ASK Automotive Limited (ASKAUTOLTD) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to ASK Automotive Q2 and H1FY27 Post Results Earnings Conference Call, hosted by AdFactorsPR. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call? Please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rushabh Shah from AdFactors PR. Thank you and over to you, sir.

Thank you, Palak. A very good evening to everyone, and welcome to the Q2 and H1 FI27 earnings call of ASK Automotive. From the senior management, we have with us Mr. Kuldeep Singh Ratti, Chairman and Managing Director, Mr. Prashant Ratti, Joint Managing Director, Mr. Aman Ratti, Joint Managing Director, Mr. Naresh Kumar, Chief Financial Officer, and Mr. Manoj Sharma, Chief General Manager, Investor Relations. Before we begin the earnings call, I would like to mention that some of the statements made during today's call may be forward-looking in nature and hence may involve risks and uncertainties, including those related to future financials and operating performance of the company. Please bear with us. If there is a call drop during the course of the conference call, we would ensure that the call is reconnected at the earliest. I would now like to hand over the call to Mr. Kuldeep Singh Lati, Chairman and Managing Director, for his opening remarks. Thank you, and over to you, sir.

Good evening, ladies and gentlemen. It is my great pleasure to welcome you all to our Q2 and H1 FY27 earnings conference call. I hope you have had the opportunity to review the detailed presentation submitted to the exchanges and available on our website. FY 27 has begun on a resilient note for the Indian economy, with GDP growing 7.8% in the first quarter ahead of expectations, supported by strong investment and steady consumption. The GST 2.0 reforms Have helped improve affordability across vehicle segments. The Indian automobile sector delivered a strong first half of FY27 with every segment recording its highest ever second quarter domestic sales. Now, let me begin by sharing a quick overview of the broader industry as reported by SIA. In H1 FY27, overall vehicle production across all segments registered a robust year-on-year growth of 20.3%. The two-wheeler segment, which is most relevant to us, recorded domestic production of 153.7 lakh units in H1 FY27. F527, up 19.5% from 128.6 lakh units in H1 F526. In Q2 alone, production touched 81 lakh units as compared to 69.5 lakh units in the same quarter last year. The festive season is underway, consumer sentiment is improving, and we expect further support from the 8th Pay Commission, new model launches, and a gradual replacement cycle. Moving on to business updates, I am delighted to share with you that we had a strong performance in the second quarter and the first half in both revenue and profitability. This is the 12th consecutive quarter of robust performance of us since listing of the company. Happy to share that we have achieved highest ever quarterly revenue, EBITDA, and PED. During Q2 FY27, we delivered strong performance in business and recorded consolidated revenue growth of 47.5%. When we see excluding pass-through impact of significant increase in alloy prices on revenue, which is 23%, and real assembly business strategic reduction, which is 5%, so overall net revenue has grown by 29.5% on year-on-year basis. We continue to outperform the two-wheeler industry, achieving net revenue growth of 29.5 percent compared with industry vehicle production growth of 16.5 percent. Achieved EBITDA of Rs. 1 to 85 growth with 30 percent year-on-year growth. EBITDA margin at 11.8%. However, EBITDA margin percentage appears lower due to pass-through alloy prices. Achieved fat of 102 crores with 27.3% year-on-year growth. With strong performance, our earning per share has increased to Rs.5.15 per share against Rs.4.05 per share in the last year's same period. Our all three product segments performed well in terms of revenue growth. Revenue from advanced baking system grew by 46% year-on-year, while aluminum light-weighting precision solutions and safety control tables recorded revenue growth of 69% and 33% respectively. Export revenue rose by 133.3% year-on-year to Rs. 70 crore compared with Rs. 30 crore in the corresponding period last year. As a result, in first half of FY27, we delivered strong performance in business and recorded consolidated revenue growth of 49.6%. So when we exclude the pass-through impact of significant increase in alloy prices, On revenue, which is 27.1%, and wheel assembly business strategy reduction, which is 5.1%. So, overall net revenue has grown by 27.6% on year-on-year basis. We achieved EBITDA of rupees 348 crore, with 31.3% year-on-year growth. EBITDA margin is at 11.9%. However, EBITDA percentage is lower due to path-through alloy prices. Achieved that of Rs. 187 croat with 28% year-on-year growth. Adding per share increased to Rs. 9.47 against Rs. 7.40 in the last year in the same period, up 28% year-on-year. Our all three product segments performed well in H1 F527 in terms of revenue growth. Revenue from Advanced Pacing System grew by 47% year-on-year, while Aluminum Light Pacing Precision Solutions and Safety Control Cables recorded revenue growth of 72% and 27% respectively. Export revenues rose by 74% year-on-year to Rs. 109 crore compared with Rs. 63 crore in the corresponding period last year. This reflects the result of our continued focus on expanding value-added businesses, improving utilization of production capacities, and bringing cost efficiencies. We continue to outperform the two-wheeler industry, achieving net revenue growth of 27.6 percent compared with industry weaker production growth of 19.5 percent. All right, and... The goal is to continue on this growth path on a sustainable basis with clear focus on the bottom line to enhance the shareholders' wealth. Volatility in alloy prices may affect margin percentages due to the denominator effect. However, in absolute terms, our EBITDA growth is in line with the net-trivity growth. There are certain key updates which I would like to highlight. Regular supply of high-pressure dicastric HPDC alloy wheels commenced on 3rd August 2026 to our leading Japanese customer under technical collaboration with Yushu Yanagawa, Japan. First time, HPDC alloy wheels introduced in two wheelers in India. Our second captive solar plant. of 11.55 megawatt in BKD Rajasthan, operationalized in October 26, as promised earlier. This reflects ASK's special focus on green energy. In spite of the current geopolitical situation, we are confident that we will continue to grow in high teens In FY27, despite post-GST 2.0 higher base in Q3 and Q4 of FY26. Thank you very much for your patient hearing. With this, we leave the floor open for question and answer.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may please press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. The first question is from the line of Raghunathan, NL, from Nuwama Research. Please proceed with your question.

Congratulations to the entire team on the stellar performance across all categories. So just a clarification to start with, when you indicate that high single-digit growth, I mean high teams growth for the full year, you are looking at the revenue excluding the pass-through alloy impact. Would that be right?

Yes, yes, net revenue. We always mention very transparently that what is the net revenue growth, Mr. Agu.

Thank you, sir. Export revenue is at 100 crores in H1. Would you see similar run rate for H2? And also, has there been any new order wins in export, either in auto or non-auto categories?

See, we are very, very rich on E1 in H2, but the only thing is, any analyst, they... Scare us by telling that H2, you will see much lesser growth because of the GSP20 impact, which, you know, there was a clear upside in the H1. But since the end of H1, September, GSK20 direction came, so the analysts feel the H2 will be less. However, we are very confident that all our customers are also very bullish on H2.

Yes, sir, thanks for that. I was asking on exports, sir, whether in exports have you seen any new order wins, and for full year, do you think exports revenue can cross 200 crore of revenue?

Last time, we had given a guidance of that we will be from 145 crores, we will touch 180 crores, and we are very confident we will be crossing that.

Got it, sir. And can you provide an update on the supply, like on alloy wheels, how is the ramp-up expected for Japanese and India OEM, and also if you can update on the port order and the sunroof cable order, whether all these orders are on track and what kind of revenue we can expect for SI27 and SI28?

As far as the Japanese customer is concerned on the alloy wheel side, from 3rd August, since we started the commercial production, the supplies are going regularly on daily basis every month, you know, and this year we'll be able to supply, as I had mentioned earlier, about 80 crores on the alloy wheels, and next year the orders are to the tune of 240 crores. That is only with one customer. As regards the other Indian customer, as I mentioned, this is in the final, as far as being a safety item, it is in the final stages of the testing, and once that breakthrough comes, so that additional supplies will come only in the next financial year. Regarding, yeah, sorry.

And what can be the potential, sir, for the Indian customer?

Ragunathan, sir, may we request that you return to question queue follow-up?

Sure, I will do that. Thank you.

Thank you, sir. The next question is on the line of Ronak Mehta from ICICI Securities. Please proceed with your question.

Thank you for the opportunity. Congratulations, sir, for the great set of numbers. So, continuing on the question from the previous participant on alloy wheels, now that the product is already on-road, What is the initial feedback from the customer, Japanese customer, and how are they planning to, and can you also throw some light on the profitability of Alawheel once it's ramped up fully? Will it be similar to the profitability of the overall company profitability currency, or it will be lower, higher, if you can throw some light on that?

See, Mr. Ronak, that these supplies are going regularly. There is a feedback from the market is very, very positive, and as I said, there will be continuous ramp-up and continuous supplies for the next full year to the tune of 240 crores in the next financial year to only one customer, which is a Japanese customer. So, as regards the EBITDA margins, you know we are very focused on the bottom line, so EBITDA margins will remain in sync with the company's EBITDA margins.

Okay, sir. And my second question is on the Capex. Can you help us with the Capex guidance for this year and next year?

Yes, Capex we are continuously doing. As I said, I am very positive on the performance of the company, on the performance of the nation, and I am always optimistic in every call, as you must have seen. So, we are continuing with our Capex. And very, very happy to share with you that we have commissioned our 19th plant for the expansion in the friction material, the brakes, and 20th plant will be commissioning very soon, likely on 14th January or 15th January, and because then that plant will be, the 20th plant will be the fourth plant of Bangalore, you know. Because there are so many orders coming from the south customers. And also, the previous plant, you know, which we had worked with an investment of about approximately 380 crores, that is now running on full capacity of 90% capacity utilization.

Thank you. So, any KPEC number for this year or for the full year?

This year, we have already budgeted 700 crores, but of course, some part of it may, you know, if the machines come on, say, 7th April, this may go a little, it will be around this number, but some, we are going on an expansion path, complete expansion path, and even next year, we'll be putting in 500 crores for them.

Okay, sir.

Thank you. Thank you, sir.

Thank you, sir. The next question is from the line of Yash Agarwal from Nirmal Bank. Please proceed with your question.

Good evening, sir. Thank you for the opportunity. My first question is on the export revenue. I am seeing in the H1, the export has grown by 75%, and at the starting of the year, you guided around 20% growth for export. So, any revision in the guidance for the H2 for all year?

At the moment, we will stick to our guidance, you know, but we will definitely, we are very confident that we will be crossing the 180 crores, you know, guidelines that we had given here. Because, you know, I can't say with certainty because of geopolitical situation. But under the circumstances, we are doing pretty well.

My second question is on ALPS segment. It has gone around 70% Y on Y in 2007. And how is the ASK's EV business growing relative to overall two-wheeler industry in this segment? And what is the current EV contribution to the ASK's revenue segment? EV segment.

EV also we are performing. We have grown in EV. We have grown by 98%.

Okay. And, sir, like, Honda is expanding capacity and launching 10 new models next year. So, how is our content per vehicle and overall wallet share in the customer versus, like, other customers? And, like, how is Honda's EV ramp-up plan going on?

See, we are associated with Honda in all the models, so we will be growing as per the growth of the vehicles in Honda. I can only explain that. And second thing is...

And as we always say, our content is slightly...

Yeah, our content is slightly higher only, not lower in Honda. Honda being our leading customer, you know, it still enjoys about, I think, 35% of our total revenues.

Okay. And also, like, companies discuss about independent aftermarket channel as a key growth strategy. So, what has been the progress in expanding the distribution network and product portfolio, and what is the current contribution of aftermarket revenue and growth expectation for midterm?

Our aftermarket is growing as per the growth of the company, and it generally outgrows the break segment, and normally of the overall revenue, it constitutes about 11 percent.

One last question on the margin guidance. We expect margins to increase up to around 13.14%. So if we remove the impact of aluminum prices, so what was our adjusted margin for Q2 and where we are in terms of the guidance?

We are maintaining what I suggested, you know, because if you adjust the aluminum, abrupt aluminum prices, our margins will come to 13.5% or a little more. Okay, sir. Thank you. That's it so much. Because I repeatedly, I said it's a denominator effect, you know. Tomorrow, aluminium prices, everything gets sorted out geopolitically, and aluminium prices fall, then you will suddenly see our EBITDA percentages. So that's why I say we should see the growth in the absolute EBITDA, you know. Okay.

Yeah, sure, sir. Thank you.

And the absolute bitter has grown by 20, by 30%, you know.

So, basically, our EBITDA growth is in line with overall revenues, and, like, is there a limit for date, then this much for demand?

You see, EBITDA percentage is actually, repeatedly, in every call I say, it doesn't matter the percentage. But the good part is that we have grown as per the line of the growth of the net revenue, you know, whatever we always tell you.

Thank you, sir.

The next question is from the line of Naveen Kumar Dube from Narnolia Financial Services Limited. Please proceed with your question.

Yeah, thanks for the opportunity, sir, and congratulations to the team for robust performance. My first question is related to the industry, sir. How should we expect the auto industry to pan out in FY28 after showing strong growth in FY27, and are we expecting that industry might be peaking around in FY28?

I can't forecast that, but the customers are at the moment very bullish. I can only say that they are all expanding capacities. We expand our capacities along with that, we being the core supplier. And, well, if we feel that the industry will keep on going 20%, so it will not grow. So, it will come to reasonable terms, but I think it should still grow at 10 percent. The industry should grow at 10 percent.

Because this year, sir, I think the industry would be doing somewhere around 24 million, 2 million.

That's what I'm saying, but see, we should appreciate that the whole economy, there's a lot of money coming and circulating in the economy, and I think... The demand for two-wheelers shall remain.

The second question is related to us. What are the key drivers behind the kind of growth that we are seeing? Is it because of new OEMs we are adding or we are gaining market share or it is because of increased premium offerings? What could be the driver?

See, we are doing what we have been doing for the last 30 years. Last 30 years, we have been outgrowing the growth of the industry, and there is no specific formula, but yes, some new customers, some new products, some new share. So I think this is the basic common formula that since we are working hard, the customers are happy, so we are getting extra orders wherever they need.

One question related to the EV industry, what kind of EV adoption we are expecting maybe in FY28, because that is the very fast-growing segment currently.

I think EV will soon, not soon, means another next two years, it should enjoy 20% of the total market.

That's a big number, 20%.

But it may take two years, two financial years further.

Sorry to interrupt, Naveen, sir. May we request that you return to question queue follow-up?

Sure, sure, sure.

Thank you, sir. The next question is from the line of Basudev Banerjee from CLSA. Please proceed with your question.

Yeah, I thank Congress Ratiji for good set of numbers and happy Rivali in advance. So, one thing, just extension of the previous question, with two-wheeler industry, EV penetration at 10%, currently, how much is the EV product revenue mix for you, and as of now, how much is the kit value difference between EV and ICE?

See, the kick value is higher in EV rather than ICE. But at the moment, our EV revenue is 5.9% because we are growing in the other segments, and plus one of our main customers, initial main customer, Ola, as everybody knows, is not doing that well at the moment. But however, we have taken the big breakthroughs in the other EV customers, and this will keep on growing.

And, sir, as of now, what can be the multiplier of kit value per unit between EV and ICE you are catering to?

See, EV, in ICE, our kit value is about 950. EV is about 1250 or 3800. So, the kit value is higher in EV.

This is for the braking system you mentioned. No, no, this is for overall, overall, including Alps. So 1.3x, 1.4x. Yeah, yeah, yeah.

So we will gain once this EV transition takes place. Ultimately, we are going to gain.

Sure, because, as you said, from 10% penetration moving up to 20% in two years.

It looks like, because, you know, we can give you a feedback what customers are thinking, you know. So, they are thinking the transition will be faster now because of environmental reasons and so many other things.

And, currently, you are catering to all the key EV makers like Bajaj, TBA, Asha, Lahiro.

We are catering to Ola, Ather, TVS, and Bajaj a little bit. Bajaj we are less, but we are catering to Bajaj, and then Hero.

And next question, sir, please.

Sorry to interrupt, Basudeb, sir. Your voice is not clear. Hello? Hello? Sir, may we request that you come to follow up as your voice is not audio.

Okay, thank you.

Thank you, sir. The next question is from the line of Preeti Sharma from Invest First Advisors. Please proceed with your question.

Yeah, hi. Congratulations on a great set of numbers, sir. I have two questions. One is, you know, with a two-wheeler ICE contribution, around 73% of half-yearly revenue, how do you see the revenue mix evolving over the next two to three years, especially across EVs, passenger vehicles, and commercial vehicles? And my second question is, sorry, sir, you can go ahead.

No, no, you please ask.

Yeah, sorry, and my second question was, Since the company has started regular supplies of HDDC alloy wheels since August 26, what is the expected revenue from this product, and are there opportunities to supply to OEMs in India and overseas?

Well, regarding the first question, that the ICE revenue and the EV revenue, probably the EV revenue will keep on a little bit increasing, and ICE revenue similarly coming a little down, because the overall population of the two-wheelers is also increasing. There is a huge growth in that segment, that's right. So, that is the first thing, and the second thing is on the HPDC alloy wheels, they will be first supplied only to the Indian OEMs, as we have cracked one OEM in the Japanese OEMs, so we expect there should be next financial year breakthrough in the other Indian OEMs also, and as far as export is concerned, that's a later on situation, because there should be a very good demand in the Indian OEMs only.

Okay, great. Thank you so much, sir. That's it from my side. All the best.

Thank you.

Thank you, ma'am. The next question is on the line of Varun from Smith's Limited PMF. Please proceed with your question.

Yeah, hi. Am I audible?

Yes, sir.

Yeah. First of all, congratulations for a very great set of numbers. I have a question on the debt part. So, basically, I understand that we are doing 700 crores of capex this year and another additional 500 crores next year. So, sir, what would be the peak debt for you and how are you going to get the repayment done?

See, we are a cash generating company for the last 32 years. And this year also, so much of capex we are doing from the internal accrual, you know, and all the cash that we are generating that is re-plowed into the company. So, repayment of the debt is no question at all because our debt equity ratio always remains around 0.5, you know, which is very well controlled. And even the debt EBITDA, we would like to keep around one year of EBITDA only, you know. So with these kinds of fiscal management, I think debt repayment or the debt figure should be of no concern, you know.

Okay, that's Ashwari, sir. And my second question was with respect to, sir, what is the margin on the HPDC versus the ALPS currently? And what's the spread like looking in that segment?

Our EBITDA margins are very, very close in each of the segments, you know.

So you would suggest that they are even, like they both are the same?

Yeah, yeah, same.

Okay, yeah. That's it from my side, sir. Thank you so much. And happy Diwali.

Happy Diwali, yes, to everyone.

Thank you, sir. The next question is from the line of Yash Agarwal from Nirmal Bhang. Please proceed with your question.

Just a few questions on the modeling side. Like, we have seen other expansions end up in Q1 now further in the Q2.

So, like, will they remain elevated?

What was the answer?

Can you repeat the question? He is asking... ...on the other expenses side, which have gone up in the Q1, then further gone up in the Q2, and they remain a bit elevated. So, will they moderate going forward? Like, any specific thing which is impacting expenses?

The major part of the other expenses is contractual labour charges that were increased due to a heavy increase in minimum wages in Haryana and other states.

Okay.

I think that KFO is telling that that is because of the huge wage increase of 35% in this Haryana region, you know.

And, sir, the care of associates has been active in the first half, so I'll be expecting them to improve going forward or second.

Can you repeat again? We do not clear the words to be clear.

Yes, yes, no, the word is not audible. Can you come back to the question queue?

Sure, sure, sure.

The next question is from the line of Harshal from CBA Advisory. Please proceed with your question.

Yeah. Hi, everyone. Am I audible?

Yes. Yes, please.

Yeah, so I have two questions. Firstly, actually, I have joined a bit late, so I might have missed it. So on the ALPS growth, I have seen you have significantly outperformed the other segments as well by around 69% in Q2 and 72% in H1. So I actually wanted to understand what were the key drivers of this growth and if you can give some clarity on how much of this is coming from the new customer's editions or vis-a-vis the higher businesses from the existing customers.

So this is, as you know, many of the OEM customers are outgrowing the industry, so we are very well associated with them and moving hand in hand with them. So anybody who has the capacities will get the business, you know. And as you have been noticing that we have been investing on an average at least 500 crores for the last four years continuously and re-flowing our profits in the business. So we are reaping the advantages of that.

Understood, sir. And secondly, I wanted to understand as the company continues to invest in the new facilities, what are the internal cash generation and the funding plans for the upcoming CAPEX cycle?

So, I think you should make out that once our EBITDA is a half-year EBITDA, numbers are 348 crores, so there is enough cash generation, you know.

Okay. Understood, sir. That was helpful. Thank you so much and a very happy diwali to you.

Happy diwali.

Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. The next question is from the line of Naving Kumar Dubey from Narnolia Financial Services Limited. Please proceed with your question.

Yeah, thanks for the opportunity again, sir. How should we think from export perspective, like A, from industry standpoint, and second from the company especially?

So export, how can we explain the industry point of view? We can explain our exports. And as I said, that our exports will grow more than 25 percent year on year on an average. So that we are achieving in this year. And even next year, we have the clarity to grow even much faster, you know, next year. I think let the time come. I'll give a clear guidance in the next quarter.

Okay. The industry standpoint, sir, I was asking related to how OEMs are responding to that. I mean, how is the export going there?

Even the OEMs exports are very good, but on that, even our products are going, but we supply to them locally, so I don't know how much of that is exported, how much is consumed. So that part we don't take in our exports because that we supply domestically to them.

Sir, one question on a broad basis. Are we thinking of, as we are more into two-wheeler industry, so how are we thinking of moving towards passenger vehicle, and is there any change in terms of when we pitch ourselves to the OEMs? Is there any differentiation between if we pitch towards two-wheeler OEM and passenger vehicle OEMs?

See, in passenger vehicle, we have grown by 79%. In this quarter, you know. And overall, also we have grown in the half year also, we have grown by 67%. So there is a focus. We are growing. And as I said, we are going pretty fast. And till that time, all our capacities are utilized. All our last investments are totally in profits. So what else we can do, you know? I think we are doing pretty well.

One bookkeeping question, sir. What could be the possible reason behind the increase in trade receivable in the first half? Any particular thing there? Increase in sales as well as increase in aluminium prices. Thank you. Thank you so much for answering the question, sir, and all the best to the team, and happy Diwali.

Happy Diwali.

Thank you.

Thank you, sir. The next question is from the line of Mandira A from Investo. Please proceed with your question.

Thank you for the opportunity. A couple of questions. So, what is the margin trajectory should we expect in H-227, assuming the aluminum price remains stable?

The margin trajectory will be the same if the aluminum prices remain high like this. So, it is not going to fall. It is going to be a little better only, or it remains the same.

Got it. And secondly, sir, EV revenue contribution has increased from 4.8% in H-126 to 5.9% in H-127. What is the medium-term growth opportunity in EV segment, and which product categories are expected to drive this growth?

So this is again in line with the industry, because EV as the whole percentage of the industry is also growing, so that's why you see the mix there, that our mix has also changed from 4.8% to 5.9%. And some new products also we are adding.

Okay. Got it. Got it. That's really helpful. Thank you. And all the wish for the coming quarters.

Thank you. Thank you, ma'am. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions, may please press star and one at this time. As there are no further questions from the participants, I now hand the conference over to Mr. Kuldi Singh Rathi from ASK Automotive Ltd. for closing comments. Thank you and over to you, sir.

Well, ladies and gentlemen, thank you so much for such patient hearing. Before Diwali, we would like to close on a very, very positive note. Whatever we have said for the full year, we are going to achieve, and in my optimistic way, even the next year, financial year, looks very, very promising. So, on that very happy note, and wishing all of you happy Diwali, I would like to close this conference. Namaste, and wishing you all good health, happiness, and prosperity on this divide. Thank you.

Thank you, sir. On behalf of AdFactorsPR, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.