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Business News/ Markets / Ipo/  ASK Automotive IPO: 10 key risks investors should consider before subscribing to the issue
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ASK Automotive IPO: 10 key risks investors should consider before subscribing to the issue

ASK Automotive IPO has opened for subscription and will close on November 9. The IPO raised over ₹250 crore from anchor investors.

Ask Automotive cater to a diverse range of sectors, including both the automotive and non-automotive industriesPremium
Ask Automotive cater to a diverse range of sectors, including both the automotive and non-automotive industries

ASK Automotive IPO has opened for subscription today (Tuesday, November 7), and will close on Thursday, November 9. ASK Automotive IPO raised over 250 crore from anchor investors on Monday, November 6, where 25 investors participated in the anchor book, and five mutual funds applied through six schemes.

ASK Automotive IPO consists of a total offer size of up to 29,571,390 equity shares with a face value of 2 each where Kuldip Singh Rathee will offload up to 20,699,973 equity shares and Vijay Rathee (promoter selling stockholders) up to 8,871,417 equity shares.

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ASK Automotive IPO has reserved not 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 is reserved for Retail Investors.

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

On day 1, Ask Automotive IPO subscription status was 38%, where retail portion was subscribed 56%, and Non Institutional Investors(NIIS) was subscribed 41%. ASK Automotive IPO price band has been fixed in the range of 268 to 282 per equity share of face value of 2.

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

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

  • The Indian two-wheeler automobile industry is responsible for a sizeable amount (more than 80%) of the company's operating revenue in each of the last three fiscal years, which ended on June 30, 2022, June 30, 2023, and June 30, 2023. Any unfavourable changes in the two-wheeler automotive industry could have a negative effect on the company's operations, financial situation, and business outcomes.
  • Over 80% of the company's operating revenue in the last three fiscal years, which ended on June 30, 2022, June 30, 2023, and June 30, 2023, may be attributed to the Indian two-wheeler automotive industry. The business, operational outcomes, and financial situation could all be negatively impacted by any unfavourable changes in the two-wheeler automotive industry.
  • The availability and cost of their raw materials, including aluminium, are crucial to their operations and profitability. Any disruption to the timely and sufficient supply of raw materials, or volatility in raw material prices, could have a negative effect on their operations, financial situation, and business.
  • The business does not have any exclusive agreements or definite obligations to supply any of its suppliers; instead, it depends on third parties to provide raw materials. The business, operational outcomes, and financial situation could all suffer from the loss of suppliers.
  • The company's business, financial situation, cash flows, and operational results could suffer if their growth initiatives are not implemented successfully, especially if it comes to gaining market share in the rapidly changing electric car industry.
  • The availability of fake goods and their disregard for the confidentiality of their technical know-how could negatively impact the company's operations and financial performance.
  • The business's operations, financial status, and performance could be negatively impacted by product liability and other civil claims and expenses resulting from product recalls.
  • On the grounds of the Industrial Development Corporation are a few of the company's manufacturing sites. Relocating their activities could have a negative effect on the company's operations, finances, and business if they are unable to comply with the terms of use of the land or to extend the leases already in place for these manufacturing facilities.
  • The company is subject to changes in foreign exchange rates, which could negatively impact both the value of the equity shares and the operating performance independent of each other.
  • The company has grown recently, but it might not be able to maintain or properly manage this growth. Due to the company's large debt load, their business and financial standing may suffer if they are unable to fulfil the repayment obligations and other terms of their financing arrangements.

ASK Automotive IPO GMP today

ASK Automotive IPO GMP today or grey market premium is +40 This indicates ASK Automotive share price were trading at a premium of 40 in the grey market on Tuesday, according to investorgain.com.

Also Read: ASK Automotive IPO opens 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 grey market, the estimated listing price of ASK Automotive share price was indicated at 322 apiece, which is 14.18% higher than the IPO price of 282.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

 

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Published: 07 Nov 2023, 01:32 PM IST
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