ASK Automotive IPO: 10 things to know before subscribing to Rs 834 crore issue

Ahead of the public offer, ASK Automotive raised Rs 250.2 crore from 25 anchor investors.

ASK Automotive’s IPO opened for subscription on November 7. Through the public issue, the company aims to raise Rs 834 crore. Ahead of the public offer, the company raised Rs 250.2 crore from 25 anchor investors.

Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

The IPO opened for subscription on November 7, 2023, and will close on November 9, 2023.

2) Price Band

The price band for the issue has been fixed at Rs 268-282 per share.

3) Offer Details

The company aims to raise Rs 834 crore via IPO. The offer is entirely an offer-for-sale of 2.95 crore shares. Ahead of the issue, the company mopped up Rs 250.2 crore by selling shares via anchor book on November 6. Marquee names such as Morgan Stanley, Goldman Sachs, Neuberger Berman, Florida Retirement System, Integrated Core Strategies, BNP Paribas Arbitrage, Societe Generale, and Copthall Mauritius Investment invested in the anchor book.

Domestic institutions including Nippon Life India, ICICI Prudential Mutual Fund, SBI Life Insurance Company, Tata Mutual Fund, ICICI Prudential Life Insurance Company, Canara Robeco Mutual Fund, Abakkus Diversified Alpha Fund, Edelweiss Trusteeship, Bajaj Allianz Life Insurance Company also picked stake in the company.

Also Read: ASK Automotive IPO: Financials, shareholding, comparison with peers in 5 charts

4) Objectives of Issue

There is no fresh issue component. So the entire issue proceeds will go to the selling shareholders and the company will not get any money from the offer.

5) Lot Size

Investors can bid for a minimum of 53 equity shares and multiples of 53 after that. Hence the minimum investment by retail investors would be Rs 14,204 (53 (Lot size) x 268 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,946.

6) Company Profile

ASK Automotive is the largest manufacturer of brake-shoe and advanced braking systems for two-wheelers in India with a market share of approximately 50% in Fiscal 2023 in terms of production volume for original equipment manufacturers (OEM) and the branded independent aftermarket (IAM), on a combined basis. As of June 2023, the company had 15 manufacturing units spread across five states in India. The company supplies to OEMs such as HMSI, HMCL, Suzuki, TVS, Yamaha, Bajaj, Royal Enfield, Denso, Magneti Marelli, and others. The company has recently expanded its operations to cater to the top names in the EV sector like TVS Motor, Ather, Hero Motocop, Greaves, Bajaj Auto and Revolt.

7) Financials

ASK Automotive recorded a year-on-year revenue growth of 27% in FY23, reaching Rs 2,555 crore. The company's profit after tax was Rs 123 crore for FY23, compared to Rs 82.65 crore in FY22. PAT (profit-after-tax) margin improved to 4.79% from 4.08% in the same period. Return on average equity (RoAE) rose to 19.27% in FY23 from 13.33% in FY22 while return on average capital employed (RoACE) climbed to 22.06% from 16.76%. The company’s adjusted net debt increased from Rs 158.49 crore in FY22 to Rs 315.78 crore in FY23. The net debt-to-equity ratio rose to 0.49x from 0.25x in the same period.

Also Read: ASK Automotive floats Rs 834-crore IPO, brokerages offer bullish views

8) Key Risks

ASK Automotive is dependent on its top three customers, who contribute more than 50% of its revenue from operations, with its single largest customer contributing approximately 30% of its revenue from operations in each of the last three fiscals. Loss of any of these customers or a reduction in purchases by any of them could adversely affect the company’s business, results of operations and financial condition. Further, the company depends on third parties for the supply of raw materials and does not have firm commitments for supply or exclusive arrangements with any of its suppliers.

9) Promoters

Kuldip Singh Rathee and Vijay Rathee are the promoters of the company. Pre-IPO, promoter and promoter group held a 100% stake in the company. Post-IPO, public shareholding will increase to 15% while the promoter and promoter group's stake will come down to 85%.

10) Listing Date

The stock is expected to be listed on the NSE and BSE on November 20. However, no official announcement has been made till now.