1 hr ago
Choice Initiates Buy on ASK Automotive, Sees 20% Upside
Choice Institutional Equities has started studying ASK Automotive and recommends buying its shares.
It set a target price of ₹730, compared with a market price of ₹608 in the article.
The brokerage expects the company’s aluminium parts business to become a larger part of its sales.
It also sees growth from brakes, exports, replacement parts, and new products such as alloy wheels and sunroof cables.
ASK Automotive is expanding its production capacity for brake products.
Choice says the company has delivered strong financial growth and expects further growth through FY29.
But some things could make growth harder, including a weaker two-wheeler market or changing rules for braking systems.
Changes in aluminium costs and reliance on major customers are also risks.
Choice Institutional Equities initiated coverage of ASK Automotive with a Buy rating and a ₹730 target price, about 20.3% above the cited market price of ₹608.
Choice projects ALPS revenue contribution will rise from 51% in FY26 to 62% in FY29, with about 26% CAGR.
The braking business accounted for about 37% of FY26 revenue, and Choice expects it to grow at roughly 11% CAGR through FY29.
Capacity expansion, aftermarket sales, exports, and new alloy-wheel and sunroof-cable businesses are among the company’s cited growth avenues.
Risks flagged include possible ABS regulation changes, weakness in the two-wheeler market, aluminium price volatility, and customer concentration.
- Who
- Choice Institutional Equities and ASK Automotive.
- What
- Choice initiated coverage with a Buy rating and a ₹730 target price, implying about 20.3% upside from ₹608.
- Where
- India; ASK Automotive’s Bengaluru and Karoli facilities are mentioned.
- When
- The article gives no publication date; its forecasts cover FY26 to FY29.
- Why
- Choice expects growth from aluminium lightweighting products, braking systems, capacity expansion, exports, aftermarket sales, and new businesses.
Growth case
Risks and uncertainties
Growth outlook
Growth case
Choice sees structural growth opportunities in ALPS, braking, exports, aftermarket sales, and new alloy-wheel and sunroof-cable businesses.
Risks and uncertainties
A weaker two-wheeler industry or slower-than-expected ramp-up of new businesses could challenge the growth outlook.
ABS requirements
Growth case
Choice cites ASK Automotive’s braking business and established OEM relationships as growth supports.
Risks and uncertainties
A possible MoRTH mandate extending ABS requirements to two-wheelers below 125cc could put some revenue at risk, according to the brokerage.
Costs and customers
Growth case
Choice expects higher aluminium content per vehicle and increased OEM wallet share to support ALPS growth.
Risks and uncertainties
Aluminium price volatility and customer concentration among major OEMs are identified as risks.
Key facts
- Brokerage rating
- Buy
- Target price
- ₹730
- Reference market price
- ₹608
- Implied upside
- About 20.3%
- ALPS revenue contribution
- Expected to rise from 51% in FY26 to 62% in FY29
- Braking capacity
- Expansion from 260 million to 320 million units
- FY26 returns
- ROE of 25.3% and ROCE of 25.4%
- Selected risks
- Potential ABS mandate changes, two-wheeler market weakness, aluminium price volatility, and customer concentration
Sources
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