Ask Automotive lists with over 8% premium; Should you hold or book profit?

Ask Automotive’s shares listed with 8.12% premium over the IPO price on bourses on Wednesday. The share debuted at Rs 304.90 on the BSE and at Rs 303.30 on the NSE as compared to the issue price of Rs 281. The investors have made a profit of nearly Rs 23 per share as the scrip gave 8% returns to investors on the listing. Ahead of the listing, Ask Automotive’s shares’ grey market premium (GMP) rose nearly 10%, surpassing the upper end of the share price on offer, indicating a favorable debut on the bourses.

“We believe post listing there would be decent demand for the shares as it had received overwhelming response from all kinds of investors especially from QIB’s 142 times. We also believe ASK can act as a proxy play for the growth in the Indian automobile sector. We strongly believe ASK Automotive gives allotted investors a long term opportunity to hold and raid the growth in automobile sector, hence recommending all allotted investors ‘Hold for long term’ while those who failed to get allotments can accumulate on the listing day for holding it for healthy long term returns as markets always reward a player who has high visibility and growth potential,” said Prashanth Tapse, Research Analyst, Sr VP Research, Mehta Equities.

The price band for its public issue at Rs 268-282 per equity share of face value Rs 2 each. For potential investors, the bidding starts at a minimum of 53 equity shares, with subsequent bids in multiples of 53 equity shares. The minimum amount of investment required by retail investors was Rs 14,946.

Incorporated in 1989 as a manufacturer of brake shoe products for two-wheelers (2Ws), ASK Automotive has since diversified its operations to include offerings such as AB systems, aluminium lightweight precision (ALP) solutions, wheel assembly to 2W original equipment manufacturers (OEMs) and safety control cables (SCC) products. The company is a prominent player for 2W OEMs in India, with a market share of 9% in FY23 in production volume (Source: CRISIL Report). The company is the largest manufacturer of brake-shoe and advanced braking (AB) systems for two-wheelers in India, with a market share of approximately 50% in FY23 in terms of production volume for OEMs and the branded independent aftermarket (IAM), on a combined basis.