ASK Automotive Ltd is the largest maker of brake-shoes and advanced braking systems for two-wheelers in India. The automotive company maintains a comprehensive portfolio of powertrain-agnostic and EV parts. It also supplies engineering solutions and safety systems to 9 EV OEMs in India.
ASK Automotive filed its draft papers with SEBI in June 2023 to float its IPO. The leading brake-shoe maker will now float its IPO on November 7 2023. It will stay open for investors till November 9 2023. The IPO will consist of only an Offer for the Sale (OFS) of equity shares of up to 29,571,390 by its promoters. Learn more about ASK Automotive Ltd IPO and the company’s financials, strengths, and risk factors before investing.
Table of Content
IPO Details
Refer to the table below for details of the upcoming ASK Automotive Ltd IPO:
| IPO Subscription Period | From November 7 2023 to November 9 2023 |
| Listing Date | Monday, November 20, 2023 |
| Price Band | ₹268 to ₹282 per share |
| Face Value | Rs. 2 each share |
| Lot Size | 53 Shares |
| Total Issue Size | 29,571,390 shares (aggregating up to ₹834.00 Cr) |
| Offer for Sale | 29,571,390 shares of ₹2 (aggregating up to ₹834.00 Cr) |
| Type of Issue | Book Built IPO |
| Listing on Exchanges | NSE and BSE |
About Company
Being the largest producer of brake shoes and advanced braking systems for two-wheelers, ASK Automotive held 50% of the market share in FY 2022. The company has been a prominent supplier of engineering solutions and safety systems for over 3 decades. It has in-house designing, development and production facilities.
The company is recognised as the top company in the 2W IAM in terms of volume of production for the Financial Year 2022.
ASK started its operations in 1989 as a manufacturer of brake shoes for only 2-wheelers. Since then, it has diversified its business and now includes the following:
- Aluminium lightweight precision solutions (ALP)
- AB systems
- Safety control cables products (SCC)
- Wheel assembly for 2W OEMs
Apart from operating domestically, the company also has many customers overseas, in the automotive as well as non-automotive segments. Some renowned customers outside India include –
- UFI Filters India Private Limited
- Federal-Mogul Italy s.r.l. (racing & 183 motorcycle division)
- FDP Virginia Inc
- Stanley Black & Decker
- MTD Products Inc
- Polaris Industries Inc
The company maintains 15 operating facilities in India spread over 5 states. Another manufacturing facility in Rajasthan is presently under development.
Also Read: How does an IPO work?
IPO Tentative Table
ASK Automotive Ltd IPO will be open for subscription from November 7 2023. Find some important tentative dates of the IPO in the table below:
| Anchor Allocation Date | Monday, November 6, 2023 |
| IPO Opening Date | Tuesday, November 7, 2023 |
| IPO Closing Date | Thursday, November 9, 2023 |
| UPI Mandate Confirmation Cut-Off Date | 5 PM on November 9, 2023 |
| Allotment Basis | Wednesday, November 15, 2023 |
| Initiation of Refunds | Thursday, November 16, 2023 |
| Listing Date | Monday, November 20, 2023 |
| Share Credit into Demat | Friday, November 17, 2023 |
IPO Lot Size
Check the lot size for the IPO of ASK Automotive Limited IPO:
| Applications | Lots | Shares | Amount |
| Retail (Min) | 1 | 53 | Rs.14,946 |
| Retail (Max) | 13 | 689 | Rs.1,94,298 |
| S-HNI (Min) | 14 | 742 | Rs.2,09,244 |
| S-HNI (Max) | 66 | 3,498 | Rs.9,86,436 |
| B-HNI (Min) | 67 | 3,551 | Rs.10,01,382 |
Company Financials
Potential investors must know about a company’s financial performance in recent years to make an informed financial decision. The following table lays down crucial financial details as per ASK Automotive DRHP:
| Parameters* as Per the Year Ending On | March 31 2023 | March 31 2022 | March 31 2021 |
| Total Assets | 12,812.08 | 11,055.63 | 9,482.53 |
| Total Liabilities | 6,374.37 | 4,736.55 | 3,260.28 |
| Total Expenses | 23,906.29 | 19,059.94 | 14,203.99 |
| Total Revenue | 25,662.79 | 20,242.60 | 15,677.67 |
| Profit After Tax | 1,229.53 | 826.59 | 1,062.01 |
| EBITDA | 2,475.45 | 1,822.58 | 2,101.12 |
| Earnings Per Share (EPS) (Basic and Diluted) | 6.18 | 4.09 | 5.22 |
*All values in Rs. millions except EPS
Also Read: IPO investment strategy
Strengths
Here are some of the notable strengths of ASK Automotive Ltd:
- India is the largest market for motorised 2-wheelers as well as the largest exporter of the same. There has been a domestic sale of 13.73 million vehicles in FY 2022 alone. ASK Automotive supplied its manufactured products to the top six 2-wheeler OEMs during this period.
- The company has a robust production system powered by its research development and design team. Additionally, they have advanced material knowledge to personalise systems and products as per customer’s requirements.
- Innovation and technology play a crucial role in developing critical engineering solutions and safety systems. The company performs extensive research, development, and designing activities to develop customised systems for EV and ICE vehicles.
- The company has a diverse customer base in India as well as many offshore clients. It maintains a long-standing relationship of over 15 years with the leading vehicle manufacturers as of March 31 2023.
- ASK Automotive has seen a growth of 28.64% CAGR in its operating revenue for the period between FY21 and FY23. It holds great potential for future growth and diversification.
Risk Factors
Now that you know how the company has been performing over the previous years, you should also be aware of its underlying risks. These have the potential to adversely affect the operations of the company:
- Over 80% of this company’s revenue comes from the Indian two-wheeler automotive sector as per the last three financial years. Any adverse change in this sector can significantly impact its business, revenue, and operations.
- The company has a long-standing customer base and it is highly dependent on the top 3 customers who contributed over 50% of the revenue from operations. Among them, the largest customers contributed more than 30% to its revenue. Thus, a loss or reduction in business from any of these customers can hurt its revenue.
Also Read: Risk of investing in IPO
Outlook & Valuation
Regarding financial results, AAL reported total income/net profit of Rs. 1567.77 Cr. / Rs. 106.20 Cr. (FY21), Rs. 2024.26 Cr. / Rs. 82.66 Cr. (FY22), and Rs. 2566.28 Cr. / Rs. 122.95 Cr. (FY23). On total revenue of Rs. 657.55 Cr, it generated a net profit of Rs. 34.83 cr during the first quarter of FY24, which concluded in June 2023. AAL has reported an average EPS of Rs. 5.32 and an average RoNW of 16.75% over the previous three fiscal years. Based on its post-IPO NAV of Rs. 34.41 and its NAV of Rs. 34.41 as of June 30, 2023, the issue is priced at a P/BV of 8.20. The asking price has a P/E ratio of 39.89 if we annualize FY24 earnings and credit it to the company’s paid-up equity capital after the initial public offering. The company reported PAT margins for the reporting periods as follows: 6.77% (FY21), 4.08% (FY22), 4.79% (FY23), and 5.30% (Q1-FY24); correspondingly, RoACE margins were 21.98%, 16.76%, 22.06%, and 5.31%.
Summary
The ASK Automotive Ltd IPO will consist of only an Offer for Sale. Promoters Kuldip Singh Rathee and Vijay Rathee will sell up to 2,06,99,973 and 88,71,417 shares, respectively. The entire proceeds from the IPO will go to the offloading shareholders and the company will not receive any funds from it. However, it will benefit the company indirectly by enhancing its brand image and visibility.
Frequently Asked Questions
K S Rathee is the Chairman/ Managing director of ASK Automotive Private Limited.
Kuldip Singh Rathee, Prashant Rathee, Aman Rathee, and Rajesh Katariab are the whole-time directors of ASK Automotive.
Axis Capital Limited, JM Financial Limited, IIFL Securities Limited and ICICI Securities Limited are the book-running lead managers of ASK Automotive IPO.
Link Intime India Private Limited is the registrar of ASK Automotive IPO.
ASK Automotive IPO will only comprise an OFS of up to 2,95,71,390 equity shares.
