Broker’s call: ASK Automotive (Buy)

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Target: ₹375

CMP: ₹309.20

ASK Automotive (ASK) is the leading manufacturer of 2W brake shoe and drum braking systems with a combined about 50 per cent market share. Despite being a late entrant, the company has emerged as a sizeable player in aluminium light-weighting components (ALP) and safety control cables (SCC) for the 2W segment, where it is gaining market share.

This has been led by ASK’s in-house technical, design and engineering capabilities (using proprietary formulations) to develop new and customised solutions for its customers, and b) quality, cost and delivery focus given its close proximity to its customers.

ASK has been consistently outperforming growth of the underlying 2W industry (by 10 per cent CAGR over FY13-23) led by expansion in product portfolio, addition of new customers and increase in wallet share with existing customers. Backed by rising kit value in the ALP segment as the 2W/3W industry transitions to EVs, ramp-up of the 2W SCC business and expansion into PV and non-automotive segments by leveraging its capabilities, we believe ASK is well positioned to continue its healthy growth momentum.

Any slowdown in electrification of domestic 2W/3W remains a key monitorable. High dependence on HMSI is a key risk.