Detailed Narrative
Strong Q2 & H1 FY26 Financial Performance
ASK Automotive delivered robust financial results for Q2 and H1 FY26. In Q2 FY26, consolidated revenue grew by 8.5% YoY, excluding wheel assembly business, revenue growth was 16.6%. EBITDA saw a 19.5% YoY increase, and PAT grew by 18.6% YoY, marking the highest ever absolute figures for any quarter. The EBITDA margin for Q2 FY26 stood at 13.4%, an improvement of 124 basis points over Q2 FY25. For H1 FY26, consolidated revenue grew 6.1% YoY, EBITDA by 19.4%, and PAT by 17.5%, with an EBITDA margin of 13.6%.
Positive Industry Outlook and GST 2.0 Impact
The Indian automobile sector showed healthy momentum, with overall vehicle production growing 5.8% in H1 FY26, and the two-wheeler segment matching this growth. Management is optimistic for FY26, projecting the two-wheeler industry growth to touch 7%. The recent GST 2.0 reforms, reducing the rate from 28% to 18% for ASK's products, are expected to significantly boost the aftermarket segment and help gain market share from the grey market, contributing to overall revenue growth.
Strategic Capacity Expansion and Utilization
The company is actively expanding its capacity, with a total CAPEX plan of Rs. 450 crore for FY26, of which Rs. 250 crore has been spent in H1. This includes Rs. 250 crore for the Karoli plant and Rs. 100 crore for the Bangalore plant this year. The Bangalore facility, opened in January, reached 60% utilization in Q2 and is expected to hit 70-75% by Q4 FY26. Karoli plant utilization is projected to be 60-70%. Management plans to invest around Rs. 400 crore annually in CAPEX going forward⏳.
Alloy Wheel Business and New Product Development
ASK Automotive is progressing with its alloy wheel business through two collaborations. Machines for the Japanese collaboration are expected by February (Q4 FY26), with product rollout by April/May and supplies commencing after testing. The Taiwan collaboration product has been under testing for over a year due to its safety-critical nature. The CAPEX already invested in the alloy wheel business is expected to generate a revenue potential of Rs. 250 crore. New products are anticipated to launch in the next financial year.
Green Energy Initiatives
The company is committed to green energy, with its 9.9 MWp solar plant at Sirsa, Haryana, commencing supplies in April '25. Building on this success, ASK Automotive is installing another 11.55 Megawatt captive solar power plant in Rajasthan, which is expected to be operational by Q1 FY27. These initiatives aim to achieve sustainable operational economies and reduce environmental impact.
Export Performance and Geopolitical Headwinds
Export revenue for H1 FY26 stood at Rs. 63 crore, a decline from Rs. 74 crore in the same period last year. This reduction is primarily attributed to the unstable global geopolitical environment, particularly issues related to rare earths and magnets. Despite the current challenges, management remains optimistic, expecting to cross last year's export numbers by the end of FY26, assuming a resolution to the geopolitical situation by Q4.
Aluminum Price Impact on Margins
The significant increase in aluminum alloy prices during Q2 FY26 had a noticeable impact on the company's profitability. Management stated that the rising aluminum prices affected the EBITDA margin by 30 basis points, meaning the margin would have been 13.7% without this commodity headwind. However, it was clarified that the absolute EBITDA numbers remained unaffected, and the company aims to maintain its current margin levels.