ASK Automotive IPO: Should You Invest Or Not Based On Valuation?

The initial public offering of ASK Automotive Ltd. will open for public subscription on Tuesday. The three-day issue, priced between Rs 268 and Rs 282 per share, will conclude on Nov. 9.

The Rs 834-crore initial share sale comprises entirely of an offer for sale of up to 2.95 crore (2,95,71,390) equity shares by promoters Kuldip Singh Rathee and Vijay Rathee. There is no fresh issue segment in the IPO. After the issue, the promoters' shareholding will reduce to about 85%.

Since the issue of ASK Automotive is completely an OFS, the entire proceeds will go to the selling shareholders and the company will not receive any funds from the issue.

Valuation Metrics: Should You Subscribe?

Looking at the valuation at the upper price band, the public issue presents a market capitalisation of Rs 5,559 crore, with a price-to-earnings ratio of 45.6 times on a consolidated basis.

"ASK will continue to grow better than the industry, is able to diversify its product basket, offer new solutions for existing products and increase the content per vehicle for its products. Therefore, we recommend a Subscribe to the issue," said Reliance Securities.

"The company’s strategic focus to strengthen its position in the EV market and leverage its experience in developing AB systems and ALP solutions is helping them develop new products for OEMs. We recommend a “subscribe” for the benefit of listing gains for the issue, as most of the positives seem priced in the offering," said StoxBox in a note.

Gurugram-based ASK Automotive is a manufacturer of brake-shoe and advanced braking systems for two-wheelers in India, with a market share of approximately 50% in FY23, in terms of production volume for original equipment manufacturers and the branded independent aftermarket.

On the financial front, the company reported a consolidated turnover of Rs 2,555 crore for FY23, an increase from Rs 2,013 crore in FY22. Its net profit rose to Rs 123 crore from Rs 83 crore.