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Ask Automotive IPO: Check Issue Size, Date, and Price Band

20 Nov 2023

Introduction:

The automotive industry is one of the most dynamic and evolving sectors globally, attracting significant attention from investors and stakeholders. Ask Automotive Limited, a leading player in the automotive component manufacturing space in India, has recently announced its Initial Public Offering (IPO).

Ahead of its opening on Tuesday, 7 November 2023, the IPO has generated significant buzz in the financial market, as it presents an opportunity for investors to be a part of an established and growing company. Continue reading to learn all the essential details concerning Ask Automotive IPO that can help you make an informed investment decision.

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About Ask Automotive Limited

Ask Automotive Limited was incorporated in 1988 and is one of the leading manufacturers of automotive components in India. The company’s product offerings include Advanced Braking Systems (ABS), Aluminium Lightweighting Precision (ALP) solutions, wheel assemblies, disc brake pads, and Safety Control Cables (SCC).

The company’s products are supplied to global two-wheeler, three-wheeler, passenger vehicle, and commercial vehicle manufacturers. Some of the most reputed clients include Yamaha, TVS, Suzuki, HMCL, HMSI, Royal Enfield, Denso, and Stanley Black & Decker.

As of June 2023, Ask Automotive Ltd. had 15 manufacturing facilities in India, and its products were exported to more than 48 countries around the globe. It has collaborated with several international players to distribute its products in different countries.

Key Strengths of the Company

Below are the key strengths of Ask Automotive Ltd. as stated in its Draft Red Herring Prospectus (DRHP) available on the Securities and Exchange Board of India’s (SEBI) website:

  • As per the 2023 CRISIL report, the company is the largest manufacturer of ABS systems and brake shoes in India, with a market share of more than 50%
  • Technology and innovation are at the forefront of the company’s manufacturing principles
  • The company boasts well-established and long-term relationships with its marquee clients both Indian and global
  • The company has invested heavily to strengthen its Research and Development (R&D) and designing wings and ensure robust production
  • The company has already entered the Electric Vehicle (EV) market which carries immense potential for the future

Key Risks or Weaknesses Highlighted

Below are some risks or weaknesses associated with Ask Automotive Limited (as highlighted in the DRHP):

  • More than 50% of the revenues are generated from the top three clients. Furthermore, 30% of the revenues come from the biggest client
  • The two-wheeler manufacturing companies contribute to over 90% of the revenues
  • The company is highly dependent on third-party vendors for the supply of raw materials
  • Most of the manufacturing facilities are on leased lands
  • The company does not own its registered office in New Delhi

Core Financials of the Company

Analyzing the key financials of a company can provide you with an idea of its future growth potential. It’s one of the crucial factors you must look at before deciding to invest in an IPO. The table below portrays the core financials of Ask Automotive Ltd. for the last three financial years:

Particulars Three-month Period Ended June 30, 2023 As of and for FY Ended March 31
2023 2022 2021
Share Capital 39 39 40 41
Net Worth 678 644 632 622
Revenue From Operations 657 2555 2013 1544
EBITDA Adjusted 65 248 182 210
Profit After Tax 35 123 83 106
Earnings Per Share (Diluted) 2 6 4 5
Return on Equity (%) 5 19% 13% 17%

*Amount in Crores

Source – RHP Dated 30 October 2023 on SEBI website

As you can see, the company’s revenue has grown steadily from Rs. 1,544 crore to Rs. 2,555 crore in the last three financial years. Profits and ROE are also attractive, although a bit erratic between FY21 and FY22.

Details of the IPO

Ask Automotive IPO, comprising only an offer for sale worth Rs. 834 crores, opens for public subscription on Tuesday, 7 November 2023, and closes on Thursday, 9 November 2023. As a retail investor, you can apply for a minimum of 53 shares (one lot) and multiples thereof in the price band of Rs. 268 to Rs. 282 per equity share.

More details of the IPO are in the table below:

IPO Date 7 November to 9 November 2023
Basis of Allotment 15-Nov-23
Listing Date 20-Nov-23
Face Value Rs. 2 per share
Price Band Rs. 268 to Rs. 282
Lot Size 53 shares
Total Issue Size 29,571,390 equity shares (Worth Rs. 834 crores)
Offer for Sale 29,571,390 equity shares (Worth Rs. 834 crores)
Listing At NSE, BSE

To conclude

The Ask Automotive IPO presents a compelling opportunity for those willing to join the growing automotive industry. However, before investing in an IPO, you must consider several factors, including the issuing company’s fundamentals and the prevailing market conditions. With Motilal Oswal, you can open a free Demat account and start investing in IPOs from your home.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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