Recognized as a top player in the ABS market, ASK Automotive specializes in providing advanced braking systems and aluminum light weighting solutions for two-wheelers. The company’s strategic focus on electric vehicle components and customer relationships supports its ongoing growth and expansion in the rapidly evolving automotive landscape.
Overview of ASK Automotive
ASK Automotive (AAL) is a prominent supplier of advanced braking systems (ABS) and solutions specifically designed for the automotive sector. The company has established itself as a leading manufacturer of aluminum lightweighting (AL) precision solutions, which encompass die casting, critical machining, paint shop services, and essential assemblies for both automotive and non-automotive applications. Notably, ASK has carved a niche for itself by developing powertrain-agnostic products that cater to the growing electric vehicle (EV) market.
Market Position and Product Offerings
Over the years, ASK Automotive has showcased its technical expertise and engineering capabilities, which have been pivotal in developing customized solutions tailored to customer needs. Currently, ASK is the largest manufacturer of ABS for two-wheelers in India, commanding approximately 50% of the market share. This includes various components such as brake shoes, disc brake pads, and brake panel assemblies. Despite entering the market later than some competitors, ASK has rapidly gained traction in aluminum products and safety control cables (SCC) for the two-wheeler segment.
In terms of revenue distribution for the first half of FY2025, ABS contributed 36.4%, while aluminum lightweighting solutions accounted for 45.1%. Other segments, including wheel assembly and safety control cables, made up 11.7% and 3.8%, respectively.
Customer Base and Industry Growth
ASK Automotive’s client roster includes all major two-wheeler original equipment manufacturers (OEMs) in India, such as Hero MotoCorp, Honda Motorcycle and Scooter India (HMSI), Yamaha Motors India, TVS Motors Co, Suzuki Motorcycle India, and Bajaj Auto.
In the realm of aluminum products and components, ASK has positioned itself as an early mover in the electric two-wheeler (E2W) segment, having successfully developed multiple EV-specific aluminum lightweighting components. The value of ASK’s E2W kits is approximately double that of traditional internal combustion engine (ICE) two-wheelers, and the company supplies parts to all leading E2W manufacturers, including both established players and pure-play EV OEMs.
According to the Society of Indian Automobile Manufacturers (SIAM), the two-wheeler industry saw an output growth of 12.5% in Q2 FY2025 and 15.8% in the first half of FY2025. The overall automotive sector experienced a growth of 9% in Q2 FY2025. This positive momentum in the two-wheeler market is expected to persist, driven by favorable market conditions, increased consumer demand, and a successful monsoon season across India.
Manufacturing Expansion
ASK Automotive recently inaugurated a state-of-the-art manufacturing facility in Bhiwadi, Rajasthan, equipped to produce ABS systems, aluminum lightweighting solutions, and safety control cables, including both liquid and powder paint shops. This facility has already begun generating positive EBITDA, benefiting from enhanced economies of scale and operational efficiencies.
To further strengthen its market presence, ASK is in the process of establishing its 18th manufacturing facility in Bengaluru, with a capital expenditure of ₹200 crore. This new plant is expected to commence operations by Q4 FY2025, focusing on catering to the southern market.
Financial Performance
For the quarter ending September 2024, ASK Automotive reported consolidated sales growth of 23% year-over-year, reaching ₹973.86 crore. The operating profit margin expanded by 260 basis points to 12%, resulting in a 57% increase in operating profit, which totaled ₹116.76 crore. The net profit also saw a significant rise, climbing 63% to ₹67.28 crore.
In the half-year period ending September 2024, consolidated sales surged by 27% to ₹1,836.06 crore. The operating profit margin improved by 230 basis points to 11.8%, driving operating profit up by 57% to ₹217.39 crore. Net profit for this period increased by 63% to ₹124.11 crore.
By leveraging its strong position in the braking segment and nurturing robust customer relationships, ASK has effectively expanded its product offerings and kit value, leading to impressive growth in the two-wheeler industry. The company is optimistic about the continuation of this growth momentum throughout the remainder of the fiscal year and aims to outpace industry growth in subsequent quarters of FY2025.
Future Outlook
With a solid foundation in research and development, engineering, and design, ASK Automotive is well-equipped to capitalize on growth opportunities in the EV, commercial vehicle, and passenger vehicle sectors, both domestically and internationally. The company anticipates maintaining an EBITDA margin of around 12% in FY2025.
Looking ahead, ASK Automotive projects a consolidated earnings per share (EPS) of ₹12.7 for FY2025 and ₹15.8 for FY2026. As of November 18, 2024, the stock was trading at ₹437.95 on the Bombay Stock Exchange.
Conclusion
ASK Automotive continues to solidify its reputation as a leader in the advanced braking systems market for two-wheelers. With its innovative solutions, strong financial performance, and strategic expansion plans, the company is poised for sustained growth in the evolving automotive landscape.
