ASK Automotive Ltd, founded in 1988 is a market leader in India’s two-wheeler ABS segment, holding a 50% share. The company serves both EV and ICE OEMs, offering advanced braking, lightweight, and safety solutions. With in-house expertise and innovative manufacturing capabilities, ASK Automotive drives growth in the evolving automotive sector.
- About
- Industry Overview
- Journey
- Board of Director
- Shareholding Pattern
- Product Segments
- Revenue Segments
- Cost Structure
- Financials
- Management Discussion & Concall
- Strengths & Weaknesses
(A) About ASK Automotive Ltd. | Stock Analysis
Incorporated in 1988, ASK Automotive Limited is a manufacturer of brake-shoe and advanced braking Systems (ABS) for two-wheelers in India with a market share of approximately 50% in Fiscal 2023 in terms of production volume for original equipment manufacturers (“OEMs”) and the branded independent aftermarket (“IAM”), on a combined basis.
They have been supplying safety systems and critical engineering solutions for more than 3 decades with in-house designing, developing and manufacturing capabilities. Their offerings are powertrain agnostic, catering to electric vehicles (“EV”) as well as internal combustion engine (“ICE”) OEMs.
(B) Industry Overview
- The global two-wheeler market is projected to grow at a CAGR of 7.2% during the forecast period of 2024 to 2032. Sales of electric models surged by 30%, capturing 15% of the market share.
- Technological integration has played a key role. Almost 40% of the new models launched in 2023 featured connectivity and advanced safety features.
- The automobile industry is one of the primary drivers of the Indian economy, accounting for 35% of the manufacturing GDP and 6% of the Indian GDP.
(C) Journey
(D) Board of Directors of ASK Automotive Ltd.
(E) Shareholding Pattern of ASK Automotive Ltd.
(F) Product Segments of ASK Automotive Ltd. | Stock Analysis
(i) Advanced Braking Systems (ABS)
The company dominates the Indian two-wheeler market for advanced braking systems, holding an approximate 50% share. It manufactures brake shoes, disc brake pads, and brake panel assemblies, which are crucial for vehicle safety and performance.
The company achieved a 7% year-over-year growth in AB Systems with 52 proprietary formulations.
(ii) Aluminium Lightweighting Precision Solutions (ALPS)
The company specializes in die casting, critical machining, paint shop operations, and critical assemblies for both automotive and nonautomotive applications. The ALP solutions cater to various industries, including BEVs, internal combustion engine vehicles, and non-automotive sectors such as power tools and outdoor equipment. Lightweighting has become vital for vehicle performance providing fuel efficiency, particularly in the E Mobility sector.
The company provides lightweight & thermal management capabilities to meet a variety of EV needs.
The company achieved a 29% year-over-year growth in ALPS and a 133% year-over-year growth in the EV segment.
(iii) Safety Control Cables (SCC)
The company has a technical collaboration with HSH Safety Control Cables Ind. Co. Ltd., Taiwan to serve domestic automobile OEMs and OES in both domestic and international aftermarket sectors. They offer a range of control cables, including front and rear brake cables, throttle cables, speedometer cables, seat lock cables, fuel lid cables, temperature controller cables, and choke cables, specifically catering to 2W OEMs.
The company achieved a 36% year-over-year growth in SCC.
(iv) Wheel Assembly
The wheel assembly service lines follow customers’ instructions & specifications in assembling components supplied by the customers and/or the vendors. The company provides wheel assembly services to certain 2W OEMs in India.
(v) Others
Others segment include the revenue from scrap, dies and other unallocable sales.
(G) Revenue Segments of ASK Automotive Ltd. | Stock Analysis
(i) Segment wise Revenue
(ii) Geography Wise Revenue
(iii) Channel Wise Revenue
(H) Cost Structure of ASK Automotive Ltd.
(I) Financials of ASK Automotive Ltd.
The company’s revenue has grown at a CAGR of 5.31% over the past 6 years, increasing from Rs 1,785 Cr in FY19 to Rs 2,995 Cr in FY24. Subsequently, the company’s PAT has also shown growth, rising from Rs 121 Cr in FY19 to Rs 174 Cr. in FY24 at a CAGR of 3.70%.
(J) Management Discussion & Concall | Stock Analysis
- Through its technical collaboration, from Taiwan, the company is producing and selling Safety Control Cables to 2W OEMs and Independent Aftermarket customers through its distribution network of 400+ dealers across India.
- In FY24, the company delivered YoY growth of 17% in Revenue, 26% in EBITDA, 41% in PAT, and 58% in exports.
- The Board of Directors has approved an investment of ₹20,000 Lakhs for setting up their 18th Plant in Bengaluru, Karnataka under their wholly owned subsidiary, ASK Automobiles Pvt. Ltd.
- ASK Automotive has commissioned a state-of-the-art mega manufacturing facility with an investment of approximately ₹38,000 lakhs by March 31, 2024, in Karoli, Rajasthan.
Joint Ventures, Technical Collaborations, and Partnerships
- In April 2024, ASK Automotive signed a strategic joint venture agreement with the AISIN Group to market and sell auto components in the independent aftermarket for passenger car products. The Company will own 51% of the shareholding in the JV Co.
- The company has entered a new strategic partnership for High-Pressure Die-Casted alloy wheels for two-wheelers, receiving technical assistance from LIOHO Machine Works Ltd. of Taiwan.
Outlook
- ASK Automotive aims to seize export opportunities by introducing high-quality products to automotive and non-automotive customers in the US and European markets.
- The company is hoping that the exports contribute 10% of the total revenue over 5 years.
- The Company is currently focused on capitalizing on the growing adoption of EVs in India by prioritizing Lightweighting and Thermal management to reduce carbon emissions.
- To meet future demand, the Company is strengthening its production capacities and capabilities. It has established its 18th manufacturing facility in Karnataka to serve southern customers in India.
- The company aims to expand its Independent After Market (IAM) channel network and increase its focus on IAM sales.
Q2 FY25 Concall Highlights
- Allocation of Rs. 3,500 Cr. for the PLI for the auto and auto components sector and retained allocation of around Rs. 2,700 Cr. for the FAME India incentive is likely to support the growth of auto manufacturing, especially 2W EV in India.
- The construction work at the facility in Bengaluru has started and expect the new plant to be operationalized in Q4 FY25.
- The company is planning to launch products under the AISIN and ASK brands by Q4 FY25 and the Karoli plant has come to almost 40% capacity utilization.
- Advanced braking systems maintained market leadership with an 18% year-on-year growth.
- The aluminium light weighting precision solutions segment, which constitutes 45% of revenue, grew by 27%.
- Safety control cables also saw a healthy growth of 18%.
- Management is optimistic about maintaining growth momentum in the two-wheeler sector, especially during the festive season.
- The company aims to sustain EBITDA margins and gradually improve them in subsequent quarters.
- Management indicated that commodity price fluctuations are hedged, ensuring no adverse impact on margins.
(K) Strengths & Weaknesses
Strengths
1. Strong market position in the two-wheeler components industry
The ASK group is a prominent player in the two-wheeler friction materials segment and caters to most of the renowned OEMs in India, including Hero MotoCorp Ltd, Honda Motorcycle and Scooter India Pvt. Ltd (HMSI), Yamaha Motors India, TVS Motors Co Ltd, Suzuki Motorcycle India Pvt Ltd, and Bajaj Auto Ltd. It has a presence in the overseas markets and aftermarket segment, and a diversified product mix including brake shoes, aluminium die castings, and panel assemblies, which support the market position.
2. Robust financial risk profile
The financial risk profile has improved consistently because of the steady repayment of debt backed by sufficient reserve and reduced reliance on bank lines on account of prudent working capital management.
Weaknesses
1. Limited track record of sustained improvement in operating profitability
Operating profitability for the ASK group has fluctuated between 10% and 12% over the past four years. However, with new units being set up, improved profitability is expected due to reduced logistics costs and better cost absorption as operations ramp up.
Drop us your query at – info@pawealth.in or Visit pawealth.in
References: Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets and Management Interviews, Industry Publications.
Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.
Most successful stock advisors in India | Ludhiana Stock Market Tips | Stock Market Experts in Ludhiana | Top stock advisors in India | Best Stock Advisors in Gurugram | Investment Consultants in Ludhiana | Top Stock Brokers in Gurugram | Best stock advisors in India | Ludhiana Stock Advisors SEBI | Stock Consultants in Ludhiana | AMFI registered distributor | Amfi registered mutual fund | Be a mutual fund distributor | Top stock advisors in India | Top stock advisory services in India | Best Stock Advisors in Bangalore
