ASK Automotive lists at 8% premium: Should you buy more, hold, or book profit?

ASK Automotive raised Rs 834 crore via IPO

Shares of ASK Automotive listed at an 8 percent premium on November 15, in line with analyst expectations. The stock debuted at Rs 303.3 on the NSE and at Rs 304.9 on the BSE against the issue price of Rs 282. Several analysts now suggest holding the stock owing to the company’s decent financial performance and dominance in the two-wheeler brake shoe and Advance Braking System (ABS) segment.

The price band for the IPO, which opened on November 7 and closed on November 9, was fixed at Rs 268-282 per share. The company raised Rs 834 crore from the public issue. Since the offer was entirely an offer-for-sale of 2.95 crore shares, the entire proceeds will go to the selling shareholders and the company will not get any money from the offer.

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ASK Automotive shares strong relations with all the top two-wheeler manufacturers in the country. It has a robust production model and a technology- and innovation-based manufacturing process. Financially, the company has shown strong growth in its topline, while its profitability has also been decent, according to Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

“Allottees who applied for the public offering for listing premium are advised to maintain their stop-loss at Rs 290 and wait for further upside, whereas those who have a medium- to long-term perspective can also hold the stock with the given stop-loss,” Nyati said.

Prashanth Tapse, research analyst and senior vice-president for research at Mehta Equities, believe that after listing there would be decent demand for the shares as the IPO had received an overwhelming response from all kinds of investors, especially from QIBs. Further, ASK can act as a proxy play for the growth in the Indian automobile sector.

The offer received a strong response from investors with the issue getting booked 51.14 times and receiving bids for 105.85 crore shares against an issue size of 2.06 crore shares. Retail investors bid 5.7 times and non-institutional investors (NII) 35.47 times the portions set aside for them. QIBs picked up 142.41 times their allotted quota.

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“We strongly believe ASK Automotive gives the allotted investors a long-term opportunity to hold and raid the growth in the automobile sector, hence recommending all allotted investors ‘hold for long-term’ while those who failed to get allotments can 'accumulate' on the listing day for holding it for healthy long term returns as markets always reward a player who has high visibility and growth potential,” said Tapse.

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 percent in fiscal 2023 in terms of production volume for OEM and the branded independent aftermarket (IAM), on a combined basis. The promoters of the company are Kuldip Singh Rathee and Vijay Rathee.

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