ASK Automotive Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

ASK Automotive reported a strong Q1 FY26 with robust profitability and margin expansion, despite a muted auto industry. Revenue grew 3.5% YoY (11.1% excluding wheel assembly), with EBITDA up 19.3% and PAT up 16.3%. The company achieved its highest quarterly EBITDA margin of 13.8% and saw its Bangalore facility turn EBITDA positive. Management remains optimistic about achieving mid-teens revenue growth for FY26 and maintaining strong margins, while navigating global economic headwinds and potential regulatory changes in ABS.

Highlights

  • Consolidated revenue grew by 3.5% YoY, driven by 11.1% growth excluding the wheel assembly business.

  • EBITDA grew by 19.3% YoY and PAT by 16.3% YoY.

  • EBITDA margin expanded by 183 bps to 13.8% in Q1 FY26, the highest quarterly margin.

  • EPS increased to Rs. 3.35 per share in Q1 FY26 from Rs. 2.88 per share in Q1 FY25.

  • Bangalore facility achieved positive EBITDA in Q1 FY26 and is expected to reach 60% capacity utilization and be cash positive by Q2 FY26.

Concerns

  • Overall auto industry performance remained muted, with total vehicle production growing by just 1.5%.

  • Global economic challenges, rising trade barriers, and USA tariffs led to stagnant export revenue at Rs. 33 crore in Q1 FY26.

  • Potential headwinds of Rs. 230 crore if ABS regulations are fully implemented, though this is a hypothetical scenario.

Key financials

  1. Consolidated Revenue Growth 3.5% +3.5%YoY
  2. Revenue Growth (excl. Wheel Assembly) 11.1% +11.1%YoY
  3. EBITDA Growth 19.3% +19.3%YoY
  4. PAT Growth 16.3% +16.3%YoY
  5. EBITDA Margin 13.8%
  6. EPS ₹3.35

What they filed

Q1 FY27: revenue up 35.8%, net profit up 13.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue884 814 735 727 827 −6%860 +6%891 +21%987 +36%
EBITDA88 79 72 81 78 −11%89 +13%87 +21%91 +12%
Net profit58 54 47 54 53 −9%61 +13%61 +30%61 +13%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Advanced Braking System
    4% Revenue Growth
  • Aluminum Light-weighting Precision Solutions
    15% Revenue Growth
  • Safety Control Cable
    6% Revenue Growth

Capital allocation

  • Capex ₹450 Cr Expected to lead to a better debt equity ratio
    • Sunroof cables JV ₹10 Cr
    • Bangalore facility expansion (additional) ₹75 Cr
    This year, we have already announced that we will be investing Rs. 450 crore and that is going on as per the plan. And this CAPEX, we will ensure that we complete, we are ready for supplies for the next 18 months, so the whole of FY27 is sorted. And as regards the CAPEX next year is concerned, that will be announced in the due course of time.
  • Debt Debt disclosed
    But the good part I may announce again that in spite of investing Rs. 450 crore, we will be having a better debt equity ratio and that will get slightly improved. That is what we target.
  • M&A TD Holding (Germany) Joint venture · Signed

    First-mover advantage in sunroof cables, import substitution, future export potential.

    Revenue expected in next financial year (FY27).

    See, we have signed this joint venture because as I have mentioned many times, we like to have the first mover advantage in any particular line that we choose. So there is no Indian manufacturer producing in India these sunroof cables. So that is why we signed with Germany, so that we are the first one to produce these cables and then supply to the system.

Guidance & targets

Revenue

  • Revenue Growth (excluding wheel assembly business) Revenue · FY26 · High confidence mid-teens
    I remain an optimist and I feel that we will be able to achieve the target of the mid-teen growth in revenue this year.

    — Kuldip Singh Rathee

EBITDA Margin

  • EBITDA Margin EBITDA Margin · FY26 · Medium confidence 13.7%
    we will strive to achieve 13.7% EBITDA margin by all these new plant in Bangalore ramping up and a better capacity utilization in the Karoli plant.

    — Kuldip Singh Rathee

  • EBITDA Margin (improvement from wheel assembly reduction) EBITDA Margin · FY26 · High confidence 13%

    Previously 12.2% → 13%

    that 80 basis point, we will improve from 12.2% to 13% just by this wheel assembly business is going, because it was a non-profit business.

    — Kuldip Singh Rathee

Exports

  • Export Revenue Growth Exports · FY26 · Medium confidence 20%
    However, we are still confident that we will grow the exports at 20% year-on-year during FY26.

    — Kuldip Singh Rathee

Capacity Utilization

  • Bangalore Facility Capacity Utilization Capacity Utilization · Q2 FY26 · High confidence 60%
    This facility is ramping up fast and expected to achieve 60% capacity utilization by Q2 FY26

    — Kuldip Singh Rathee

  • Bangalore Facility Capacity Utilization Capacity Utilization · Q4 FY26 · High confidence 70%-75%
    So now, I would like to revise the guidance that in Q4, we will be at 70%-75%.

    — Kuldip Singh Rathee

Profitability

  • Bangalore Facility Cash Positive Profitability · Q2 FY26 · High confidence Cash Positive
    and this facility will be cash positive in Q2 FY26 itself.

    — Kuldip Singh Rathee

Wheel Assembly Business

  • Wheel Assembly Business Reduction Wheel Assembly Business · FY26 · High confidence 60%
    We had said that this business is about Rs. 380-Rs. 400 crore this year and 60% will go.

    — Kuldip Singh Rathee

  • Wheel Assembly Business Reduction (total) Wheel Assembly Business · End of FY26 · Medium confidence 100%
    even that 40% will go, maybe the end of this Financial Year however, if it goes, we will let you know at least one quarter before.

    — Kuldip Singh Rathee

New Product Revenue

  • Sunroof Cables JV Revenue New Product Revenue · Next Financial Year (FY27) · High confidence Revenue Generation
    The revenue should come in our opinion in the next financial year only, because I feel we should put up the capacity by the end of this current financial year.

    — Kuldip Singh Rathee

Industry Growth

  • Two-wheeler Industry Growth Industry Growth · FY26 · Medium confidence 3%-4%

    Previously 6%-8% → 3%-4%

    Today, overall in two-wheeler segment, people feel that the industry may not grow at 6%. They may grow at about 3%-4% throughout the year, but we expect that we will still achieve the mid-teens growth.

    — Kuldip Singh Rathee

What to watch in Q2 FY26

Bangalore Facility Capacity Utilization

Q2 FY26
Current Ramping up, positive EBITDA in Q1 FY26
Target 60% capacity utilization

Why it matters

Indicates successful ramp-up and operational efficiency of the new facility, contributing to overall profitability.

This facility is ramping up fast and expected to achieve 60% capacity utilization by Q2 FY26

Risks & concerns

  • Global Economic Slowdown & Policy Uncertainty

    medium

    Global economy faces significant challenges, rising trade barriers, and increased policy uncertainty leading to broad-based slowdown.

    Management acknowledged

  • USA Tariffs & Export Demand

    medium

    Uncertainty from USA tariffs impacted overall environment and resulted in low demand from existing export customers, leading to stagnant export revenue in Q1 FY26.

    Management acknowledged

  • Muted Two-Wheeler Industry Growth

    medium

    Overall auto industry performance, particularly two-wheeler segment, remained muted with total vehicle production growing by just 1.5% in Q1 FY26, with industry growth revised to 3-4% for FY26.

    Management acknowledged

  • ABS Regulatory Implementation

    medium

    Sudden draft notification for ABS implementation caught industry unprepared, with limited supplier capacity. Full implementation could lead to hypothetical headwinds of Rs. 230 crore, though new opportunities are being explored.

    Management acknowledged

Q&A highlights

5 direct
Revenue Growth and Margin Drivers Direct
Well, I would like to correct your understanding on the revenue growth because in our last call also, we had very clearly mentioned that in this year, you will see our mid-teens growth in the revenue excluding the wheel assembly business because that constituted between 7%-8% of the total revenues... As far as your second part is concerned on the margin improvement that also very clearly we had mentioned in the last call, that 80 basis point, we will improve from 12.2% to 13% just by this wheel assembly business is going, because it was a non-profit business.

Clarifies the company's revenue growth calculation (excluding wheel assembly) and details the specific drivers for margin expansion, including the impact of discontinuing the non-profit wheel assembly business.

Asked by Vijay Pandey (Nuvama Wealth)

Employee Expenses as % of Sales Partial
Actually, you compare our sale with the apple to apple because this time our sale is lesser because our wheel assembly business is not there, 53.5% is not there. So due to that, the percentage seems very high.

Addresses the analyst's concern about rising employee expenses by attributing it to the change in revenue base after reducing the wheel assembly business, implying it's not an operational inefficiency.

Asked by Vijay Pandey (Nuvama Wealth)

Two-wheeler Industry Growth Outlook and Competitive Intensity in ABS Direct
Industry growth, well, it is too early to say the quarter one has got below expectations. But as I say, I remain optimist and I feel that the festival season is approaching, maybe we cover up and monsoon has been good. So the good demand should come... Today, overall in two-wheeler segment, people feel that the industry may not grow at 6%. They may grow at about 3%-4% throughout the year, but we expect that we will still achieve the mid-teens growth.

Provides a revised, more conservative outlook for the two-wheeler industry growth for FY26, while maintaining confidence in ASK Automotive's ability to outperform with mid-teens growth.

Asked by Naveen Kumar Dubey (Narnolia Financial Services)

Top 3 Customer Contribution Direct
See, our top customer is the Honda Motorcycle Scooter India (HMSI) and that constitutes around 35%. The second big customer is TVS, which is now 20%-21% and the third one is the Hero MotoCorp, which is about 17% or so.

Offers specific customer concentration data, highlighting the company's reliance on key OEMs and noting a shift in share among top customers (TVS gaining).

Asked by Naveen Kumar Dubey (Narnolia Financial Services)

Wheel Assembly Business Ramp Down and Sunroof Cables Joint Venture Direct
No. We had said that this business is about Rs. 380-Rs. 400 crore this year and 60% will go... So I think we are very much on that path, but even that 40% will go, maybe the end of this Financial Year... See, we have signed this joint venture because as I have mentioned many times, we like to have the first mover advantage in any particular line that we choose. So there is no Indian manufacturer producing in India these sunroof cables.

Confirms progress on the strategic reduction of the low-margin wheel assembly business and elaborates on the rationale for the new sunroof cables JV as an import substitution and first-mover play.

Asked by Prateek Ladha (Nirmal Bang Institutional Equities)

ABS Regulatory Impact and Disc Brake Segment Expansion Partial
See, this is a sudden draft notification that everyone received from the government. Nobody was mentally prepared for it. And there are not many suppliers of ABS in the country, and neither do they have the full capacities... So they have to gear up, how fast they gear up, what will be the quantum of the business that gets generated. But the good part is after the draft notification, even we have opened discussions with some of the players that what best we can do, what new opportunities we can encash on.

Reveals the industry's unpreparedness for potential ABS regulatory changes and the company's proactive engagement with OEMs to identify new opportunities, indicating a strategic response to a potential market shift.

Asked by Sagar Shetty (BP Wealth)

Bangalore Facility Capacity Utilization Guidance Revision Direct
Yes, you are right. We are lucky that it is already in Q2, we will reach 60% capacity utilization. So now, I would like to revise the guidance that in Q4, we will be at 70%-75%.

Management revises upwards the capacity utilization guidance for the Bangalore facility, indicating faster-than-expected ramp-up and operational efficiency.

Asked by Suvaan Mittal (MFC)

Impact of ABS Implementation on Financials Partial
See, Nitin, this is a very hypothetical question that if it is implemented, because there are no suppliers who can supply in toto. So we would like to wait and watch to comment. However, if you really want to know the numbers, the total headwinds are about Rs. 230 crore, which are very nominal and they are into the aluminum segment.

Quantifies the potential maximum negative impact (headwinds) of full ABS implementation at Rs. 230 crore, providing a specific figure for a hypothetical but significant regulatory risk.

Asked by Nitin (JM Financial)

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

ASK Automotive reported a strong financial performance for Q1 FY26, marking its seventh consecutive quarter of robust results since listing. Consolidated revenue grew by 3.5% year-on-year, with a more significant 11.1% growth when excluding the strategically reduced wheel assembly business. This growth translated into a 19.3% increase in EBITDA and a 16.3% rise in PAT. The company achieved its highest quarterly EBITDA margin of 13.8%, representing an improvement of 183 basis points over Q1 FY25, and its earning per share increased to Rs. 3.35 from Rs. 2.88 in the prior year.

Segmental Performance and Market Leadership

Despite a muted two-wheeler industry growth of 1.5% in Q1 FY26, all three of ASK Automotive's core segments delivered positive growth. The Advanced Braking System, where the company maintains market leadership, saw revenue grow by 4% year-on-year. The Aluminum Light-weighting Precision Solutions segment recorded a 15% year-on-year revenue increase, while the Safety Control Cable revenue grew by 6% year-on-year. This indicates the company's ability to outperform the broader industry trends in its key product categories.

Strategic Initiatives: Bangalore Plant & Sunroof Cables JV

The newly commissioned Bangalore facility has quickly ramped up, delivering positive EBITDA in Q1 FY26. Management expects this facility to achieve 60% capacity utilization by Q2 FY26 and become cash positive in the same quarter, with a revised target of 70-75% utilization by Q4 FY26. Additionally, the company has entered a joint venture with TD Holding (Germany) to produce sunroof cables in India, aiming for first-mover advantage and import substitution in the domestic market, with revenues expected from FY27.

Industry Outlook and Export Challenges

Management acknowledged the global economic challenges, rising trade barriers, and policy uncertainty, which led to stagnant export revenue of Rs. 33 crore in Q1 FY26, matching the previous year. However, they remain optimistic about achieving 20% year-on-year export growth for FY26. While the overall two-wheeler industry growth forecast for FY26 has been revised downwards to 3-4% from an earlier 6-8%, ASK Automotive is confident in achieving its mid-teens revenue growth target by outperforming the industry and leveraging internal efficiencies.

Capital Expenditure Plans and Wheel Assembly Business Reduction

ASK Automotive plans to invest Rs. 450 crore in CAPEX for FY26, which includes approximately Rs. 10 crore for the sunroof cables JV and an additional Rs. 75-100 crore for the Bangalore facility. This investment is expected to improve the company's debt-equity ratio. The strategic reduction of the low-value-added wheel assembly business, which was a non-profit segment, is progressing as planned, with approximately 60% of the Rs. 380-400 crore business expected to be phased out this year, potentially reaching 100% by the end of FY26.

ABS Regulatory Impact Assessment

The company addressed the potential impact of a draft notification regarding ABS implementation, noting that the industry is largely unprepared and current suppliers lack sufficient capacity. While management highlighted a hypothetical maximum headwind of Rs. 230 crore if ABS is fully implemented, they emphasized that this is a draft and they are engaging with OEMs to explore new opportunities. They await the final notification to assess the precise impact and strategic response.

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