ASK Automotive IPO Review – GMP, Financials & Much More

ASK Automotive IPO Review: ASK Automotive Limited is coming up with its Initial Public Offering. The IPO will open for subscription on November 7, 2023, and close on November 9, 2023. In this article, we will look at the ASK Automotive IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out! ASK Automotive IPO Review – About The Company ASK Automotive Limited, Incorporated in 1988, is a manufacturer of advanced braking systems for two-wheelers in India. The company initiated its operations with the production of brake shoe products for two-wheelers (2Ws) and has since expanded its portfolio to encompass various offerings, including advanced braking (AB) systems, aluminium lightweight precision (ALP) solutions, wheel assembly for 2W OEMs, and safety control cables (SCC) products. It has versatile offerings, that serve the needs of both electric vehicle (EV) and internal combustion engine (ICE) original equipment manufacturers (OEMs), making them a valuable resource in the automotive industry. As of June 2023, the company operates 15 manufacturing units across five states in India. It has a diverse clientele base, including popular names like HMSI, HMCL, Suzuki, TVS, Yamaha, Bajaj, Royal Enfield, Denso, and Magneti Marelli, among others. The company also caters to the independent aftermarket and export market by utilizing its manufacturing facilities located across different regions of the country. ASK Automotive IPO – Industry Overview India is the world’s largest market for motorized two-wheelers, with domestic sales of 16.25 million units in Fiscal 2023. This figure represents approximately 76% of the total market consisting of two-wheelers, three-wheelers, passenger vehicles, and commercial vehicles by volume. In terms of value, two-wheelers account for approximately 16% of the market, which is approximately ₹1,056 billion. It is also worth noting that India is among the biggest 2-wheeler exporters globally. According to CRISIL MI&A, there is a projected Compound Annual Growth Rate (CAGR) of 5%-7% for 2-wheeler exports from India between Fiscal 2023 and Fiscal 2028, as compared to 5.3% between Fiscal 2018 and Fiscal 2023. Moreover, electric vehicles (EVs) are gaining more popularity in India and showing faster growth as compared to internal combustion engine (ICE) vehicles, across the 2-wheeler, 3-wheeler, and 4-wheeler sectors. Similarly, in the non-automotive sector, the growth of infrastructure, particularly in emerging economies like India and China, is a significant driver of the global power tools market. ASK Automotive IPO Review – Financial Highlights If we look at the financials of ASK Automotive we find out that their assets have grown from ₹948.25 crores in March 2021 to ₹1,443.34 crores in June 2023. Their revenues also follow a similar trend, it has grown from ₹1,567.77 crores in March 2021 to ₹2,566.28 crores in March 2023. As of Q1FY24, the company has reported a net revenue of ₹657.55 crores. While there was a good increase in revenue, the net profits of the company have only increased from ₹106.20 crores in March 2021 to ₹122.95 crores in March 2023. While there was an increase in revenue and net profit numbers, the net profit margins decreased from 6.77% in FY21 to 4.79% in FY23. This can be attributed to the high costs associated with raw materials (Aluminium) Coming to the return ratios, we can see that, it has an ROE of 19.27% and a RoCE of 22.06%, respectively as of FY23. This indicates a good return on the capital employed by the shareholders and the efficient use of company resources. Over the past three years, the company has increased its Debt-to-equity ratio from 0.13 to 0.39. This indicates that the company’s debt has slightly increased over the years. But, the positive aspect of this is, that the company is not heavily leveraged Key Performance Indicators of the Company (Source: RHP of the company)Competitors The following image will show you the comparison of the company along with the listed peers of the industry: (Source: RHP of the company)Strengths of the Company The company is well well-established manufacturer of safety systems and critical engineering solutions for some of the largest original equipment manufacturers in India. The company has a robust production model centred on research and development (“R&D”) and design, with a focus on (i) improved material understanding to tailor systems and products based on customer specifications, and (ii) developing lighter precision products. The company prioritizes technology and innovation to develop custom solutions for both the EV and ICE sectors through ongoing R&D and design efforts. The company has established long-standing customer relationships with both Indian and global OEM customers. The contributing factor to this is the company’s experience in developing complex critical safety systems and solutions. The company continuously enhances its engineering expertise through in-house training, equipping its workforce with diversified skillsets and ensuring they stay current with the latest manufacturing technologies and processes. Weaknesses of the Company The company derives 50% of its revenue from its top 3 customers of which, a single customer contributes 30% of revenue. The loss of any of these customers can adversely affect its business. The company is dependent on third parties for the supply of raw materials as it does not have any exclusive arrangement with its suppliers. The loss of any of these suppliers could adversely affect the company’s operations and business. The company does not own its Registered Office and land on which some of its manufacturing facilities are located. A failure to renew its existing lease arrangements at commercially favourable terms or at all may have a material adverse effect on its business. The company has significant power, fuel and water requirements to run its operations. Any disruption in these requirements or increase in its cost could adversely affect its business. The company is dependent on contract labourers for some of the ancillary and supporting tasks in the operations. Any disruption in the supply of such labour could adversely affect the business Key IPO Information Particulars Details IPO Size Rs 834 Cr Fresh Issue - Offer for Sale (OFS) Rs 834 Cr Opening date November 7, 2023 Closing date November 9, 2023 Face Value ₹2 per share Price Band ₹268 to ₹282 per share Lot Size 53 Shares Minimum Lot Size 1 (53 Shares) Maximum Lot Size 13 (689 shares) Listing Date November 20, 2023 Promoters: Kuldip Singh Rathee and Vijay Rathee. Book Running Lead Manager: JM Financial Limited, Axis Capital Limited, IIFL Securities Limited and ICICI Securities Limited. Registrar to the Offer: Link Intime India Private Limited The Objective of the Issue As the entire issue is through an offer for sale, the company will not receive any proceeds from this IPO The company intends to enhance its visibility and brand and provide liquidity to its existing Shareholders through this IPO In Closing In this article, we examined the details of the ASK Automotive IPO Review 2023. Given the industry’s consistent expansion, coupled with the company’s own growth, the company’s outlook appears favorable for the future. What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below. Written By Aaron Vas By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment The post ASK Automotive IPO Review – GMP, Financials & Much More appeared first on Trade Brains. [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Click here to reserve your seat now!]( style=) [ASK Automotive IPO Review – GMP, Financials & Much More]( ASK Automotive IPO Review: ASK Automotive Limited is coming up with its Initial Public Offering. The IPO will open for subscription on November 7, 2023, and close on November 9, 2023. In this article, we will look at the ASK Automotive IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out! ASK Automotive IPO Review – About The Company ASK Automotive Limited, Incorporated in 1988, is a manufacturer of advanced braking systems for two-wheelers in India. The company initiated its operations with the production of brake shoe products for two-wheelers (2Ws) and has since expanded its portfolio to encompass various offerings, including advanced braking (AB) systems, aluminium lightweight precision (ALP) solutions, wheel assembly for 2W OEMs, and safety control cables (SCC) products. It has versatile offerings, that serve the needs of both electric vehicle (EV) and internal combustion engine (ICE) original equipment manufacturers (OEMs), making them a valuable resource in the automotive industry. As of June 2023, the company operates 15 manufacturing units across five states in India. It has a diverse clientele base, including popular names like HMSI, HMCL, Suzuki, TVS, Yamaha, Bajaj, Royal Enfield, Denso, and Magneti Marelli, among others. The company also caters to the independent aftermarket and export market by utilizing its manufacturing facilities located across different regions of the country. ASK Automotive IPO – Industry Overview India is the world’s largest market for motorized two-wheelers, with domestic sales of 16.25 million units in Fiscal 2023. This figure represents approximately 76% of the total market consisting of two-wheelers, three-wheelers, passenger vehicles, and commercial vehicles by volume. In terms of value, two-wheelers account for approximately 16% of the market, which is approximately ₹1,056 billion. It is also worth noting that India is among the biggest 2-wheeler exporters globally. According to CRISIL MI&A, there is a projected Compound Annual Growth Rate (CAGR) of 5%-7% for 2-wheeler exports from India between Fiscal 2023 and Fiscal 2028, as compared to 5.3% between Fiscal 2018 and Fiscal 2023. Moreover, electric vehicles (EVs) are gaining more popularity in India and showing faster growth as compared to internal combustion engine (ICE) vehicles, across the 2-wheeler, 3-wheeler, and 4-wheeler sectors. Similarly, in the non-automotive sector, the growth of infrastructure, particularly in emerging economies like India and China, is a significant driver of the global power tools market. ASK Automotive IPO Review – Financial Highlights If we look at the financials of ASK Automotive we find out that their assets have grown from ₹948.25 crores in March 2021 to ₹1,443.34 crores in June 2023. Their revenues also follow a similar trend, it has grown from ₹1,567.77 crores in March 2021 to ₹2,566.28 crores in March 2023. As of Q1FY24, the company has reported a net revenue of ₹657.55 crores. While there was a good increase in revenue, the net profits of the company have only increased from ₹106.20 crores in March 2021 to ₹122.95 crores in March 2023. While there was an increase in revenue and net profit numbers, the net profit margins decreased from 6.77% in FY21 to 4.79% in FY23. This can be attributed to the high costs associated with raw materials (Aluminium) Coming to the return ratios, we can see that, it has an ROE of 19.27% and a RoCE of 22.06%, respectively as of FY23. This indicates a good return on the capital employed by the shareholders and the efficient use of company resources. Over the past three years, the company has increased its Debt-to-equity ratio from 0.13 to 0.39. This indicates that the company’s debt has slightly increased over the years. But, the positive aspect of this is, that the company is not heavily leveraged Key Performance Indicators of the Company (Source: RHP of the company)Competitors The following image will show you the comparison of the company along with the listed peers of the industry: (Source: RHP of the company)Strengths of the Company The company is well well-established manufacturer of safety systems and critical engineering solutions for some of the largest original equipment manufacturers in India. The company has a robust production model centred on research and development (“R&D”) and design, with a focus on (i) improved material understanding to tailor systems and products based on customer specifications, and (ii) developing lighter precision products. The company prioritizes technology and innovation to develop custom solutions for both the EV and ICE sectors through ongoing R&D and design efforts. The company has established long-standing customer relationships with both Indian and global OEM customers. The contributing factor to this is the company’s experience in developing complex critical safety systems and solutions. The company continuously enhances its engineering expertise through in-house training, equipping its workforce with diversified skillsets and ensuring they stay current with the latest manufacturing technologies and processes. Weaknesses of the Company The company derives 50% of its revenue from its top 3 customers of which, a single customer contributes 30% of revenue. The loss of any of these customers can adversely affect its business. The company is dependent on third parties for the supply of raw materials as it does not have any exclusive arrangement with its suppliers. The loss of any of these suppliers could adversely affect the company’s operations and business. The company does not own its Registered Office and land on which some of its manufacturing facilities are located. A failure to renew its existing lease arrangements at commercially favourable terms or at all may have a material adverse effect on its business. The company has significant power, fuel and water requirements to run its operations. Any disruption in these requirements or increase in its cost could adversely affect its business. The company is dependent on contract labourers for some of the ancillary and supporting tasks in the operations. Any disruption in the supply of such labour could adversely affect the business Key IPO Information Particulars Details IPO Size Rs 834 Cr Fresh Issue - Offer for Sale (OFS) Rs 834 Cr Opening date November 7, 2023 Closing date November 9, 2023 Face Value ₹2 per share Price Band ₹268 to ₹282 per share Lot Size 53 Shares Minimum Lot Size 1 (53 Shares) Maximum Lot Size 13 (689 shares) Listing Date November 20, 2023 Promoters: Kuldip Singh Rathee and Vijay Rathee. Book Running Lead Manager: JM Financial Limited, Axis Capital Limited, IIFL Securities Limited and ICICI Securities Limited. Registrar to the Offer: Link Intime India Private Limited The Objective of the Issue As the entire issue is through an offer for sale, the company will not receive any proceeds from this IPO The company intends to enhance its visibility and brand and provide liquidity to its existing Shareholders through this IPO In Closing In this article, we examined the details of the ASK Automotive IPO Review 2023. Given the industry’s consistent expansion, coupled with the company’s own growth, the company’s outlook appears favorable for the future. What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below. Written By Aaron Vas By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment The post ASK Automotive IPO Review – GMP, Financials & Much More appeared first on Trade Brains. 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