ASK Automotive Ltd. - Firing on all cylinders - Company Update

We upgrade ASK Automotive to BUY rating on attractive valuation and increase our TP to Rs590 (Rs525 previously). The increase in TP is largely driven by valuation rollover. ASK delivered a strong Q3, materially ahead of our expectations, led by broad-based outperformance across ALPS, Advanced Braking Systems and Safety Controls, with core (ex-wheel assembly) growth significantly outpacing underlying 2W industry volumes. Margin performance remained stable, despite aluminium price inflation, supported by improving utilisation at Karoli and Bangalore and continued ramp-down of low-value wheel assembly. We expect ASK to continue outperformance to base industry growth, driven by wallet share gains in ALPS segment and robust aftermarket performance in ABS. Progress in the alloy wheels and new product developments (including sunroof cables) remain key monitorable. Remain positive on ASK.

Strong revenue performance across segments:

ASK reported +18.5% yoy growth in revenue to Rs10.8bn. On ex-wheels assembly segment basis, ASK reported growth of 28% yoy. The advanced braking systems division grew by 22% on yoy basis driven by heavy demand in the aftersales market. The ALPS segment continued to be the primary driver of the overall performance with a growth of 36% on yoy basis, while the safety controls division reported 21% yoy growth. The wheels assembly business declined by 52% on yoy basis.

Stable margins despite elevated RM:

Q3 margins came in at 13% (versus our estimate at 12%); +90bps yoy, flat qoq. ASK has improved its yoy margin performance due to ramp-down of low value add wheels assembly business, operating leverage and scale at new capacities. However sequentially margins have sustained despite elevated aluminium prices. Effectively, EBITDA stood at Rs1.4bn; +27.2% yoy. Consol. PAT increased by 21.3% yoy to Rs799mn.

ALPS and aftermarket to drive outperformance:

ASK’s strong position in drum brakes is expected to benefit 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 deliver robust growth, largely driven by wallet share gains. We have revised our revenue estimates downward by 5%/2% for FY26E/FY27E, respectively, to factor in higher capex led depreciation and debt driven finance cost. ASK is expected to sustain its strong track record of earnings consistency. While developments in the alloy wheels program and on new product initiatives, (incl. sunroof cables), will be important factors to track going forward, the meaningful commercial production is only expected to start in 2HFY27.

Valuation, view and key risks:

We build in revenue/ EBITDA/ PAT growth of 14%/ 20%/ 22% over FY25-28E. We have valued ASK at 27x Dec’27E (unchanged) earnings to arrive at a target price of Rs 590 (Rs 525 previously) and upgrade to BUY rating. Increase in TP is mainly due to valuation roll-forward. 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. Q3FY26 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. Q3FY26 Company Update

Overview: ASK Automotive has attracted investor interest following strong earnings growth and improving profitability across its core automotive component segments. The company’s leadership in braking systems and expansion in aluminium precision components support long-term growth visibility.

1. What drove ASK Automotive’s strong quarterly performance?

The company reported strong growth across its ALPS, Advanced Braking Systems and Safety Controls segments, supported by higher demand from OEMs and the aftermarket business.

2. Why is the ALPS segment important for ASK Automotive?

The ALPS segment is a major growth driver for the company, benefiting from increased wallet share with customers and rising demand for lightweight precision aluminium components.

3. How does the aftermarket segment support growth?

ASK Automotive’s leadership in drum brakes allows it to benefit from strong demand in the aftermarket channel, which is expected to grow further following GST rationalization.

4. What are the key future growth drivers for ASK Automotive?

Future growth is expected to come from ALPS segment expansion, increased aftermarket demand, new product initiatives such as sunroof cables, and developments in alloy wheel programs.

5. What risks should investors monitor?

Investors should track client concentration risk, export growth momentum, regulatory changes in braking systems and execution of new product programs.

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