Brokerages express optimism after the Rs 834-crore IPO of ASK Automotive

 Brokerages express optimism after the Rs 834-crore IPO of ASK Automotive

Several experts have rated ASK Automotive's Rs 834 crore initial public offering (IPO) as "Subscribe."

The Rs 834-crore public offering of ASK Automotive began accepting subscriptions on November 7. ASK Automotive's respectable financial performance and fair value earned the business a "subscribe" grade from many experts. The offering has a fixed price range of Rs 268-282 per share and will close on November 9.

All of the IPO's profits will go to the selling stockholders since the issuance is just an offer to sell 2.95 crore shares. Vijay as well as Kuldip Singh Rathee are the company's promoters.

Investing Anchors

The business received Rs 250.20 crore from anchor investors prior to the IPO. Participating in the anchor book were 25 investors, including well-known firms as Florida Retirement System, BNP Paribas Arbitrage, Morgan Stanley, Goldman Sachs, Neuberger Berman, and Copthall Mauritius Investment.

A number of domestic organizations acquired shares in the business, including Edelweiss Trusteeship, Bajaj Allianz Life Insurance Company, Canara Robeco Mutual Fund, SBI Life Insurance Company, Nippon Life India, ICICI Prudential Mutual Fund, Tata Mutual Fund, along with Abakkus Diversified Alpha Fund.

The financial outcome

In FY23, ASK Automotive's revenue increased by 27% year over year to Rs 2,555 crore. In FY23, the company's profit after tax was Rs 123 crore, up from Rs 82.65 crore in FY22. During the same year, the PAT margin increased to 4.79 percent from 4.08 percent. The return on average capital employed (RoACE) increased to 22.06 percent from 16.76 percent in FY23, while the return on average equity (RoAE) increased to 19.27 percent from 13.33 percent in FY22.

The company's net debt-to-equity ratio dropped to 0.49x from 0.25x in the same time as its adjusted net debt climbed from Rs 158.49 crore in FY22 to Rs 315.78 crore in FY23.

Company Overview

With a combined market share of roughly 50% in terms of production volume for manufacturers of original equipment (OEM) or the branded independent aftermarket (IAM) in fiscal 2023, ASK Automotive is the biggest producer of brakeshoe as well as advanced braking systems for two-wheelers in India.

The corporation operated 15 production facilities in five states as of June 2023. OEMs including HMSI, HMCL, Suzuki, TVS, Yamaha, Bajaj, Royal Enfield, Denso, and Magneti Marelli are among the companies that ASK Automotive provides. It has since increased the scope of its business to serve well-known brands in the EV industry, including TVS Motor, Ather, Hero Motocop, Greaves, Bajaj Auto, and Revolt.

Principal Dangers

The company's revenue from operations is mostly derived from its top three clients, who account for over 50% of the total. In the previous three fiscal years, the single biggest customer has contributed over 30% of the company's revenue from operations. The company's operations, financial situation, and business may be negatively impacted if any of these clients were to disappear or reduce their purchases.

The business does not have binding obligations for supply or exclusive relationships with any of its suppliers; instead, it relies on other parties to provide raw materials.

Should you get an IPO subscription for ASK Automotives?

Subscribe to Reliance Securities Now! 

Reliance Securities analysts predicted a "subscribe" rating for the issue, stating that "ASK will continue to grow better than the industry able for diversification its product basket, offer fresh alternatives for existing products, as increase the content per vehicle for its products."

Subscribe to Canara Bank Securities

"This issue seems to be reasonably valued when compared to rivals, with a P/EPS of 45.63x for FY2023. Thus, we advise subscribing to the issue in order to benefit from listing profits, according to Canara Bank Securities analysts.

BP Wealth: Enroll

For the benefit of listing gains, analysts at BP Wealth suggested a "subscribe" rating since the majority of the advantages seem to be priced into the offering.

Investmart Swastika: Subscribe

Analysts at Swastika Investmart rated this initial public offering (IPO) as "Subscribe" because of the company's potential for long-term development.