Incorporated in 1988, ASK Automotive Limited is India’s largest manufacturer of brake-shoe and advanced braking (AB) systems for two-wheelers. Other than brakes, it is involved in the design, development and manufacturing of aluminium lightweight precision (ALP) solutions, wheel assembly for OEMs, and safety control cables (SCC) products.
These products are used in the automotive sector for two-wheelers, three-wheelers, passenger vehicles and commercial vehicles and cater to the electric vehicle (EV) and internal combustion engine (ICE) OEMs. They are also used in the non-automotive sector for all-terrain vehicles, power tools and outdoor equipment.
In FY23, the company had a market share of approximately 50% in terms of the production volume for original equipment manufacturers (OEMs) and the branded independent aftermarket (IAM).
As of 30 June 2023, the company operates 15 manufacturing facilities located in five states in India in close proximity to OEM customers. One new manufacturing facility became operational in July 2023 in Rajasthan and another one is proposed to be developed in Karnataka.
It supplies its products to all of the top six two-wheeler manufacturers in India, including TVS, Ather, Hero MotoCorp, Greaves, Bajaj Auto and Revolt. It also caters to overseas customers like UFI Filters, Federal-Mogul, FDP Virginia Inc., Stanley Black & Decker, Polaris and MTD Products.
Between FY21 and FY23, the company saw a CAGR rise of 18% in its revenue from operations and 5% in its profit. Moreover, its products are supplied to top automakers in India, which is the largest 2W market in the world, with domestic sales of 16.25 million units in FY23. All of this could be beneficial for the company.
And now, ASK Automotive Limited is coming out with its initial public offer (IPO). The entire IPO will be an offer for sale. The money raised through this IPO will be received by the selling shareholders. Its shares will be listed on the NSE and the BSE.
- India’s largest manufacturer of brake-shoe and advanced braking (AB) systems for two-wheelers (2W). Market share of approximately 50% in FY23 in terms of the production volume
- Products include AB systems, aluminium lightweighting precision (ALP) solutions, wheel assembly for 2W OEMs, and safety control cables (SCC) products.
- Caters to the automotive sector for 2Ws, three wheelers, passenger vehicles and commercial vehicles.
- Caters to the electric vehicle as well as the internal combustion engine (ICE) sector.
- Caters to the non-automotive sector for all-terrain vehicles, power tools and outdoor equipment.
- 16 manufacturing facilities are located in five states in India in close proximity to OEM customers.
- Customers are all of the top six 2W OEMs in India including TVS, Ather, Hero MotoCorp, Greaves, Bajaj Auto and Revolt.
- Overseas customers include UFI Filters, Federal-Mogul, FDP Virginia Inc., Stanley Black & Decker, Polaris and MTD Products.
- CAGR rise of 18% in its revenue from operations and 5% in its profit in the last three years.
- Operates in an industry with high barriers to entry as the development of braking systems requires technological prowess and R&D.
- Operates as a supplier to the 2W market in India, which constituted approximately 76% by production volume of the total Indian automotive market in FY23.
- Long-standing customer relationships of more than 16 years with two-wheeler automakers in India.
- Holds a portfolio of 52 proprietary formulations used in the production of AB systems as of 30 June 2023.
- Robust production model driven by research and development comprising 365 engineering graduates as of 30 June 2023.
- Develops and offers customised systems and solutions for customers in both the ICE and EV sectors.
- EBITDA of ₹210 crore, ₹182 crore and ₹247 crore in FY21, FY22 and FY23 respectively.
Risks and threats
- Derives a significant portion of its revenue from the 2W automotive sector, accounting for 90% of the total revenue from operations in FY23. Meanwhile, its top three customers contribute 60% of its total revenue.
- Manufacturing facilities are concentrated in the state of Haryana and certain products are manufactured only at the manufacturing facilities in Haryana.
- Operates a capital-intensive business with a total capital expenditure of ₹166 crore in FY23.
- May be subject to industrial unrest, slowdowns and increased employee costs.
- Has incurred significant indebtedness with total outstanding borrowings amassing to ₹318 crore as of 31 March 2023.
You can now apply for the ASK Automotive IPO on Upstox here.