ASK Automotive: To Hold or Exit?

ASK Automotive shares have been on the rise after a decent listing, and investors are wondering whether to hold or exit the stock. The stock saw a mild listing pop at the bourses and found some buyers at lower levels during its maiden trading session. It was listed at a premium of about 8 per cent on both BSE and NSE at Rs 304.90 and Rs 303.30, respectively, over the issue price of Rs 282 apiece. The stock extended its gains by another 3 per cent to hit Rs 314.25 on BSE, marking an overall gain of 12 per cent over the issue price. Analysts tracking the stock continue to remain positive and suggest investors pick the stock for the long term. They believe that the company is a strong long-term play and investors can hold the stock for a longer run considering its business model and decent financials. ASK Automotive’s listing was in line with street expectations. Post listing, there is expected to be decent demand for the shares as it had received overwhelming response from all kinds of investors. The company can be a proxy play for the growth in the Indian automobile sector, according to Prashanth Tapse, Research Analyst- Senior VP Research at Mehta Equities. He recommends investors ‘hold for long-term’ while those who failed to get allotments can accumulate on the listing day for healthy long-term returns. The initial public offering (IPO) of ASK Automotive was open for bidding between November 7-9. It sold its shares in the fixed price band of Rs 268-282 apiece with a lot size of 53 equity shares. The issue was entirely an offer-for-sale (OFS) of up to 29,571,390 equity shares, aggregating to Rs 834 crore. The issue was overall subscribed a strong 44.52 times, mostly led by qualified institutional bidders (QIBs), whose quota was 129.01 times. The portion set aside for non-institutional investors saw solid 34.2 times bidding, while the allocation reserved for retail investors was subscribed only 5.09 times. ASK Automotive has a more than 50 per cent market share as a brake shoe and advanced braking systems manufacturer. The company shares strong relations with all the top two-wheeler manufacturers in the country. It has a robust production model and a technology- and innovation-based manufacturing process, according to Shivani Nyati, Head of Wealth, Swastika Investmart. Financially, the company has shown strong growth in its top-line numbers, while its profitability has also been decent. Investors who applied for the public offering for listing premium are advised to maintain their stop loss at Rs 290 and wait for further upside, whereas those who have a medium- to long-term perspective can also hold the stock. ASK Automotive is a manufacturer of advanced braking systems (ABS) for two-wheelers in India as well as global markets, with 15 manufacturing units spread across five states in India. It manufactures ABS systems; aluminum lightweight precision, wheel assembly to 2W OEMs; and safety control cables.