ASK Automotive shares debut at 8% premium. Should you buy, sell or hold?

Investors willing to bet on ASK Automotive shares should do it from a medium-to-long-term perspective, a couple of analysts recommended. The stock made a modest debut on the exchanges at a premium of nearly 8% today. On BSE, it debuted at Rs 304.90 and on NSE at Rs 303.30.

The stock extended gains during the session and was trading 11% above the issue price. It hit an intraday high of Rs 314.50.

SBI Securities and Anand Rathi had recommended a ‘Subscribe’ view on the IPO with a long-term horizon.

Following the listing today, expert Shivani Nyati, Head of Wealth at Swastika Investmart recommended a hold on the counter with a medium-to-long-term view while suggesting a stop loss at Rs 290. The IPO came at a PE valuation of 45.63X, which she said was reasonably priced.

With a robust production model and a technology and innovation-based manufacturing process, the company shares strong relations with all the top two-wheeler manufacturers in the country, she added.

ASK Automotive is a market leader in brake-shoe and advanced braking (AB) systems for two-wheelers (2W) in India with approximately 50% share in FY23 in terms of production volume for original equipment manufacturers (OEMs) and the branded independent aftermarket (IAM), on a combined basis, SBI Securities said as it valued the company at FY23PE multiple of 45.2X and EV/EBITDA of 24.8X at the upper price band on post-issue capital.

Echoing a similar sentiment, Anand Rathi said that it believes that the valuation of the company was fairly priced. “At the upper price band the company is valued at P/E of 41x, EV/EBITDA 25X with a market cap of Rs 5,559.40 crore post issue of equity shares,” Anand Rathi said in its IPO note.

The issue, which was entirely an offer for sale (OFS) of 2.95 crore equity shares, received an overwhelming response from investors across categories, especially from QIBs, whose category was subscribed 142 times.

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