
Got it. Thank you for this. Sir, just on the EV acceleration what we are seeing across India and Europe, I want to understand how is the Endurance presence on the EV components, particularly for the casting segment, and how it differs for the casting segment in the ICE and EV segments, sir?
So, as far as the casting orders are concerned, these volumes are increasing, and I've said in the past years also that the number of components are much more in an EV. Of course, we focus more on the larger castings. But I'll just tell you that Endurance is present in a large way in the casting, transmission, and braking. And we have just started with the battery pack, and this is a business in future years we would like to grow, which is there. It is only the clutch assembly as of now, which is mainly on the ICE, which is there.
But if you talk about transmission, the braking, suspension, and castings, as well as alloy wheels, which I consider as a part of castings. So this is a business where we are highly entrenched, maybe not supplying to every two-wheeler OEM. But I think the OEMs who are, I think, leaders, we are supplying to them. And now I'm talking of the EV OEMs.
Got it, sir. And finally, on the Fondalpress acquisition, sir, it was an attractive valuation. I just want to understand the rationale and what it adds either to the backward integration or the new custom additions, sir?
Yes. So I'll request Massimo Venuti, but I've already mentioned a few points what we plan to do. But let him speak. Massimo?
Yes. The rationale of the acquisition is very simple because we bought a historical competitor of ours. Please consider that this company, in 2017, did EUR 80 million of turnover and was one of the major players for the Stellantis Group. It is 40 km from our plant. We bought more or less 16,400 sq m of building. On top of this, also land available for the future growth. We bought 16 fully automated die casting machines ranging from 2,300 ton- 2,800 ton machine. This equipment is in good working condition and will immediately scale our manufacturing capacity, allowing the insourcing of production of parts currently purchased by external supplier.
As you know, in Stöferle, we are buying 100% of the parts into the market, and this 100% can be insourced in Fondalpress, so we can have immediately an economy of scale in our margin, contribution margin, and also EBITDA. But to be honest, the strategy is to use also this production capacity to try to enter in the truck sector because we believe that in the future, the stability and also profitability in this sector could be an opportunity to reinforce our position in Europe.
So, this was an important opportunity due to also the good relationship with the owner of the company that accepted to sell the company for, let me say, nothing, if you consider that EUR 12.3 million was the price, but inside of the company, there was EUR 10.2 million cash, and also EUR 2.5 million of stock, and also 16,000 sq m of building. So, this was an important opportunity for us. And please consider that we have available, starting from tomorrow, for the future growth and also diversification, a new plant of 5,000 sq m of machining completely free and able to start with the process of certification also in other sector, not only in the automotive. So, I believe that this could be an important opportunity for the future growth of the European market.
Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant so that the management is able to address questions from all participants at the conference. Should you have follow-up questions, we request you to rejoin the queue. The next question is from Shubham from Investec. Please go ahead.
Yeah. Hey. Hi. Thanks for the opportunity. Congratulations on the strong order wins in Europe. This is the second consecutive quarter of healthy wins at about EUR 14 million. Could you please help us understand the outlook for order intake in Europe, with Europe imposing curbs on Chinese hybrid vehicles, and as you had highlighted earlier, financial stress among some competitors creating opportunities for you? How should we think about the sustainability of these order wins going ahead?
First of all, for sure, the acquisition of the new order with Mercedes is absolutely positive signal because this is an important acquisition due to the fact that these are two component of the new transmission of Mercedes starting from 2029. The situation in Europe, as Mr. Jain told you, is we have a stable volume without consider the important increase of the Chinese OEM into the market, because in the previous quarter, the market closed with an increase of 5.6%. But if I offset the impact of the Chinese, the increase compared to the previous year should have been only 0.7%, because SAIC grew 23%, BYD 133%, Geely 26%, Chery 215%.
It means that more than 90% of the increase compared to the previous year has been done by the Chinese OEM. The visibility for the future is to maintain stability. Please consider that despite this situation, Endurance grew more three times, four times compared to the market. This is due, as I told you in the previous call conference, thanks to the important acquisition of new business we did in the electric field in the last five years. To be honest, I have an optimistic view for the future for three reasons. First of all, starting from December 1st, 2026, as you know, the European government decide to set a cap of 350,000 vehicle for the hybrid importation of vehicle from China.
This 350,000 vehicle is a cap that can grow only 6% for the next four years. Now there is an important cap and the limit for the import of plug-in and hybrid, mild hybrid vehicle from China. The second point is that they fixed the duty for the electrical vehicle from China with different range, BYD 27%, Geely 29%, SAIC 45%, Tesla 18%, and all the others in a leverage between 21% and 35%. The last but not the least important point is that within, I hope, February, March of 2027, the European Community will approve the Industrial Accelerator Act.
In this new law, the rules are that at least 70% of the value of non-battery component in electric vehicle must originate in the U.S. It means that for the supply chain, this could be an opportunity to improve and to increase our production capacity. On top of this, if it is true that in this moment, in six months, the Chinese OEM exported in this financial year more than 350,000 vehicle, that is the cap for the next financial year, they will be obliged to install production capacity also for the internal combustion engine in Europe. This could be an opportunity for us because for sure we will receive from the Chinese OEM request for quotation. To be honest, the strategy to protect the European market can give us the possibility to come back to volume different compared to the past.
Thank you, Massimo. Office time.
Yeah, sure.
Thank you. Also on the non-auto segment, particularly on the aerospace and defense part, if you can provide more color on this opportunity, how are we basically targeting entry into segment? Are these through M&A, or are we developing products in-house or through a tech partner? How should we think about the overall non-auto mix evolving over a slightly medium term, say, by FY 2030?
Yeah. As we highlighted earlier, that clearly die casting and aluminum, they play a very important role in both aviation and defense. The route that we are adopting in this is twofold. Number one, we are developing organic capability and also evaluating inorganic opportunities. The kind of inquiries that we are seeing across non-automotive is quite encouraging.
As certain commercialization will start in the next quarter onwards, we believe that the number of new customers inquiries will only accelerate. We don't want to limit ourselves by saying and putting a number right now that how much contribution can come from non-automotive. It's, as of now, a very dynamic situation. Over the next few quarters, we will have slightly better clarity. But I must say that the opportunity would only increase as we start execution of current orders in hand.
Thank you. The next question is from Hitesh Goel from Origin Capital. Please go ahead.
Thanks for taking my question. Good morning, Anurang and Aditya. My question is twofold. First, on the basically this solar railway business, like questions are more targeted to non-auto. In this, are you substituting It is import substitution or you are— Because it's a more of a B2B L1, L2 business, right? If I'm right. Can you shed some light on that?
Yeah, a good question. First of all, this entire domain is pretty new to the industry. The growth started happening only a couple of years ago, and currently there are not many players around the world. We have the advantage of something like first in this category. A lot of material is currently sourced from China, so we are displacing China in this case. There are not many players in India.
Okay. My second, sorry. Yeah, got it. Sorry. On my second question on basically this aerospace and defense, if we look at companies in India, mostly the business which is coming in aerospace and defense supply chain is mostly forging or electronics to some extent, or machining, right? Can you shed some light on what kind of parts you will be making here? Because I think, from aluminum, is it only machining or you are making parts, looking at part, making ground up part, and then machining it? Some sense on that?
In the aerospace defense, the parts will not be in the proprietary nature. The responsibility of development will lie with the aerospace manufacturers. We will be supplying them components.
It is mostly machining, right? If I am right?
Yes. Casting and machining.
Hitesh, one point to add here. As you are aware that aluminum die casting has a very big role to play in the supply chain of aviation. So, the die casting components are very actively used in this space. So we are developing certain component in-house, and we are also exploring inorganic opportunities, which are also in manufacturing of aluminum die casting components in this space, Hitesh.
Thank you. The next question is from Nishit Jalan from Axis Capital. Please go ahead.
Thank you for the opportunity. My question is on standalone four-wheeler business. If I look at the order wins that you have talked about, 23% of total 6,000 odd crore, that is roughly about INR 1,400 crore-INR 1,500 crore. Our revenue last year was around INR 600 crore. Maybe it will be around INR 800 crore, INR 900 crore this year. So just wanted to understand how much of these orders are already reflecting in revenues, and when do you expect to see the full scale-up of these orders translating into revenues? So essentially, will we reach INR 1,500 crore+ revenues in the next two years, given that orders are already in place?
No. There are two parts. What I was specifying was more on the proprietary part, because in die casting, we are already large, with Tata Motors, Mahindra , Honda, Kia. That too I've said separately in my opening remarks that that is something we are growing, and it's a big focus for us, Shendra, Vallam, Chennai, and Chakan plants. We continue new business. We are including focus on commercial vehicles and passenger cars. Casting is one part. What I think specifically you must be asking is on the proprietary part, right? Which is suspension, braking, drive shafts. It could be the battery packs, a business for the four-wheelers.
Very difficult to put a number, but I don't see a challenge of reaching INR 1,500 crore by FY 2031. I don't see that challenge with the battery pack, with suspension, with brakes, and with drive shaft. That challenge I don't see, to do that. I tell you, as we are speaking, some of the programs are with only one customer. Like we mentioned, you start with one, others may follow. We are very, very confident because of our technology and process and product.
We are very strong. We have the people for it. We have the relationship with the customers. That's why we have got these business being nominated. We are very, very confident. I mean, if you talk about confidence, we are very confident. When you ask me to put a number, the number could be what I told you, by FY 2031 crossing INR 1,500 for the proprietary. It could be slightly less, it could be more. If you ask me that number, not in the next two years, but definitely by FY 2031, it's possible to do that.
Got it. My specific question was, since we already have an order book of INR 1,500 crore revenue on the four-wheeler side, which means we have already received the orders, we just need to execute that.
Yeah. Then that must be including casting then. You're right. You're talking about that part which I mentioned.
Total?
Okay. Yeah.
Total four-wheeler.
Yeah. You are right. Those orders will happen in the next two years.
Got it.
Those orders which I mentioned for the business will happen in next two years.
Currently, whatever are our revenues from four-wheeler business is pure casting. The proprietary products will come incrementally.
Yes. Proprietary products will start with the drive shaft starting in this quarter. Then, like I mentioned, we will have the brakes in the first half of next year, and also the suspension. The battery packs, which I told you, will happen from March or April for one OEM, and the second OEM in quarter two of the next financial year.
Got it. Very clear. Thank you so much.
Thank you.
Thank you. The next question is from Ravi Gupta from Ashika Institutional Equities. Please go ahead.
Thanks for the opportunity, and festive greetings to the management. Just wanted to understand on the margin front in EV order books. I mean, so it's good to see that you have given the bifurcation of casting, suspension, and other businesses in that segment. So, on margin front, it will be supporting the margins, the overall corporate margin, or it will be diluting as EV penetration in our order book or revenue will increase?
No, no. In fact, the margins will be similar. Of course, we'll try and improve it, but the margins will be similar.
Just one thing to clarify. When you talk about EV revenue, they are coming from our die-casting products, our suspension brakes, all our existing products. There are new revenue streams that we have added, which is like battery pack business. Purely overall EV business is margin accretive from the company perspective.
Great. Secondly would be on non-auto that we have directionally we have given that what are the areas that we are getting into. What are the parameters that we focus on? I mean, we see growth or maybe margins. What are the parameters that we will see before entering into such areas?
We definitely see the return on investment. We, of course, see the margins, and we see what is the target market. If the target market is good, then we enter. These are three criteria which immediately come to my mind.
These are the criteria for expansion, and also we need to understand our own capabilities and areas of strength. Along with these financial parameters and areas of strength, that is how we shortlist the areas of diversification.
Yeah, that is an important point.
Thanks. That is it from my side.
Thank you very much. That was the last question in queue. I would now like to hand the conference over to Mr. Aditya Jhawar for closing comments.
So as we see that Q2 was clearly a challenging quarter from commodity headwinds. As I mentioned before, customer price increases are coming through. We have already indicated a 0.5% positive impact of customer price increase from Q3, and there are discussions happening with other customers as well. On the RMC side, there is clearly a 0.5%-0.6% positive impact that we expect in Q3 itself. Depending upon how things progress, we will see how the direction moves for the commodities.
Clearly, the margin trajectory seems to be getting better. The greenfield facilities that I spoke about, the drag that it is having on margin, sequentially, that should also reduce, and next financial year will start contributing positively. On the demand side, we are seeing a reasonable good outlook from most of the customers, so that is also very encouraging. Thank you. That is it from my side.
Thank you very much. With that, we conclude today's conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.