ASK Automotive Limited is the largest manufacturer of brake-shoe and advanced braking ('AB') systems for two-wheelers ('2W') 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 three decades with in-house designing, developing and manufacturing capabilities. The offerings are powertrain agnostic, catering to electric vehicle ('EV') as well as internal combustion engine ('ICE') OEMs. Company commenced its operations in 1989 by manufacturing brake shoe products for 2Ws and have since diversified the operations to include offerings such as: (i) AB systems; (ii) aluminium lightweighting precision ('ALP') solutions, where they are a prominent player for 2W OEMs in India with a market share of 9% in Fiscal 2023 in terms of production volume; (iii) wheel assembly to 2W OEMs; and (iv) safety control cables ('SCC') products. They supply the portfolio of AB systems, ALP solutions, wheel assembly, and SCC products to OEMs in (i) the automotive sector for 2Ws, three wheelers ('3Ws'), passenger vehicles ('PVs') and commercial vehicles ('CVs'), and (ii) the non-automotive sector for all-terrain vehicles ('ATVs'), power tools and outdoor equipment. Company supplies its products to all of the top six 2W OEMs (in terms of production volume and value in Fiscal 2023) in India. In Fiscal 2022, they commenced commercial supplies to 2W EV OEMs in India, including TVS Motor Company Limited ('TVS'), Ather Energy Private Limited ('Ather'), Hero MotoCorp Limited ('Hero MotoCorp'), Greaves Electric Mobility Private Limited ('Greaves'), Bajaj Auto Limited ('Bajaj') and Revolt Intellicorp Private Limited ('Revolt'). They have long-standing relationships with all six of the top 2W OEM customers ranging from 16 years to 30 years. In addition to the customers in India, the Company also increasingly caters to customers overseas, both in the automotive and non-automotive sectors through export of AB systems and ALP solutions. Automotive customers outside India include UFI Filters India Private Limited ('UFI Filters'), Federal-Mogul Italy s.r.l. – racing & motorcycle division ('Federal-Mogul'), and FDP Virginia Inc., and the non-automotive customers outside India include Stanley Black & Decker, Polaris Industries Inc. ('Polaris') and MTD Products Inc. ('MTD Products'). As of June 30, 2023, they operated 15 manufacturing facilities across five states in India, majority of which are strategically located in close proximity to the OEM customers. They recently commenced commercial manufacturing operations at the 16th manufacturing facility in Bhiwadi (Rajasthan) in July 2023. They have also been allotted land in Kolar, Karnataka from the relevant regulatory authority, on which they propose to develop a manufacturing facility. In addition, their Joint Venture operates one manufacturing facility in Gurugram, Haryana. As per financial performance, ASK Automotive Limited has posted total income / net profits of Rs 1,567.76 Cr / Rs 106.20 Cr (FY21), Rs. 2,024.26 Cr / Rs 82.65 (FY22), Rs 2,566.27 Cr / Rs 122.95 Cr (FY23) and Rs 657.54 Cr / Rs 34.82 Cr (Q1 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 5.32 and average RoNW of 16.75% for last three fiscals. Issue is priced at a P/BV of 8.20 as per NAV of 34.41 as on 30.06.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 67.26, 45.22, 41.11 and 39.91 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, four lead managers are associated with this IPO, and have handled around 159 IPOs in last three fiscals. JM Financial Limited : This is 38th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. (As on 02.11.2023) Axis Capital Limited : This is 44th IPO from this BRLM. From last 10 IPOs, three are opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. (As on 02.11.2023) ICICI Securities Limited : This is 42th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, all are trading above issue price or at par. (As on 02.11.2023) IIFL Securities Limited : This is 39th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. (As on 02.11.2023) As per financials, ASK Automotive Limited has shown good growth, RoNW is 19.10% and P/E is respectively 67.26, 45.22, 41.11 and 39.91 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks fully priced, also its complete OFS and company needs to off-load more 10% equity in next three years. Company is in business of two wheeler auto parts manufacturing (EV and ICE) with dominant market share. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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