ASK Automotive Limited (ASKAUTOLTD) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the ASK Automotive Q1 FY27 Post Results Earned Conference Call hosted by AdFactors VR. As a reminder, all participant lines will be in the listen-only mood and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone form. Please note that this conference is being recorded. I now hand the conference over to Mr. Rooshib Shah from AdFactor PR. Thank you and over to you, sir.

Thank you. A very good evening to everyone, and welcome to the Q1FI27 Earnings Call of ASK Automotive Limited. From the Senior Management, we have with us Mr. Kuldeep Singh Rathi, Chairman and Managing Director, Mr. Prashant Rathi, Joint Managing Director, Mr. Aman Rathi, Joint Managing Director, and Mr. Naresh Kumar, Chief Financial Officer, and Mr. Manoj Sharma, Chief General Manager, Investor Relations. Before we begin the call, I would like to mention that some of the statements made during today's call may be forward-looking in nature, and hence it may involve risks and uncertainties, including those related to the future financial 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 Singhrati, Chairman and Managing Director, for his opening remarks. Thank you, and over to you, sir.

Thank you, Rushabh. Good evening, ladies and gentlemen. It's my great pleasure to welcome you all to our Q1 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. FY27 has begun on a strong note for the Indian economy, which continues to be the world's fastest-growing major economy. Domestic demand remains robust, private consumption is resilient, and the government of India's structural reforms, particularly GST-20, continue to energize the broader economy and, importantly for us, the automobile sector, given its deep forward and backward linkages. As you are aware, after 28th February 2026, The geopolitical conflict in West Asia had created undue volatility in energy, commodity, and currency markets and had led to a sharp, phenomenal increase in aluminum alloy prices, which affected our industry. Despite these challenges, we are optimistic that the growth momentum will remain in the coming quarters. Now, let me begin by sharing a quick overview of the broader industry, as reported by SIA. The Indian automobile sector has carried strong momentum into the first quarter of FY27. Overall vehicle production across all segments registered a robust year-on-year growth of 22.1% in Q1 FY27. The two-wheeler segment, which is most relevant to us, recorded production growth of 22.8% on a year-on-year basis. With total two-wheeler production of 72.5 lakh units in Q1 F27, up from 59.59 lakh units in the same quarter last year. I would remind you that in Q1 of last year, two-wheeler production had grown by just 0.7%. The third round this year is therefore significant, driven by the GST20 rate reduction, the personal income tax rationalization announced in the union budget, successive rate cuts, and liquidity measures by the Reserve Bank of India, a favorable base, and the introduction of two borders. Looking ahead, we believe the industry will continue to benefit from these far-reaching reforms. Improving consumer purchasing power and easier access to vehicle financing. The monsoon deficit witnessed earlier in the season has eased on the back of rainfall in late June and early July, supporting the outlook for rural income and tubular demand in the run-up to the festive season. Before we move on to ASK's business performance, we would like to highlight that on the green energy front, As already shared with you, Adia, I am happy to update that our 9.9 megawatt solar power plant at Switha, Haryana, has been fully operational and is delivering the sustainable operational economy on the expected lines. Our second captive solar plant of 11.55 megawatt at Pekane, Rajasthan, is ready and is expected to be commissioned in quarter two of FY20. Seven, this reflects ASK's special focus on green energy. Moving on to business updates, I am delighted to share with you that we had a strong performance in the first quarter in both revenue and profitability. This is the 11th consecutive quarter of robust performance by us since listing of the company. We achieved highest ever quarterly revenue EBITDA and PED. We delivered strong performance in business and recorded consolidated revenue growth of 52.1%, excluding pass-through impact of significant increase in alloy prices on revenue, that is 33.4%, and real assembly business strategy reduction, which reduced by 6.6%. Overall, net revenue has grown by 25.3% on year basis. We continue to outperform the two-way industry vehicle production growth. We achieved EBITDA of Rs. 164 crores with 32.7% year-on-year growth. EBITDA margin at 12%. However, EBITDA percentage was impacted due to abrupt and phenomenal path through alloy prices. This reflects the result of our continued focus on expanding value-added businesses, improving utilization of production capacities, and bringing cost efficiencies. We have outperformed the industry growth, and our aim is to continue on this growth path on a sustainable basis with clear focus on the bottom line to enhance the shareholders' value. Volatility in alloy prices may affect margin percentages due to the denominator effect. However... With the aluminum prices expected to remain benign in the coming quarters, we anticipate an improvement in our EBITDA margins. With strong performance, our earning per share has increased to Rs. 4.32 per share against Rs. 3.35 per share in the last year's same period. Our all three product segments performed well in terms of revenue growth. We have sustained our market leadership position in the advanced banking system. Our advanced banking system revenue grew by 48% in Q1 on year-on-year basis. The aluminum light rating pre-season solutions revenue grew by 75% in Q1 on year-on-year basis. The safety control cable revenue also recorded growth of 20% in Q1 year-on-year basis. Our revenue from exports were at Rs. 39 crore in Q1 FY27 against Rs. 33 crore last year. Key updates. We are happy to share that the technical collaboration with Yushu Yanagawa Japan has been successfully implemented at our Karoli plant, and first supply of high-pressure di-casted alloyedin has started to our esteemed Japanese customer. Strategic closure in low-margin wheel assembly business is complete, and from 1st April to 1026, The real assembly revenues are made. We also remain optimistic on the medium-term industry outlook, supported by improving consumer sentiment, expected benefits from the 8th May Commission, and continued policy support for manufacturing and formalization through labor reforms. These structured developments provide greater confidence in India's long-term consumption and manufacturing growth trajectory. We are confident that we will continue. Thank you very much.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and do. Participants are requested to use answers while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ramunandan from the Bama Resort. Please proceed.

Thank you, sir, on extremely strong numbers once again. Firstly, alloy price inflation impact is 33% in total revenue. Approximately how much would be the same alloy wheel inflation impact for the breaking systems division?

We have not calculated in that way, but we will let you know separately.

Sure, sir. Thank you.

This will be approximately, I will put it like that, that if it is increased by 48 percent, then the alloy impact will be around 28 percent or something. How much?

Total.

Total. But we have not calculated, as the CFO is saying.

No, that's it. New orders. Can you indicate how much can be the revenue for alloy wheel in FI27 and FI28 and also for the Ford order for the current year and next year? And if you can throw some colors if there has been any more order wins?

Well, allowable, as I have explained earlier, we have confirmed orders of about 70 to 90 crores, depending on how the gear up and how the customer gear ups. And for this financial year, however, for next financial year, we have confirmed orders of about 250 crores. As regards your second question of Ford Motors, we will be doing exports of about 40 to 45 crores this year, and next year it is likely to go up to 60 crores.

And any more new orders which you have received or are having in the pipeline, anything you can talk about?

Yes, we are getting new orders existing with one of the customers, which I would not like to name, and then happy to share that immediately, though it was not in our plans, but we'll have to set up a new plant immediately in south.

No, that's well. Congratulations on that. So, coming to the, before I fall back to the queue, one question. Can you remind us on the utilization at Karoli and Bangalore facility and also the CAPEX plan for FI27, given that you are setting up this new plant in South?

Yes, Mr. Raghu, that our Bangalore plant, which was our 18th plant, is running at optimum capacity utilization, near optimum. And again, happy to share that against the installed capacity in Karoli plant, from 60 to 65 percent that we were in the last quarter, we have now gone up to about 75 percent. And we are confident that in the last two, four, we'll be around 80% of the capacity utilization. Because we see the visibility for the Q4, you know. So that is the need that we have to urgently set up for the new orders that have come. We have to set up a new plant in south that will be in Bangalore at a war footing. And we hope to operationalize it before March in this financial year. The other question of yours was how much capex to be done. We had given a guidance of about around 450 to 500 crores, but the way we are going and the way we are receiving the orders, because as I today revised the guidance to high teams, I think our capex may go to something like 700 crores.

That's wonderful to be here, sir. Wishing you all the best. I'll fall back to the queue. Thank you.

Thank you. The next question is on the line of Ron Akmeta from ICICI Securities. Please proceed.

Yeah, thank you for giving this opportunity, and congratulations, sir, for a very good set of numbers. My first question is on the ISIN JV. Can you throw some light on, or can you give us an update on the JV, where are we in terms of revenue, margin, etc., product portfolio expansion? Number of dealers, any color on the JV, and by when can we see the profitability of JVs improving? Because I believe it is still making losses. That would be my first question.

So, ironically, Aishin JV is ramping up, and we are introducing more products into the pipeline, and we are also expecting that by the end of this year quarter, that we will also see some profitability there. However, it will not be significant because it is mainly trading.

Understood. But any color on the revenue that you expect from the JV, maybe, say, by the end of next year, this year or next year?

I think this year there is not much significant revenue we are expecting, but maybe in the last quarter call, we will be able to give you some good guidance for the next finance. FY28.

Sure, sir. Thank you. And my second question is on the commodity prices. So, like you indicated during your opening remarks that commodity prices have started to cool off and you may see improvement in the margins going ahead. But I just wanted to clarify one thing. Is there any pass-through of… Last quarter, which is still pending, or we are, but everything is fully passed so far.

Actually, Mr. Raunath, there is a complete confusion on the margins. In this casting line, we have to see the absolute EBITDA, which, as I have always explained, because there is 100% pass-through with the customer, back-to-back. We are hedged, fully hedged. So, the absolute margins remain the same, you know. Yes, sir.

My question was something else.

When we talk of the margin, it is only the percentage that looks like low, you know, which is looking 12, you know, when the prices are coming down, the same percentage is 13 or 13.4, you know, like that.

No, sir. I completely understand that. So, my question was more from a pass-through which happens with a lag, with a three-month or six-month lag. So, is there any pass-through which is pending? No, not pending.

We have received everything from that. Our customers are very, very esteemed customers and they have passed it on.

Perfect. Thank you. Thank you, sir.

Thank you. The next question is from the line of Joseph George from IIFS. Please proceed.

Hello, sir. I hope you are well. Just one question that I have. You mentioned that in the first quarter, revenues are inflated, or rather, growth is inflated by about 33% because of aluminum or, you know, the pass-throughs. Now, if I look at this quarter's revenue, which is about 1,358 crores, and if I divide that by 1.33 to remove the element of price hikes for aluminum, I get to about, you know, 1,020 crores, and if I, there is no impact on EBITDA because of the pass-through, and if I, you know, use the EBITDA number and divide it by this modified revenue, I get a margin of some 15.7%. So, what I want to check is, one, is the math correct, and second, is this kind of a margin sustainable adjusted for the effect of price eggs in revenue?

I narrate this side. Actually, your calculation is right, but some part of opening inventory may be there in the revenue. So, this margin of 15% is not sustainable in our industry. Our margins remain in the same line.

The overall margins will be, you will be finding around 13.5 to 14 in between that.

Understood, sir. And the backworking that I did, that is logical, right? Where I got more than 15%.

That's dearly logical, yeah.

Okay. Understood, sir. Thank you. That's all I have.

Thank you. The next question is from the line of Deneesh Agarwal from Bajaj Aldenay. Please proceed.

Yeah, thank you for the opportunity. Congratulations, sir, on great set of numbers. Just one question from my friend, like, how do you plan to fund the new CAPEX which you are targeting?

That will be, yeah,

actually, we are actually keeping in mind our high mid-team growth, our interleague roles will be sufficient, but yes, for cash flow management, we will have to take this result of some external financing.

So external will be borrowing, sir?

Turn-down, turn-down, you know, we'll be taking turn-down, please, for machines, you know.

Understood. Okay, thank you so much.

Thank you. The next question is from the line of Mrunmay Joglikas from Assets C Meta Investment. Please proceed.

Hello. Hi, sir. Am I audible?

Yes, please.

Sir, congratulations on a great set of numbers. I had a couple of questions. You mentioned that, you know, you have received some new orders based on which there is a new capacity that you are putting up. So, can you give some more color on these orders? Are these more on the EV side because we are seeing improving penetration or is it broad based across ICE and EV?

This is broad-based, ICE, and EV, but EV also is substantial because, as you know, the EV share is now increasing, and it's mainly in the ALPS segment, you know.

Okay, okay, sir, got it. And, sir, any updates on the alloy wheel with the Taiwanese partners?

That is under testing. As I told you last time also, in the last many calls, I said that it's in the final stages of testing whenever the approval comes, you know, because in the safety item, we don't pursue it that the customer must should take their own sweet time, you know. So, but we are very confident that even that will pass. For both the collaborations, I had given the guidance of H2, but we have been lucky that this one, at least one of them has rectified one quarter before, you know.

Right, sir, yes. And, sir, anything on the sunroof cable business?

That is also going as per plan, and in fact, we have received very good orders in that, and next year it will be shaping up very well.

But the supplies may start in H2.

Yeah, yeah. Initial supplies will start from H2, but next year you will see a substantial growth there.

Okay, so we'll start in H2 of this year and then ramp up next year.

Yeah.

Okay, sir. Thank you.

Thank you. The next question is from the line of Web of Meta from Access Neutral Fund. Please proceed.

Yeah, I have a conversation for a good set of numbers. Thanks for taking my question. My question was regards with solar plant that is coming up in operation from Q2. I see that there is a good jump in our usage of solar and renewable energy.

Sorry to interrupt, Mr. by above. Can you be a bit audible?

Hi. Is it better?

Yeah.

Yes, so my question was with regards to the savings in the energy cost by the Sola plant, chapter Sola plant that is coming up, if we can quantify that number and how would it impact our margins?

We can't quantify that number exactly, but we know very well that our payback of the investment is in five, five and a half years.

Yeah, sure.

Thanks.

Thank you. The next question is from the line of Naveen Kumar Dubev from Noveli Financial Services. Please proceed.

Yeah, thanks for the opportunity, sir. Congratulations to the team on robust performance. Thank you. You guys are really setting up new benchmark of growing at 30%. Sir, my question is related to the industry performance. As we see that second half of FY26 has seen growth of close to 25%. So how do we see that the growth should be in FY27 second half?

See, we, as I mentioned in my calls today, and even now to just now, we expect a high teens growth, you know. So I have revised my forecast, so you can see that even this quarter is going very well, and we expect this momentum to continue in the whole of the financial year.

Okay. And, sir, what would be the growth drivers be in the second half because the base was high in the second half last year?

See, this was high, but the industry is growing, and I think the way economy is growing at about 6.7 percent, I believe a lot of money is percolating down the line. And after this GST reduction from 28% to 18%, I think because the prices have become rather reasonable and customers are buying the product, especially two-wheeler, you know, there is a lot of tailwinds. And the only negative possible factor was the El Nino effect, which it seems now that that has diluted to quite some extent. Because I believe the water tables are almost 90% level even in Bombay, you know?

Yeah, yes, right, right. And the second question related to the margin, sir, we have seen some 300 basis points of gross margin contraction in recent quarters. So do we expect that the margin should come back to 34% levels, gross margin to 34% levels in next two, three quarters?

It will suddenly come. The moment the prices come down, they have already started coming down because the supplies have become not normal but near normal, you know, because at one time the raw material was just not available. So the prices have shot up by more than 100 rupees. So the aluminium prices that have shot up to 365 rupees have already come down by more than 10 percent, you know.

Okay, so we can safely assume that 13.5% to 14% EBITDA margin is easily achievable.

It should come. It should come. Sir, it all depends on the geopolitical situation. If tomorrow hormones gets clear, then certainly it will come. But suppose there is no agreement and signing off, and again they block it, I can't say anything.

But more important is the absolute value of the EBITDA.

Yes, yes. The growth in the absolute.

Okay, sure. Sure, sir. My third question is related to, in our investor presentation, we have mentioned in the February investor presentation, the workforce numbers are 7,000 plus, and in May it was 9,000 plus. So I think it's roughly some 25% kind of.

It is the 2,000 people added in the last two plants, you know, in Karoli and this, in Bangalore, I think that was added. Because they are very big plants, and in that more than 1500 people got recruited, in Karoli only, you know.

Oh, that's a huge number, then.

That's a huge plant. We have already invested 750 crores there, you know.

So it's a plant in 23 acres, so that kind of purpose will be there.

And I think the more will be recruited. I think 500 more at least will be recruited soon. So, this number will keep on changing.

So, shortly, you will find, next year, you will find more than 10,000.

Oh, great, great to hear, sir. Sir, one related question, is the land fully utilized, or we have some more scope to, you know, set up more capacities?

Currently, there is a little more scope, you know, about 20% or so. But the good part is the revenues have really shot up in Karoli, and from 60 crores monthly, we have touched 110 crores in the last month, you know, which is an appreciable jump. So maybe that plant will give us about, next year it should give us 1,500 crores.

Two last questions, sir. One is we have invested in the captive solar plant. So what kind of saving do we expect from the first plant and the second one is coming? Because I think the power cost is close to 3.5% for us.

Sir, we have explained that we have estimated that we'll get our payback of the investment in five, five and a half years.

Okay, five years.

If there is more sun, we'll get it in five years. If it remains cloudy, then maybe six years.

Okay. And the last question, sir, related to you mentioned that 700 crores of CapEx we will be doing this year. So, have we increased our date from March FY26 levels?

Actually, this is a recent development, as I said. It's not even 15 days development. So we have immediately, the board has decided that we'll go for the next part very, very fast. So it is only the revision from 500 to 700 because of if the need arises. So let's see where we end up in this financial year. However, there are such good internal accruals we'll be utilizing. As you know, the philosophy of the company is to completely blow back the internal accruals. So we'll be throwing that back, and wherever the working capital or term loan need arises, we'll buy the, we'll take the loan. However, we are still very confident that our debt equity will remain under control, and it will be, not exceed 0.5, you know.

Okay. Sir, have we increased our debt levels in Q1 from Q4 levels?

Yes, it has increased because due to certain increase in working capital requirement due to commodity price increase, so there is an increase in there.

The minimum is 100 rupees, sir, the price, so working capital it impacts, you know.

Okay. So can you specify the debt number, sir, current debt levels?

We will update in the Q2 results, because at that time, we will provide you a statement of a second liabilities.

Oh, okay, okay, okay, sure, sure. Thank you so much, sir, and all the best for you, sir. Thank you.

Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. To ask a question, please press star and one now. The next question is from the line of Yash Agarwal from Nirmal Bank Security. Hi, sir.

Thank you for the opportunity and first of all, congratulations on the great set of results. My first question is basically like one of a client Honda is expanding capacity and they are planning to launch 10 new models. So how is the content per vehicle there versus overall content per vehicle?

That is our most prestigious and largest customer, so the content per vehicle is also highest, and that will continue in the new models also.

Okay. And, sir, basically, what's the export outlook for FY27? Like, last year was slightly weak, but...

Yeah, last year we could not go near the target anywhere, but this time we have given a guidance of 20% increase in the exports, and we are, at the moment, we are still very confident we will achieve it.

And any update on that code order execution timeline and any new export order win recently?

We are in negotiations with two, three players, and I think a big export order, but I'll tell you when it betterizes, not before that.

And also, like, now the alloy will ramp up is started. So, the revenue guidance that you gave in the last earning call, does it remain same or, like, improve from that, like, you have adjusted that?

But also, I have given a revenue guidance, so it will remain the same, what I have given today.

Okay. And basically, one last second question on the ABS mandate implementation. So, any update on that?

I don't know. We read in the newspapers that you also must have gone through. Nothing has come so far, you know. It's only remains a draft, you know. And I believe there was a news item that some revised draft is also coming. So we are, I told last time, we'll not discuss on the draft thing, you know. Whenever a final thing comes, we'll do.

Okay, and sir, one last question on the segmental revenue growth, like tubular ice growth is close to tubular EV growth, but overall in the market, we have seen that EV is growing at much, much faster pace, and the penetration is at least close to 10 to 11%. So why our growth is kind of similar and not higher in the tubular EVs? We also are growing in the EV.

We are very, with all the top customers, but one of the major customers, which we had a very large revenue, so that is not performing for the last some time. So because of that, the percentage looks a little distorted.

Okay, sir. Thank you. Rest in place.

Thank you. Participants who wishes to ask a question, may please press start and run at this time. That was the last question. I would now like to hand the conference over to Mr. Kuldeep Singh Rathi from ASK Automotive Limited for closing comments. Over to you.

Thank you, ladies and gentlemen. Thank you for very, very patient hearing, and I feel, and I think we could answer to any of your queries quite satisfactorily. However, if something is left, we'll further, always happy to clarify because we are a very transparent company, and I would like to assure that now we'll be working hard to achieve the revised guidance for this year, Which I said that will be growing at high teens, you know. So give us all your best wishes so that we can achieve that target. Thank you very much once again.

Thank you. On behalf of AdFact of VR, that can use this conference. Thank you for joining us, and you may now disconnect your line.