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ICICI Securities Report
Ask Automotive Ltd. caters to braking systems, aluminium light-weighting parts and safety control cable systems of two-wheelers (~90% of revenue); rest of the revenue is derived from commercial vehicles, passenger vehicles, three-wheelers and all-terrian vehicles.
Ask's offerings are largely powertrain agnostic, benefitting from the need of light-weighting solutions from electric vehicles. Ask has ~35% market share in two-wheeler drum braking system market, with ~85% of two-wheeler braking market constituting of drum brakes, as per the company.
Ask is expanding its reach to passenger vehicle aluminium casting component segment to ramp up revenue profitably, both in India and globally.
With ~25% pre-tax return on capital employed, lean capital structure and controlled capital allocation, we expect Ask to deliver mean free cash flow of Rs 1.8 billion per annum along with earnings compound annual growth rate of ~38% in FY24-26E.
We initiate coverage on Ask with a Buy rating and a discounted cash flow-based target price of Rs 356, implying 22 times FY26E earnings.
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