The bidding for ASK Automotive’s Rs 834 crore-initial public offering (IPO) kicks off on Tuesday, November 7. The auto-ancillary player is offering its shares in the price band of Rs 268-Rs 282 apiece with a lot size of 53 equity shares. The issue will close for bidding on Thursday, November 9.
ASK Automotive, incorporated in 1988, is a manufacturer of advance braking systems (ABS) for two-wheelers in India as well as overseas. The product range of the company includes AB systems; aluminium lightweight precision, wheel assembly to 2W OEMs; and safety control cables.
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ASK Automotive’s Rs 834 crore-IPO is entirely an offer-for-sale (OFS) of up to 29,571,390 equity shares with a face value of Rs 2 each, by its promoters Kuldeep Singh Rathee and Vijay Rathee. The company will not receive any proceeds from the issue.
ASK Automotive raise Rs 250.2 crore from 25 anchor investors by allocating them 88,71,416 equity shares at Rs 282 apiece. Its anchor book included marquee names like Morgan Stanley, Goldman Sachs, Neuberger Berman, Florida Retirement System, Integrated Core Strategies, BNP Paribas Arbitrage, Societe Generale, and Copthall Mauritius Investment.
ASK Automotive has 15 manufacturing units spread across five states in India. It supplies to original equipment manufacturers (OEMs) like HMSI, HMCL, Suzuki, TVS, Yamaha, Bajaj, Royal Enfield, Denso, Magneti Marelli, and others. It also provides to the independent aftermarket and the export market through its manufacturing facilities.
For the period ended on June 30, 2023, ASK Automotive reported a net profit of Rs 34.84 crore with a revenue of Rs 657.55 crore. The company’s bottomline came in at Rs 122.95 crore with a revenue of Rs 2,566.28 crore for the financial year 2022-23.
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ASK Automotive has reserved 50 per cent of the offer for qualified institutional bidders (QIBs), while 15 per cent of shares shall be reserved for non-institutional investors. Remaining 35 per cent of shares shall be allocated for the retail investors.
JM Financial, Axis Capital, ICICI Securities and IIFL Securities are the book running lead managers to the issue, while Link Intime India is the registrar for the issue. Shares of ASK Automotive will be listed on both BSE and NSE. Here’s what a host of brokerage firms said about the IPO of ASK Automotive:
Canara Bank Securities
Rating: Subscribe
ASK has recently expanded its operations to cater to the top names in the EV sector like TVS Motor, Ather, Hero MotoCorp, Greaves, Bajaj Auto and Revolt, which has further increased its market share. With a strong liaison with major OEMs in the industry for the past 30 years, ASK Automotive enjoys long standing customer relationships, said Canara Bank Securities.
“Revenue and Profit after tax has increased by 29 per cent and 3 per cent for FY 2021-23 in terms of two-year CAGR, respectively. There was a drop in profits due to supply chain issues arising out of the pandemic. This issue is available at P/EPS of 45.63 times for FY2023 which appears fairly priced with peers. Hence, we recommend subscribing to subscribe the issue for listing gains,” it said.
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Reliance Securities
Rating: Subscribe
ASK’s key business ABS has high entry barriers with extensive and detailed vendor approval process of suppliers by OEMs, proprietary material formulations and technological prowess with various product lines being developed for the 3W, 4W and CV segments which will continue to drive the growth momentum in its business, said Reliance Securities.
“ALS division is witnessing growth and has a strong pipeline of new products for domestic and export markets to benefit from the growing Indian automotive industry. ASK will continue to grow better than the industry able to diversify product basket, offer new solutions for existing products and increase the content per vehicle for its products,” it added with a ‘subscribe’ tag.
Swastika Investmart
Rating: Subscribe for long-term
ASK is a leading player with more than 50 per cent market share as a brake shoe and advanced braking systems manufacturer. The company shares strong relations with all the top two-wheeler manufacturers in the country. It has a robust production model and a technology and innovation-based manufacturing process, said Swastika Investmart.
“The company has shown strong growth in its top-line numbers, while its profitability has also been decent. It is facing some risks related to its dependence on a limited number of clients, the regional concentration of its manufacturing unit, and increasing debt. The IPO is coming at a PE valuation of 45.63 times, which is reasonably priced,” it said ‘subscribe for long term’ rating.
Marwadi Financial Services
Rating: Subscribe
The company is going to list with a market capitalization of Rs 5,559.4 crore. We assign a ‘subscribe’ rating to this IPO as the company is a well-established manufacturer of safety systems and critical engineering solutions for some of India’s largest original equipment manufacturers with an extensive suite of systems and solutions for EV and ICE sectors,” said Marwadi Financial.
StoxBox by BP Equities
Rating: Subscribe
The advanced braking systems market is estimated at Rs 5,429.9 crore in FY23. The company’s strategic focus to strengthen its position in the EV market and leverage its experience in developing AB systems and ALP solutions is helping them develop new products for OEMs, said StoxBox by BP Equities.
This has enabled the company to achieve further weight reduction, enhanced performance and improved vehicle acceleration via high-performance driveline products and improved efficiencies, positioning it firmly in the market. On the valuation front, the issue is valued at a P/E of 39.8 times on the upper price band based on Q1FY24 annualised earnings, it said with a ‘subscribe’ tag.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
