ASK Automotive shares have gained 46% over the past six months and 32.14% year-to-date. Despite the strong rally, Choice Institutional Equities sees further upside, backed by the company’s structural growth opportunities.
The brokerage has initiated coverage with a ‘Buy’ rating and a target price of ₹730, implying an upside of around 20.3% from the current market price of ₹608. Choice values the stock at 30x its average estimated earnings for FY28–FY29.
ALPS emerges as key growth driver
Choice Institutional Equities expects Aluminium Lightweighting Precision Solutions (ALPS) to become ASK Automotive’s biggest growth engine. The brokerage estimates ALPS’ contribution to revenue will increase from 51% in FY26 to 62% by FY29, implying a CAGR of around 26% during the period.
The growth is expected to be driven by increasing aluminium content per vehicle and higher wallet share with original equipment manufacturers (OEMs). Aluminium lightweighting helps reduce vehicle weight and improve fuel efficiency, while electric vehicles typically use 30–50% more aluminium than internal combustion engine vehicles, creating a structural opportunity for the company.
ASK Automotive’s powertrain-agnostic product portfolio and established OEM relationships position it to benefit from this transition, the brokerage said.
The company is also entering the high-pressure die-casting (HPDC) alloy-wheel segment through technical collaborations with Taiwan-based LIOHO and Japan’s Kyushu Yanagawa. Choice expects this business to generate around ₹250 crore, or 4% of total revenue, by FY28.
Braking business provides strong foundation
ASK Automotive’s core braking business remains an important growth pillar. The company is India’s largest manufacturer of two-wheeler brake shoes and advanced braking systems (ABS), with an estimated 50% OEM market share, according to Choice.
The braking segment contributed around 37% of FY26 revenue, and the brokerage expects it to grow at approximately 11% CAGR between FY26 and FY29.
ASK Automotive is expanding its brake-shoe and disc-pad capacity from 260 million to 320 million units. At the same time, higher aftermarket penetration and increasing contribution from disc pads and ABS are expected to support growth.
With capacity utilisation at around 90%, continued expansion at its Bengaluru and Karoli facilities should help sustain growth even as the two-wheeler product mix gradually changes, Choice said.
Exports, aftermarket and new products add to growth
Beyond braking and ALPS, ASK Automotive is expanding its presence across exports, aftermarket, passenger-vehicle components and safety-control cables.
Its aftermarket business, supported by a network of more than 450 dealers, recorded a 21% CAGR between FY24 and FY26. The company is also pursuing new opportunities through a joint venture with AISIN and T.D. Holding in sunroof cables.
Management is targeting 20% export CAGR between FY26 and FY29, while the exit from the low-margin Wheel Assembly business is expected to provide around 80 basis points of structural improvement in EBITDA margins, according to Choice.
Strong financial track record supports valuation
Choice said it favours ASK Automotive because of its experienced promoter-led management, strong return ratios and consistent outperformance versus the broader two-wheeler industry.
The company reported FY26 ROE and ROCE of 25.3% and 25.4%, respectively. Between FY22 and FY26, consolidated revenue, EBITDA and PAT grew at CAGRs of around 20%, 33% and 37%, respectively, driven by higher content per vehicle and a favourable product mix across ALPS and ABS.
Going ahead, Choice expects ASK Automotive to deliver approximately 18% revenue CAGR, 20% EBITDA CAGR and 20% PAT CAGR between FY26 and FY29, led by the scaling up of ALPS and the company’s new alloy-wheel and sunroof-cable businesses.
What could drive further upside?
Choice sees additional upside potential from a faster-than-expected ramp-up of the alloy-wheel business, new export order wins, earlier clarity on the proposed ABS mandate and additional technical collaborations or joint ventures.
However, the brokerage flagged several risks, including a possible MoRTH mandate extending ABS requirements to two-wheelers below 125cc, which could put some revenue at risk. Other concerns include weakness in the two-wheeler industry, aluminium price volatility due to delays in passing on cost changes, and customer concentration among major OEMs.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
