ASK Automotive

ASK Automotive reported a strong Q4 FY25, with revenue growing 8.5% and EBITDA increasing 24.7% year-on-year. PAT also saw a 20.6% rise. The EBITDA margin for Q4 FY25 stood at 12.5%, an improvement of 162 basis points over the previous year. For the full fiscal year FY25, the company achieved a revenue growth of 20.2%, with EBITDA and PAT growing 42.7% and 42.5% respectively, leading to an EBITDA margin of 12.3%, surpassing its guidance and improving by 193 basis points year-on-year. EPS for FY25 increased to Rs. 12.6 from Rs. 8.8 in the previous year.

The Indian automobile sector demonstrated healthy momentum in FY25, with overall vehicle production growing 9.1%. The Two-Wheeler segment was a key performer, with production growth of 11.3% and domestic sales up 9.1% year-on-year, driven by rising rural demand and consumer confidence. Management anticipates continued domestic growth of 6-8% for the Two-Wheeler industry in FY26, supported by a good monsoon forecast, potential interest rate cuts, and government tax benefits. Exports for the Two-Wheeler segment also saw an impressive 21.4% increase year-on-year.

The company entered into a strategic partnership with Kyushu Yanagawa Seiki Co. Ltd., Japan, in March 2025 for high-pressure die-casted alloy wheels for Two-Wheelers, targeting a Rs. 2,000 crore scooter alloy wheels market. Additionally, a joint venture with AISIN Group, Japan, was signed in April 2024 to market and sell passenger car aftermarket products. A technical collaboration with LIOHO, Taiwan, for Two-Wheeler HPDC alloy wheels is also underway, with capacity built and products under testing, expected to begin supplies in H2 FY26. These initiatives aim to leverage first-mover advantage and expand product offerings.

ASK Automotive is actively expanding its manufacturing footprint. The Bangalore facility, its eighth plant and third in South India, commenced commercial production on January 14, 2025, with an investment of Rs. 155 crore to date and an additional Rs. 100 crore planned for FY26, aiming for Rs. 400-500 crore in revenue potential and 60-70% capacity utilization by Q4 FY26. The largest plant in Karoli, Rajasthan, has seen an investment of Rs. 490 crore by March 2025, with another Rs. 200 crore planned for FY26, currently operating at 50% utilization with a peak revenue potential of Rs. 1,100-1,200 crore. Total CAPEX for FY26 is projected at Rs. 450 crore.

The company's financial health significantly improved, with CRISIL Ratings upgrading its long-term credit rating from "AA-" to "AA". Debt to equity ratio reduced to 0.38x in FY25 from 0.42x in the previous year, and average debt to EBITDA improved to 0.83x. The Return on Capital Employed (ROACE) stood at 27.7% and Return on Equity (ROAE) at 26.5%, reflecting strong capital efficiency. The company also recommended a dividend of 75%, or Rs. 1.5 per equity share on a face value of Rs. 2. ROCE improved from 23.64% to 27.5% in FY25, with management expecting similar levels next year.

All three core product segments showed strong revenue growth in FY25: Advanced Braking system grew 16%, Aluminum Lightweighting Precision Solutions grew 28%, and Safety Control Cable grew 14%. However, the company is strategically shifting away from its low-margin wheel assembly business, with a customer moving 60% of this business from Q4 FY25. This shift is expected to reduce FY26 revenues by approximately Rs. 300 crore but will improve overall EBITDA margins by 80 basis points, contributing to the targeted 14% EBITDA margin for FY26.

While the EV market currently accounts for less than 5% of the total Two-Wheeler industry, ASK Automotive is actively engaged, supplying to 80% of the organized EV market. The company's content per vehicle is higher in the EV segment due to aluminum lightweighting components. Management expressed optimism for the EV market's growth, noting that the company is "fully hedged" by supplying components for both ICE and EV vehicles, ensuring resilience regardless of market shifts. Despite potential price cap issues, the company aims to benefit from the EV sector's expansion.