ASK Automotive (NSE:ASKAUTOLTD) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the ASK Automotive q one f y twenty seven post results on conference call hosted by AdFactors PR. As a reminder, all participant line 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 the conference call, please signal an operator by pressing 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister from. Thank you. Now over to you, sir. Thank you. A very good evening to everyone, and welcome to the q one FY twenty seven earnings call of ASK Automotive Limited. From the senior management, we have with us Mr. Chairman and managing director, Mr. Joint managing director, Mr. Joint managing director and Mr. And Mr.

0:58 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 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. Would now like to hand over the call to Mr. Chairman and managing director for his opening remarks. Thank you and over to you sir. Thank you, Ruchar. Good evening, ladies and gentlemen. It's my great pleasure to welcome you all to our Q1 FY twenty twenty seven earnings conference call.

1:51 I hope you have had the opportunity to review the detailed presentation submitted to the exchanges and available on our website. FY twenty seven 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 2.0, 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 02/28/2026, 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.

2:51 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 SEA. The Indian automobile sector has carried strong momentum into the first quarter of FY twenty twenty seven. Overall vehicle production across all segments registered a robust year on year growth of 22.1% in Q1 FY twenty twenty seven. 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 less units in Q1 FY twenty twenty seven, up from 59 lakh units in the same quarter last year.

3:42 I would remind you that in Q1 of last year, two wheeler production had grown by just 0.7%. The turnaround this year is therefore significant, driven by the GST two-zero rate reduction, the personal income tax rationalization announced in the union budget, successive rate cuts and liquidity measures by the Reserve Bank of India, the favorable base and the introduction of new bottles. Looking ahead, we believe the industry will continue to benefit from these far reaching reforms, improving consumer purchasing power and easier access to vehicle finance. The monsoon deficit witnessed earlier in the season has eased on the attack of rainfall in late June and early July, supporting the outlook for rural income and $2,000,000 demand in the run up to the festive season.

4:40 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 earlier, I'm happy to update that our 9.9 megawatt solar power plant at Sifa Haryana has been fully operational and is delivering the sustainable operational economies on the expected lines. Our second captive solar plant of 11.55 megawatt at Piikade, Rajasthan is ready and is expected to be commissioned in quarter two of FY twenty twenty seven. This reflects ASK's special focus on green energy. Moving on to business updates.

5:26 I'm delighted to share with you that we had a strong performance in the first quarter in both revenue and profitability. This is the eleventh consecutive quarter of robust performance by us since listing of the company. We achieved highest ever quarterly revenue, EBITDA and PAT. 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 wheel assembly business strategy reduction, which reduced by 6.6%. Overall, net revenue has grown by 25.3% on a year on year basis.

6:15 We continue to outperform the two wheeler industry vehicle production growth. We achieved EBITDA of INR164 crores with 32.7% year on year growth. EBITDA margin at 12%. However, EBITDA percentage was impacted due to abrupt and phenomenal pass through alloy prices. Achieved PAT of INR 85 crore with 28.8% year on year growth. This reflects the result of our continued focus on expanding value added businesses, improving utilization of production capacities and bringing cost efficiencies.

7:03 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 aluminum prices expected to remain benign in the coming quarters, we anticipate an improvement in our EBITDA margins. A strong performance. Our earnings per share has increased to INR 4.32 per share against INR 3.35 per share in the last year same period. Our all three product segments performed well in terms of revenue growth.

7:53 We have sustained our market leadership position in the advanced system. Our advanced baking system revenue grew by 48% in Q1 on year on year basis. The Aluminum Light Waiting Precision Solutions revenue grew by 75% in Q1 on year on year basis. The Safety Control Table revenue also recorded growth of 20% in Q1 year on year basis. Our revenue from exports were at INR39 crore in Q1 FY twenty twenty seven against INR33 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 die casted alloydine has started to our esteemed Japanese customer.

8:48 Strategic closure in low margin wheel assembly business is complete and from 04/01/2026, wheel assembly revenues are mid. We also remain optimistic on the medium term industry outlook supported by improving consumer sentiment, expected benefits from the eight ks commission and continued policy support for manufacturing and formalization through labor reforms. These structural developments provide greater confidence in India's long term consumption and manufacturing growth trajectory. We are confident that we'll continue to grow not only in mid teens, but I would I'm confident that we'll be now growing for the full year in high teens.

9:42 Thank you very much for your patient hearing. With this, we leave the floor open for Q and A. Thank you very much. We will now begin the question and answer session. May press star and one on your touch tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets for asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of from Navama Research. Please proceed. Congratulations, sir, on extremely strong numbers once again. Firstly, alloy price inflation impact is 33% in total revenue.

10:33 Approximately, how much would be the same alloy deal inflation impact for the Braking Systems division? We are not calculating in that way, but we will let you know separately. Sure, sir. Thank you. It will approximately if the I will put it like that, that if it is increased by 48%, then the alloy impact will be around 28% or something. How much? But we have not calculated as the CFO is saying. Noted, sir.

11:23 Second question on the new orders, can you indicate how much can be the revenue for alloy wheel in FY 'twenty seven and 'twenty eight and also for the forward order for the current year and next year? And if you can throw some colors if there has been any more order wins? Well, alloy wheel, as I have explained earlier, we have confirmed orders of about INR 70 crores to INR 90 crores depending on how the gear up and how the customer gear up and for this financial year. However, for next financial year, we have confirmed orders of about INR $2.50 crores. As regards to your second question of Ford Motors, we will be doing exports of about INR 40 crores to 45 crores this year. And next year, it is likely to go up to INR 60 crores.

12:24 Got it, sir. 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 in the 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. Noted, sir. 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 FY 'twenty seven, given that you are setting up this new plant in South?

13:21 Yes, Mr. Raghu, that our Bangalore plant, which was our eighteenth 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% that we were in the last quarter, we have now gone up to about 75%. And we are confident that by in the last Q4, we'll be around 80% of the capacity utilization because we see the visibility for the Q4. So that is the need that we 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.

14:18 The other question of yours was the how much CapEx to be done. We had given a guidance of about around $4.50 crores to INR 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 teens, think our CapEx may go to something like INR700 crores. That's wonderful to hear, sir. Wishing you all the best. I'll call back to the queue. Thank you. Thanks. Thank you. The next question is from the line of from ICICI Securities. Please proceed. Yeah. Thank you for giving this opportunity, and congratulations, sir, for the... For very good set of numbers.

15:07 My first question is on the ASIN JV. Can you throw some light on or can you give us an update on the JV, are we in terms of revenue margin, etcetera, 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. So yes, that would be my first question. So ironically, ASKIN 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'll also see some profitability there.

15:57 However, it will not be significant because it's 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 end or next year? 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 financial FY 'twenty eight. 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.

16:45 But I just wanted to clarify one thing. Is there any pass through of last quarter, which is still pending? Or we are everything is fully passed so far? Actually, Mr. Ronnath, there is a complete confusion on the margins. In our this casting line, we have to see the absolute EBITDA, which as I've 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. Yes, sir. My question was something else. When we talk of the margin, it is only the percentage that looks like low, which is looking 12 when the prices are coming down, the same percentage will look 13% or 13.4% like that.

17:38 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 pending. Through which is pending? No, received everything from there. 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 IIFL. Please proceed. Hello, sir. Hope you are well. Just one question that I have. So you mentioned that in the first quarter, revenues are inflated or rather growth is inflated by about 33% because of aluminum or the pass throughs. Now if I look at this quarter's revenue, which is about $13.58 crores, and if I divide that by INR 1.33 to remove the element of price hikes for aluminum, I get to about $10.20 crores.

18:45 And if I there is no impact on EBITDA because of the pass through. And if I 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 tags in revenue? Hi, Mahesh. This Saeed. 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 the same line. Overall margins will be you'll be finding around 13.5% to 14% in between that.

19:34 Understood, sir. And the back working that I did, that is logical, right, where I got more than 15%? Yes. That's very logical, Perfect. Understood, sir. Thank you. That's all I have. Thank you. The next question is from the line of Denis Agarwal from Bajaj Alternate. Please proceed. Yes. Thank you for the opportunity. Congratulations, sir, on great set of numbers. Just one question from my side, like how do you plan to fund the new CapEx which you're targeting? That would be Yes. Actually, we are actually keeping in mind our high mid teen growth. Our interlec roles will be sufficient. But yes, for cash flow management, we will have to take this result of some external financing.

20:28 So externally, we'll be borrowing, sir? It's not. It will be taking turns on, it's for machines. Understood. Okay. Thank you so much. Thank you. The next question is from the line of from Asset 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's a new capacity that you're 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?

21:18 Or is it broad based across ICE and EV? This is broad based ICE and EV, but yes, EV also is substantial because as you know, the EV share is now increasing. And it's daily in the ALPS segment. Okay, sir. Got it. And sir, any updates on the deal with the Taiwanese partner? 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. Because it's a safety item, we don't pursue it that the customer must should take their own sweet time.

22:04 So but we are very confident that even that will pass. Got it. Got it. And if you want to For both these 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. 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? Yes, yes. 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.

22:52 Okay. Perfect, sir. Thank you. Thank you. The next question is from the line of from ASK's mutual fund. Please proceed. Yeah. Hi, sir. And congratulations for a good set of number, and thanks for taking my question. My question was regards with the solar plant that is coming up in operation from q two. I see that there is a a good jump in our usage of solar and renewable energy. So Yes. So my question was with regards to the savings in the energy cost by the solar plant... Capital solar plant that is coming up. If we can quantify that number, and how would it impact our margins?

23:47 Probably we can't quantify that number exactly, but we know very well that our payback of the investment is in five, five point five years. Okay. Yes, sure. Thanks. Thank you. The next question is from the line of Navin Kumar Dubhe from Financial Services. Please proceed. Yeah. Thanks for the opportunity, sir. Congratulations to the team on robust performance. And 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 FY twenty twenty six has seen growth of close to 25%.

24:38 So how do we see that the growth should be in FY twenty twenty seven second half? See, we as I mentioned in my calls today and even now to just now, we expect a high teens growth. 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 could be the growth drivers be in second half because of the base was high in second half last year? See, base was high, but the industry is growing. And I think the way economy is growing at about 6.7%, 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, there is a lot of tailwinds.

25:57 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 water tables are almost 90% level even in Bombay. Yes. Yes, sir. Right, right, sir. 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?

26:42 Yes, it will certainly come. The moment the prices come down, they have already started coming down because the supplies have become not normal, but near normal. Because at one time, so the raw material was just not available. So the prices had shot up by more than INR 100. So the aluminum prices that are short up to INR $3.65 have already come down by more than 10%. Okay. So we can safely assume that 13.5% to 14% EBITDA margin is easily achievable. Sir, it all depends on the geopolitical situation. If tomorrow, our most 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 The growth in the absolute. Okay. Sure. Sure.

27:40 Yeah. Sir, my third question is related to... Sir, in our investor presentation, we had 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... Last 2,000 people added in the last two plants in Karoli and this Bangalore, I think that was added. Okay, okay. Because they are very big plants and in that more than 1,500 people got recruited in Karoli only. That's a huge number there.

28:26 That's a huge plant. We have already invested INR $7.50 crores there. So it's a plant in 23 acres, so that kind of workforce will be there. And I think the Board will be recruited. I think 500 Board at least will be recruited soon. So this number will keep on changing. So shortly, will find next year, you will find more than 10,000. Great to hear, sir. Sir, one related question. Is the land fully utilized or we have some more scope to set up more capacity? Currently, there is a little more scope, about 20% or so. But the good part is the revenues have really shot up in Karoli. And from INR 60 crore monthly, we have touched INR 110 crore in the last month, which is an appreciable jump.

29:21 So maybe that plant will give us about next year, it should give us INR 1,500 crores turnover. So yes, two last questions. One is we have invested in the CapEx solar plant. So what kind of saving we do expect in those plants 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 point five years. Okay, five years.

30:07 If there is more sun, we'll get it in five years. If it remains cloudy, then maybe for six years. Okay. And the last question, sir, related to you mentioned that INR700 crores of CapEx we will be doing this year. So have you increased our debt from FY March FY twenty twenty six levels? This is a recent development. As I said, it's not even fifteen 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.

31:02 However, there are such good internal accruals we'll be utilizing. As you know, the philosophy of the company is to completely draw back the internal accruals. So we'll be throwing that back and wherever working capital or term loan need arises, we'll buy the we'll take the loan. However, are still very confident that our debt equity will remain under control and it will be not exceed 0.5. Sir, have we increased our debt levels in Q1 from Q4 levels? Yes. Yes, it has increased because due to certain increase in working capital requirement due to commodity price increase, so there is an increase in the INR 100, sir, the price for working capital, it impacts.

31:56 Okay. So can you specify the date numbers, sir, at current date levels? We will update in the Q2 results because at that time, we'll provide you a statement of the shares and liabilities. Oh, okay. Okay. Okay. Sure. Sure. Thank thank you so much, sir, and all the best for. Thank you. 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 1 now. The next question is from the line of from Bank Securities. Please proceed. Hi, sir. Thank you for the opportunity. And first of all, congratulations on the great set of results.

32:43 My first question is basically, like, one of our 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 FY 2027? Like last year was slightly weak, but 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'll achieve it.

33:37 And any update on the export order execution timeline and any new export order win recently? We are in negotiations with two, three players and I think big export order, But when I'll tell you when it fertilizes, not before that. And also, now the alloy view ramp up is started. So the revenue guidance that you gave in the last earnings call, does it remain same or improved from that, like, you have adjusted it? But we also 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.

34:24 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. It's only remains a draft. And I believe there was a news item that some revised draft is also coming. So I have told last time, we'll not discuss on the draft thing. Whenever a final thing comes, we'll do. Okay. And sir, one last question on the segmental revenue growth, like two wheeler ICE growth is close to two wheeler EV growth. But overall in the market, we have seen that EV is growing at much much much faster pace and the penetration is close to 10 to 11%. So why our growth is, like, kind of similar and not higher in the two wheeler EV?

35:12 We also are growing in the EV. We are very with all that top customers and but our 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 little distorted. Okay, sir. Thank you. Best of luck. Thank you. Participants who wishes to ask a question may please press star and one at this time. That was the last question. I would now like to hand the conference over to Mr. Kuldeep Singh Rathi from ASKAUTOLTDMOS:] Thank you, ladies and gentlemen. Thank you for very, very patient sharing.

36:06 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 we'll be growing at high teens. 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 ARTDFactor PR, that concludes this conference. Thank you for joining us, and you may now disconnect your line.