ASK Automotive Ltd — summary of earnings call

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ASK Automotive Limited
Q4 FY25
Call date · May 14, 2025

1 · Management Commentary

Key Positives

  • Achieved 8.5% YoY revenue growth, 24.7% EBITDA growth, and 20.6% PAT growth in Q4 FY25.
  • Full-year FY25 revenue grew 20.2%, EBITDA 42.7%, and PAT 42.5% YoY; EBITDA margin improved to 12.3% (up 193 bps).
  • Outperformed Two-Wheeler industry growth for the sixth consecutive quarter.
  • All three product segments (Advanced Braking, Aluminum Lightweighting, Safety Control Cable) posted strong revenue growth.
  • CRISIL upgraded long-term credit rating to “AA”; short-term reaffirmed at “A1+”.
  • ROACE improved to 27.7%, ROAE to 26.5%; debt/equity reduced to 0.38x.
  • Dividend of 75% (Rs. 1.5 per share) recommended.

Key Negatives

  • Export revenue remained flat at Rs. 147 crore vs. Rs. 174 crore last year, impacted by global geopolitical instability.
  • Wheel Assembly business (low margin) shifted 60% to another supplier in Q4 FY25, impacting FY26 revenue by ~Rs. 300 crore.

Forward Guidance

  • Capex of Rs. 450 crore planned for FY26, including Rs. 150–200 crore for the Japanese alloy wheel collaboration.
  • Bangalore facility (eighth plant) started commercial production Jan 14, 2025; Karoli, Rajasthan plant ramping up (Rs. 4.9 billion invested as of Mar 31, 2025).
  • Targeting 14% EBITDA margin in FY26 (up 150 bps; 80 bps from wheel assembly exit, 70 bps from efficiencies).
  • New products launched in April 2025 (post Bharat Mobility Global Expo).
  • Technical collaborations: LIOHO (Taiwan) and Kyushu Yanagawa Seiki (Japan) for HPDC alloy wheels; JV with AISIN Group (Japan) for passenger car aftermarket.
  • Confirmed order book supports mid-teens revenue growth and continued industry outperformance in FY26.
  • Further expansion under evaluation (potential new plant in Gujarat or Bangalore).

2 · Q&A Highlights

Q 1 (Composite): What is the potential and timeline for the new HPDC alloy wheel business and related collaborations?
A (Management):
• Rs. 2,000 crore market for scooter alloy wheels; product under testing, expected to launch and show results next year.
• Japanese collaboration targets Japanese OEMs; Taiwanese for broader market.
• Supplies to start in H2 FY26 after approvals.

Q 2 (Composite): What is the outlook for new order wins and revenue growth, excluding alloy wheels?
A (Management):
• Confirmed orders support mid-teens growth; will continue to outperform industry.
• Alloy wheel revenue not quantified yet; focus on maintaining track record.

Q 3 (Composite): What is ASK’s strategy and product roadmap for the EV segment?
A (Management):
• Supplying to 80% of organized EV market; content per vehicle higher for EVs due to aluminum lightweighting.
• No plans to add new EV-specific products beyond current three verticals.

Q 4 (Composite): How will the exit from the wheel assembly business impact margins and revenue?
A (Management):
• FY26 revenue to decline by ~Rs. 300 crore; EBITDA margin to improve by 80 bps.

Q 5 (Composite): What are the capacity utilization and revenue potential for Karoli and Bangalore plants?
A (Management):
• Karoli: Rs. 490 crore invested, 50% utilization, current revenue Rs. 500–600 crore, peak potential Rs. 1,100–1,200 crore.
• Bangalore: Rs. 155 crore invested (to reach Rs. 250 crore), revenue potential Rs. 400–500 crore, expected 60–70% utilization by Q4 FY26.

Q 6 (Composite): What are the company’s capex and expansion plans?
A (Management):
• Rs. 450 crore capex planned for FY26; intensity expected to remain high.
• Evaluating new plant location (Gujarat or Bangalore) for further expansion.

Q 7 (Composite): How is working capital and debt profile evolving?
A (Management):
• Improved due to better inventory management and prompt customer payments.
• Debt to equity and debt to EBITDA ratios reduced; absolute borrowings stable due to growth.

Q 8 (Composite): What is the content per vehicle and segmental trends?
A (Management):
• Content per vehicle ~Rs. 1,000; similar for motorcycles and scooters.
• Scooterization trend continuing; company well-positioned.

3 · Other Key Numbers

  • Two-Wheeler industry FY25 production: 23.9 million units (vs. 21.15 million in FY24).
  • Q4 Two-Wheeler production: 5.8 million units (vs. 5.5 million YoY).
  • Two-Wheeler exports: 4.2 billion units, up 21.4% YoY.
  • Total EV registrations FY25: 1.97 million units, up 16.9% YoY; EVs <5% of Two-Wheeler market.
  • Advanced Braking revenue: +9% in Q4, +16% in FY25 YoY.
  • Aluminum Lightweighting Precision Solutions revenue: +21% in Q4, +28% in FY25 YoY.
  • Safety Control Cable revenue: +1% in Q4, +14% in FY25 YoY.
  • Debt to equity: 0.38x (vs. 0.42x last year).
  • Debt to EBITDA: 0.83x in FY25.
  • ROACE: 27.7%; ROAE: 26.5%.
  • Dividend: 75% (Rs. 1.5 per share on Rs. 2 face value).
  • Karoli plant investment: Rs. 490 crore as of Mar 31, 2025; further Rs. 200 crore planned.
  • Bangalore plant investment: Rs. 155 crore as of Mar 31, 2025; Rs. 100 crore more planned.
  • FY25 EPS: Rs. 12.6 (vs. Rs. 8.8 last year).
  • Wheel Assembly business exit to impact FY26 revenue by ~Rs. 300 crore; margin improvement of 80 bps.
  • Capex planned for FY26: Rs. 450 crore.
  • Content per vehicle: ~Rs. 1,000.
  • Karoli plant current utilization: ~50%; Bangalore plant expected to reach 60–70% by Q4 FY26.
  • Peak Karoli plant revenue potential: Rs. 1,100–1,200 crore.
  • Bangalore plant revenue potential: Rs. 400–500 crore.
  • Number of AISIN aftermarket dealers at launch: 40.
  • ROCE improved from 23.64% to 27.5% in FY25.

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