Ask Automotive Business Analysis
Operating metrics
Product Segment wise % of total revenues FY23
AB Systems 42%
ALP Systems 39%
Wheel assy 13.75%
SCC products 3.5%
Total revenues 2550cr
Sector wise revenues contribution
OEM Auto (total) 76%
Non Auto OEM 3%
After market 11%
Others 10%
OEM Auto breakup
2 wheeler ICE 74%
2 wheeler EV 1.75%
Others ( PV/CV) 0.5%
76% of total revenues are from 2 Wheeler OEMs. Top 3 customers form 61% of revenues( as few players dominate 2 wheeler industry)
Capacity utilization > 75% for brake shoes and cables, others lesser.
Contents
Business
Industry overview
Operating metrics
Financials
Points to consider
Valuation
Business
Ask Automotive, promoted by Kuldip Singh Rathee (MD & CEO) started in 1989 , is the largest manufacturer of brake-shoe and advanced braking systems ((AB systems) for two-wheelers in India with a market share of approximately 50% They do in-house designing, developing and manufacturing. Products are powertrain agnostic ( both EV & IC engines)
Company is also developing capabilities for product migration from steel and plastics to Aluminium, for lightweighting and thermal management for e-powertrain products.
Ask supply products to OEMs in 2Ws, 3Ws, PV, CV, ATV, with most revenues from 2 wheelers. All major 2 wheeler OEMs Hero, Honda, TVS, Bajaj, Suzuki are their customers ( relations > 20 years with top 4 OEs)
Ask Automotive operates from 15 manufacturing facilities across five states in India.They have been allotted land in Kolar, Karnataka for new plant. Ask has technology licensing arrangements with several global companies.
Products
AB Systems (41.8% of revenues)
brake shoes
disc brake pads
brake linings
brake assembly
ALP ( Aluminium Lightweighting Precision) solutions (39% of revenues)
Aluminium can be 40% lighter than steel, used to build lighter vehicles to improve performance, more in case of EVs. Products are
battery pack housing
de-casing motor
electric control unit (ECU) housing
heat sinks for thermal management system
geared pulley for e-powertrain
crank case, crank case cover etc
Safety control cable (SCC) products (3.5% of revenues)
front brake cable, rear brake cable, combi brake cable, seat lock cable, throttle cable, fuel lid cable clutch cable, speedometer cable, battery lid cable
Industry overview
Advance Braking systems
The market for advanced braking systems for 2Wheelers/ 3 wheeler is estimated to at Rs 2820cr in FY23 projected to grow at 8% CAGR for 5 years. Total braking systems industry ( 2 wheeler/PV/CV) at 5430cr.
Key players in the braking solutions market are Ask Automotive Limited, Allied Nippon, Endurance Technologies, and Brembo
Aluminium Lightweighting Precision Solutions ( ALP)
Lightweighting is becoming all the more relevant (as EVs are emerging)for improving range for the given battery capacity. Light weighting can be achieved by using aluminium alloy as it is significantly lighter than ferrous alloys. Precision aluminium alloy parts is another critical requirement of the industry - offers a very high level of dimensional repeatability, casting internal soundness and integrity etc. Also, due to increase in electronic controls in vehicles, aluminium alloy content is increasing continuously due to heat dissipation properties.
Applications of aluminium in EVs include lightweight battery casings, motor housings and heat exchangers, besides overall structural integration.
The domestic market of ALP solutions is at Rs 86,40 cr (FY23), expected to grow at a 11.3% CAGR.
Growth in the ALP solutions for EVs will be primarily led by electrical and electronic parts, EV-specific components, and body and chassis parts. The aluminium content per vehicle is expected to increase with the penetration of EVs as big battery trays demands a good thermal conducting material alongside offering improved structural, crash, and lightweighting performance.
Key players are Endurance Technologies, Craftsman Auto, Sundaram Clayton Limited, Rico Auto Industries, Sandhar Group and Alicon Castalloy
Safety Control Cables (SCC)
Safety control cables (SCC) are used to actuate, control and operate brake, accelerator, clutch, transmission gear, speedometer etc. Throttle cables are used to accelerate the vehicles, brake cables are used to stop the vehicle, clutch cable is used to dis-engage & engage the power of engine, choke cable provided to enrich the fuel in cold conditions etc. Market size estimated at 2100cr projected to grow at 7% CAGR
Suprajit Engineering Limited, Ramson Industries, ASK Automotive Limited are key players.
Financials
Annual revenues of Ask is 2550cr. PAT 130cr ( other income 30cr).
Cashflow from operations 140cr.
Revenues grown at 27% CAGR in 2 years, but PAT has not, as margins shrinked due to unprecedented raw material costs.
EBITDA margin 9.6% ( vs peer Rico Auto 10.6%, others Endurance, Alicon 11-12% )
ROCE 22% ( better than peers)
Balance sheet ( figures above in Rs millions)
Borrowings 320cr. Debt/ Equity ratio 0.51
Cash 3.2cr
Receivables 210cr. Payables 170cr. Inventory 150cr
Working capital days of 22 is at par / less than industry
No comparable peers . Figures can be compared to some extent with Rico Auto, Alicon, Endurance ( India)
Company ( Revenues/ EBITDA%/ PAT )
Ask Auto 2550cr/ 9.6%/ 120cr
Rico Auto 1900cr/ 10.6%/ 200cr
Endurance 6800cr/ 11.7%/ 410cr
Alicon 1400cr/ 11.4%/ 50cr
Unlike peers, who are diversified across 2 wheeler/ PV/CV, revenues of Ask Automotive tied to 2 wheeler industry, more so, 61% revenues from top 3 customers
Points to consider
Long standing relationships with top clients ( > 20 years with Hero, Honda , Bajaj, TVS) is a MOAT, which is strengthened by the CRITICALITY factor. Brake systems being critical safety component( any errors has direct forbearance with reputation of OEM) undergoes through stringent approval & validation cycle- a natural entry barrier for OE suppliers.
Revenues tied to 2 wheelers ( 74% of revenues) , so dependent mostly on this industry
80% of revenues contributed by Brake Systems, ALP systems - which are EV agnostic- unaffected migration from IC engines to EV.
Margins dependent on raw material fluctuations ( mainly Aluminium) - which affected in last 2 years.
R & D cost only 0.03% of revenues- quite low for auto ancilliary working in critical parts
Future growth will come from ALP systems- with more lightweighting and EV conversion
Valuation
Ask Automotive is valued at P/E 43 ,whereas peers Rico Auto 27, Endurance ( standalone) 51 . Peers not comparable
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