ASK Automotive sets price band at ₹268-282/share for ₹834-cr IPO

ASK Automotive, a manufacturer of advanced braking systems, aluminium lightweight precision, and wheel assembly for two-wheeler, has set the price band for its initial public offering (IPO) at ₹268-282 per share. The public issue of the auto ancillary player will open for subscription on November 7 and close on November 9, while the anchor book will open for a day on November 6. The shares of ASK Automotive are slated to be listed on the stock exchanges on November 20, 2023.

At the upper end of the price band, the Gurugram-based company aims to raise ₹833.91 crore by issuing 2,95,71,390 equity shares. The IPO is completely an offer for sale by promoters Kuldip Singh Rathee and his wife, Vijay Rathee. Hence, the entire issue proceeds will go to promoters and the company will not receive any capital from this offer.

Kuldip Singh Rathee is the largest shareholder in the company with a 50.73% stake, followed by Vijay Rathee, who owns 39.47% shares in the company as of now. Kuldip’s sons Prashant Rathee and Aman Rathee hold 4.9% each in the company.

As per the offer document filed with the capital market regulator SEBI, the company has reserved up to half of the public issue size for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and the remaining 35% for retail investors.

The lot size is 53 equity shares and in multiples thereafter. This means the minimum application amount for retail investors would be ₹14,946 for 1 lot, and a maximum of ₹194,298 for 13 lots.

Established in 1988, ASK Automotive claims to be the largest manufacturer of brake-shoe and advanced braking systems for two-wheelers in India. The company dominates in this space with a 50% market share in the fiscal 2022 in terms of production volume for original equipment manufacturers (“OEMs”) and the branded independent aftermarket, on a combined basis, as per the CRISIL report.

With the help of in-house designing, developing and manufacturing facilities, ASK supplies products to top two-wheeler Original Equipment Manufacturers (OEMs) in India, with domestic sales of 13.73 million units during fiscal 2022. It supplies to all the top six two-wheeler manufacturing companies namely Hero MotoCorp, Honda Motorcycle and Scooter India, Bajaj Auto, India Yamaha Motor, TVS Motor, and Suzuki Motorcycle India. In fiscal 2022, the company commenced commercial supplies to 2-wheeler electric vehicle OEMs in India.

The company’s product range includes AB systems, aluminium lightweight precision, wheel assembly for two-wheeler, and safety control cables. As of June 2023, the company has 15 manufacturing units spread across five states in India.

On the financial front, ASK reported profit after tax (PAT) of ₹34.83 crore in the quarter ended June 2023, up 54.8% from ₹22.5 crore last fiscal. The revenue grew 8.7% to ₹657.55 crore as against ₹603.7 crore in the same period last year.

For the financial year 2023, the company posted 48.75% rise in PAT at ₹122.95 crore as compared to ₹82.66 in FY22. The revenue also increased by 26.78% to ₹2,566.28 crore from ₹2,024.26 crore as on March 31, 2022.

JM Financial, Axis Capital, ICICI Securities, and IIFL Securities are the merchant bankers to the issue.