ASK Automotive IPO: 10 key risks investors should consider before subscribing to the issue

ASK Automotive IPO consists of a total offering amount of up to 29,571,390 equity shares with a face value of ₹2 each in which Kuldip Singh Rathee will offload up to 20,699,973 equity shares and Vijay Rathee (promoters selling stockholders) up to 8,871,417 equity shares.

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ASK Automotive IPO has not reserved more than 50% of the shares in the public issue for Qualified Institutional Buyers (QIB), not less than 15% for Non-Institutional Investors (NII), and not less than 35% of the offer placed in certain for Retail Investors.

Also Read: Automotive IPO Ask: GMP, subscription status, review, other details. Apply or not?

On the first day, Ask Automotive IPO subscription status stood at 19%, 13:24 IST, where the retail segment was 32% subscribed, and Non Institutional Investors (NIIS) subscribed 16%. ASK IPO automotive price band is set in the range of ₹268 to ₹282 per equity share of the face value of the ₹2.

Also read: ASK Automotive opens IPO tomorrow: GMP, issue details, review, 10 key things to know

Let’s look at some of the key risks listed by the company in its Red Herring Prospectus (RHP):

• The Indian two-wheeler industry has accounted for a significant amount (more than 80%) of the company’s operating income in each of the last three fiscal years, which ended on June 30, 2022, June 30, 2023, and June 30 , 2023. Any unfavorable changes in the two-wheeler industry could have a negative impact on the company’s operations, financial condition and business results.
• More than 80% of the company’s operating income for the last three fiscal years, which ended on June 30, 2022, June 30, 2023, and June 30, 2023, can be attributed to the Indian two-wheeler industry. Any adverse changes in the two-wheeler industry could have a negative impact on our business, operating results and financial conditions.
• The availability and cost of their raw materials, including aluminum, is critical to their operations and profitability. Any disruption to the timely and adequate supply of raw materials, or volatility in raw material prices, could have a negative impact on their operations, financial condition and business.
• The business has no exclusive agreements or definite obligations to supply any of its suppliers; instead, it relies on third parties to supply raw materials. The business, operating results, and financial position could suffer from losing the suppliers.
• The company’s business, financial position, cash flows and operating results could suffer if its growth initiatives are not successfully implemented, particularly when it comes to gaining market share in the rapidly changing electric car industry.
• The availability of counterfeit goods and their disregard for the confidentiality of their technical know-how could have a negative impact on the company’s operations and financial performance.
• Product liability and other civil claims and expenses arising from product recalls may have a negative impact on the operations, financial status and performance of the firm.
• On the grounds of the Industrial Development Corporation are several of the company’s manufacturing sites. Relocating their activities could adversely affect the company’s operations, finances and business if they are unable to comply with the terms of land use or extend the leases already in place for those manufacturing facilities.
• The company is subject to changes in foreign exchange rates, which may have a negative impact on the value of equity shares and operating performance independently of each other.
• The company has grown recently, but it may not be able to maintain or manage this growth properly. Due to the company’s heavy debt load, their business and financial position could suffer if they are unable to meet the repayment obligations and other terms of their financing arrangements.

QUEST Automotive IPO GMP today

ASK Automotive IPO GMP GMP today or green market premium is +40 This shows that ASK Automotive share price was trading at a premium of ₹40 in the gray market on Tuesday, according to investorgain.com.

Also read: ASK Automotive opens IPO on November 7, price band set at ₹268-282 per share

Considering the upper end of the IPO price band and the current premium in the gray market, the estimated listed price of ASK Automotive’s share price was shown at ₹322 apiece, which is 14.18% higher than its IPO price ₹282.

A ‘grey market premium’ indicates the willingness of investors to pay more than the issue price.

Disclaimer: The above opinions and recommendations are the opinions and recommendations of individual analysts, experts and brokerage firms, not of the Mint. We encourage investors to check with certified experts before making any investment decisions.

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Updated: 07 November 2023, 01:32 PM IST