ASK Automotive Ltd. - New business addition drives re-rating | Q1FY26 Company Update

ASK’s performance in 1QFY27 was beat to our expectations primarily due to pass on of alloy steel inflation, while the growth was broad-based with industry outperformance across ALPS, Advanced Braking Systems and Safety Controls. Margin were compressed on elevated aluminum price, cushioned by improving utilization at Karoli and Bangalore. We expect margins to normalize as the RM cost pressure reverses. ASK has several levels to expand content per vehicle with a strong order book for alloy wheels and start of sunroof cables. Export orders from Ford, strong traction in aftermarket and wallet share gains in ALPS segment, are expected to translate into a robust 21%/ 23%/ 24% CAGR in Revenue/ EBITDA/ PAT over FY26-28E. Therefore, we upward revise the valuation multiple for ASK to 30x Jun’28 PE (27x previously) to arrive at a TP of Rs 745 and maintain Buy rating.

ASK Automotive Ltd. Stock Price Chart

Price pass on saves the day:

ASK reported +52% yoy growth in revenue at Rs 13.6bn (beat to our estimate of Rs 10.5bn). The high growth was driven by 33% yoy growth from price pass on for alloys. Excluding the impact of discontinued Wheels assembly business, net revenue grew by 25% yoy, beating the 2W industry growth of 22% yoy. The advanced braking systems division grew by 49% yoy driven by heavy demand in the aftersales market and price pass on. The ALPS segment continued to be the primary driver of the overall performance with a growth of 75% yoy, while the safety controls division reported 38% yoy growth.

Margins moderated on elevated RM:

Q1FY27 margins came in at 11.8% (versus our estimate at 11.2%); -160bps yoy. Decline in margins were due to aluminium price inflation. This translated into an EBITDA of Rs 1.6bn; +34% yoy (beat to our estimate). Consol. PAT grew by 49% yoy to Rs 851mn.

ALPS, aftermarket and new products to drive outperformance:

ASK’s performance in 1QFY27 was driven majorly by price hikes. The RM cost pressure, especially Aluminum cost, has started gradually easing, which should help regain margins back to the 13% levels in upcoming quarters. ASK’s strong position in drum brakes has benefited from the recent GST rationalization in the aftermarket segment (earlier 28% to now 18%). We expect the aftermarket business to outpace industry growth. The ALPS segment is expected to continue robust growth, largely driven by wallet share gains in leading 2W and selective 4W OEM. Starting FY27, low margin wheels assembly business is declared shut by ASK as per their guidance, which should aid margins. The two new businesses of sunroof cables and alloy wheels are largely on track and will witness ramp up starting 2HFY27. ASK has a strong order book of Rs 900mn & Rs 2.5bn for FY27E & FY28E resp. for alloy wheels which will drive the growth in content per vehicle. The export order for Ford is expected to start in FY27E and double in FY28E. Additionally, the management expects Karoli plant to reach ~70% utilization by end of this fiscal, leading to announcement of another plant in south India. All these developments have increased earnings visibility leading to a 9%/ 12% upward revision in FY27E/FY28E earnings. Remain positive on ASK.

Valuation, view and key risks:

We expect a 21%/ 23%/ 24% CAGR in Revenue/ EBITDA/ PAT over FY26-28E. We value ASK at 30x (previously 27x) Jun’28E earnings to arrive at a target price of Rs 745/share (previously Rs 555) and a BUY rating. Upward revision in valuation multiple is to discount the content per vehicle expansion and high growth in the existing segments. Key Risks: High client concentration, failure to ramp up exports and regulation mandating anti-lock braking system.

Company website: https://askbrake.com/

*CMP is as per report published date

Click to download the full ASK Automotive Ltd. Q1FY27 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

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FAQs on ASK Automotive Ltd. Q1FY27 Company Update

How did ASK Automotive perform in Q1FY27?

Revenue increased 52% YoY to approximately ₹1,360 crore, supported partly by alloy price pass-through. EBITDA grew 34% YoY to approximately ₹160 crore, while consolidated PAT increased 49% to approximately ₹85 crore.

What is the target price for ASK Automotive?

The research report assigns a Buy rating with a target price of ₹745 per share. The target is an analyst estimate and should not be interpreted as a guaranteed future return.

What drove ASK Automotive’s Q1FY27 growth?

Growth was broad-based, with ALPS increasing 75% YoY, Advanced Braking Systems rising 49% and Safety Controls growing 38%. Alloy price pass-through was also a significant contributor to reported revenue growth.

Can ASK Automotive margins recover?

Q1FY27 EBITDA margin declined to 11.8% due largely to elevated aluminium costs. The research view expects margins to improve as raw-material cost pressure eases, supported by better plant utilization and the discontinuation of the lower-margin wheels assembly business.

What are ASK Automotive’s new growth opportunities?

Alloy wheels and sunroof cables are expected to add to content per vehicle. The company also has export opportunities, including an order from Ford, while aftermarket demand and wallet-share gains in ALPS could support growth.

What are the key risks for ASK Automotive?

Key risks include customer concentration, slower-than-expected export ramp-up, raw-material price volatility, execution challenges in new businesses and regulatory changes affecting automotive components.

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