ASK Automotive Ltd. - ALPS hits the accelerator; aluminium taps the brakes - Company Update

ASK’s performance in 4QFY26 was ahead of our expectations primarily due to passing on of alloy steel inflation, while the growth was broad-based with industry outperformance across ALPS, Advanced Braking Systems and Safety Controls. The core (ex-wheel assembly) growth significantly outpaced underlying 2W industry volumes. Margin performance was in line to our expectations, compressing on elevated aluminum price, cushioned by improving utilization 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 drivers in FY28E. We have downward revised our TP to Rs 555 (Rs 590 previously), largely due to cut of 19%/10% in FY27E/28E earnings respectively. We maintain BUY rating due to the sharp share price correction (rich valuations).

Strong revenue performance across segments:

ASK reported +35% yoy growth in revenue at Rs 11.5bn. On ex-wheels assembly segment basis, ASK reported growth of 38% yoy. The advanced braking systems division grew by 31% 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 48% on yoy basis, while the safety controls division reported 39% yoy growth. The wheels assembly business declined by 8% on yoy basis in-line with their guidance on shutting this business. FY26 revenue grew by 16% yoy to Rs 41.8bn.

Margins moderated on elevated RM:

Q4FY26 margins came in at 11.6% (versus our estimate at 11.7%); -60bps yoy, -138bps qoq. Decline in margins were due to aluminium price inflation, partially offset by ramp-down of low value wheels assembly business. Effectively, EBITDA stood at Rs 1.3bn; +28% yoy; -5% qoq. Consol. PAT increased by 13% yoy to Rs715mn. For FY26, EBITDA grew by 22% to Rs 5.3bn, resulting in margins of 12.7%; +70bps. FY26 PAT grew by 20% to Rs 3bn.

ALPS and aftermarket to drive outperformance:

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 FY27E, low margin wheels assembly business is declared shut by ASK as per their guidance. The two new businesses of sunroof cables and alloy wheels are largely on track and will witness ramp up starting 2HFY27. We have upward revised our FY28E revenue estimates to account for the new business. The Middle East war has led to cost inflation and surge in Aluminum cost for ASK. We have downward revised our margins to account for this RM cost hike in FY27E & FY28E. Effectively, we remain positive on the outperformance story in ASK led by new business additions and expansion of market share in existing segments.

Valuation, view and key risks:

We expect a 16%/ 15%/ 17% CAGR in Revenue/ EBITDA/ PAT over FY26-28E. We value ASK at 27x (unchanged) FY28E earnings to arrive at a target price of Rs 555/share (previously Rs 590). We maintain BUY rating due to sharp correction in share price (rich valuations) . Decrease in TP is mainly due to cut in earnings, partially offset by 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. Q4FY26 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. Q4FY26 Company Update

What drove ASK Automotive’s Q4FY26 growth?

Growth was driven by strong performance in the ALPS segment, advanced braking systems aftermarket demand, safety controls expansion and market share gains across key OEM customers.

Why did ASK Automotive margins decline in Q4FY26?

Margins moderated mainly due to elevated aluminium prices and raw material inflation, partially offset by improved utilization levels and reduction in low-margin wheel assembly business.

What are the future growth drivers for ASK Automotive?

Future growth is expected from ALPS market share gains, aftermarket expansion, alloy wheel ramp-up, sunroof cable business and operational efficiencies across manufacturing facilities.

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