ASK Automotive Limited IPO is scheduled on November 7, 2023. Company is the largest manufacturer of brake-shoe and advanced braking systems for two-wheelers in India. In this article we would review ASK Automotive IPO with details, positive and risk factors.
ASK Automotive IPO – Dates & Issue Details
| IPO Opening Date | 07-Nov-23 |
| IPO Closing Date | 09-Nov-23 |
| IPO Listing Date | 20-Nov-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 2 per equity share |
| IPO Price band | Rs 268 to Rs 282 per equity share |
| Lot Size | 53 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 834 Crores |
About ASK Automotive Limited
Company is the largest manufacturer of brake-shoe and advanced braking systems for two-wheelers in India with a market share of approximately 50% in Fiscal 2023 in terms of production volume for original equipment manufacturers and the branded independent aftermarket, on a combined basis.
They have been supplying safety systems and critical engineering solutions for more than three decades with in-house designing, developing and manufacturing capabilities.
Its offerings are power train agnostic, catering to electric vehicle as well as internal combustion engine OEMs. Its brand “ASK” is recognized as the leading brand in the 2W IAMin term soft production volume for Fiscal 2023 in India.
ASK Automotive Limited – Financials
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Period Ended | 31-Mar-21 | 31-Mar-22 | 31-Mar-23 | 30-Jun-23 |
|---|---|---|---|---|
| Assets | 948.25 | 1,105.56 | 1,281.21 | 1,443.34 |
| Revenue | 1,567.77 | 2,024.26 | 2,566.28 | 657.55 |
| Profit After Tax | 106.20 | 82.66 | 122.95 | 34.83 |
| Net Worth | 622.23 | 631.91 | 643.77 | |
| Reserves and Surplus | 581.54 | 591.73 | 604.34 | 639.03 |
| Total Borrowing | 54.02 | 119.78 | 231.82 | 268.03 |
ASK Automotive IPO Valuation
- Its IPO price band is Rs 268 to 282 per share
- If we consider last year FY23 EPS of Rs 6.18, P/E ratio works out to be 46x
- If we consider last 3 years weighted EPS of Rs 5.32, P/E ratio works out to be 53x
- The listed peers like Bharat Forge trading at P/E 99x (Highest) and Suprajit Engineering is trading at P/E of 17x (Lowest) and industry average P/E is 58.3x. Hence, the IPO Price band at P/E of 46x to 53x is fully priced.
ASK Automotive IPO – Positive Factors
- Company is well established manufacturer of safety systems and critical engineering solutions for some of India’s largest original equipment manufacturers.
- Company has robust production model driven by research and development and design with an emphasis on advanced material knowledge to customize systems and products based on customer specifications and engineering lighter precision products
- Company with technology and innovation-driven manufacturing process, with an extensive suit eof systems and solutions for EV and ICE sectors with long-standing customer relationships with both Indian and global OEM players
- Its financial and return metrics demonstrates the growth and efficient use of capital
ASK Automotive IPO – Negative or risk factors
- Objective of the IPO has only OFS. Under Offer For Sale (OFS), the IPO proceeds would go to selling share holders and company would not get benefitted.
- A significant portion (of more than 80%) of its revenue from operations is attributable to the Indian two-wheeler automotive sector. Any adverse changes in the two-wheeler automotive sector could adversely impact its business.
- They are dependent on its top three customers who contribute more than 00% of its revenue. Any loss of such customers can impact company operations and financials.
- Its business and profitability is substantially dependent on the availability and cost of its raw materials, including Aluminium, and any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact its business
- They depend on third parties for the supply of raw materials and do not have firm commitments for supply or exclusive arrangements with any of our
- Investors need to go through all internal and external risk factors from Ask Automotive IPO RHP.
ASK Automotive IPO – Should you invest?
- Company is well established manufacturer of safety systems and critical engineering solutions for some of India’s largest original equipment manufacturers. Company has strong revenue growth in the past.
- On the other side, company margins are on declining mode (6.7% in FY20, 4% in FY21 and 4.8% in FY23). Its top 3 customers contribute to over 50% of the revenues which poses high risk. Its entire IPO proceeds would go to selling share holders and company would not get benefitted
Investors should go through all positive aspects and risk factors (internal and external risk factors from RHP) before investing in such IPOs.
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