ASK Automotive shares jump 46% in six months as brokerage initiates Buy call

The brokerage values the stock at 30x its average estimated earnings for FY28–FY29. Choice Institutional Equities identifies Aluminium Lightweighting Precision Solutions (ALPS) as the company's biggest growth engine, projecting its revenue contribution to rise from 51% in FY26 to 62% by FY29, translating to a CAGR of approximately 26%.

This growth is expected to be driven by increasing aluminium content per vehicle and a higher wallet share with original equipment manufacturers (OEMs). Aluminium lightweighting reduces vehicle weight and improves fuel efficiency, with electric vehicles typically using 30–50% more aluminium than internal combustion engine vehicles, creating a structural opportunity for ASK Automotive.

The company's powertrain-agnostic product portfolio and established OEM relationships position it to benefit from this transition. Additionally, ASK Automotive is entering the high-pressure die-casting (HPDC) alloy-wheel segment through technical collaborations with Taiwan-based LIOHO and Japan's Kyushu Yanagawa, with Choice expecting this business to generate around ₹250 crore, or 4% of total revenue, by FY28.

ASK Automotive's core braking business remains a key growth pillar. As India's largest manufacturer of two-wheeler brake shoes and advanced braking systems (ABS), the company holds an estimated 50% OEM market share. The braking segment contributed around 37% of FY26 revenue and is expected to grow at approximately 11% CAGR between FY26 and FY29.

Capacity expansion is underway, with brake-shoe and disc-pad production increasing from 260 million to 320 million units. Higher aftermarket penetration and growing contribution from disc pads and ABS are expected to support this growth. With current capacity utilisation at around 90%, expansion at the Bengaluru and Karoli facilities should help sustain growth despite gradual shifts in the two-wheeler product mix.

Beyond braking and ALPS, the company is expanding into exports, aftermarket, passenger-vehicle components, and safety-control cables. Its aftermarket business, supported by over 450 dealers, recorded a 21% CAGR between FY24 and FY26. ASK Automotive is also pursuing new opportunities via a joint venture with AISIN and T.D. Holding in sunroof cables.

Management targets a 20% export CAGR between FY26 and FY29, while exiting the low-margin Wheel Assembly business is expected to improve EBITDA margins by around 80 basis points structurally.

Choice Institutional Equities favours ASK Automotive due to its experienced promoter-led management, strong return ratios, and consistent outperformance versus the broader two-wheeler industry. The company reported FY26 ROE and ROCE of 25.3% and 25.4%, respectively. Between FY22 and FY26, consolidated revenue, EBITDA, and PAT grew at CAGRs of around 20%, 33%, and 37%, driven by higher content per vehicle and a favourable product mix across ALPS and ABS.

Looking ahead, Choice expects ASK Automotive to deliver approximately 18% revenue CAGR, 20% EBITDA CAGR, and 20% PAT CAGR between FY26 and FY29, led by the scaling up of ALPS and new alloy-wheel and sunroof-cable businesses.

Additional upside potential is seen from a faster-than-expected ramp-up of the alloy-wheel business, new export order wins, earlier clarity on the proposed ABS mandate, and further technical collaborations or joint ventures.

However, the brokerage flagged risks, including a possible MoRTH mandate extending ABS requirements to two-wheelers below 125cc, which could put some revenue at risk. Other concerns include weakness in the two-wheeler industry, aluminium price volatility due to delays in passing on cost changes, and customer concentration among major OEMs.