Asahi India Glass Ltd. share price target

Asahi India Glass’ (AISG) EBITDA margin, at 17%, improved 50bps QoQ, in line with our estimate. Auto segment EBIT margin improved ~90bps QoQ to 11.4%, but architectural segment EBIT margin decreased ~100bps QoQ at 14.8%.

Asahi India Glass (AISG)’s Q2FY24 EBITDAM, at 17.1%, slid 290bps QoQ on the back of import volumes intensifying in the architectural segment, which in turn impaired pricing power for domestic manufacturers such as AISG. The auto segment saw a one-off cost escalation stemming from a surge in demand – expected to rebound to the levels of ~13-14% next quarter onwards.

Asahi India Glass’ (AISG) Q1FY24 EBITDAM at 20.1%, was up ~330bps QoQ and higher than I-Sec estimate of 17%. The beat was driven by auto segment EBIT margin improvement of ~730bps QoQ to 13.5% (9-quarter high) vs architectural segment EBIT margin remaining flat QoQ at 21%. Increase in the auto margin was driven by price hikes taken by AISG to pass on input cost inflation, operating leverage and improved mix.

Asahi India Glass’ (AISG) Q4FY23 EBITDA margin came in at 16.8% (down 280bps QoQ) as gross margin (GM) contracted by ~500bps QoQ (GM at 60% vs 5-year mean of 67.5%). Auto segment EBITM remained subdued at ~6% (sub-10% for the third quarter in a row) vs non-auto segment EBITM coming back to ~22% (roughly 5-year mean) from a high of ~35% a year back.

Asahi India Glass’ (AISG) Q3FY23 EBITDA margin came in at 19.6% (down ~250bps QoQ). The decline was due to 180bps contraction in gross margin (GM), post falling ~400bps QoQ in Q2FY23.

Asahi India Glass’ (AISG) Q2FY23 EBITDA margin came in at 22.1% (down 260bps QoQ).

We believe, it would be tough for Asahi India Glass (AIG) to sustain its present elevated profitability levels amidst steep rise in energy costs. Past 5-year average energy cost/sales has been ~13.5%, which increased to ~17% in Q3FY22. We expect it to surge a further ~400bps by Q1FY23E, assuming present natural gas and crude oil prices. Also, logistics cost to sales is ~5-6%, and ~20% increase in fuel costs would add a further 100bps pressure on margins.

Asahi India Glass (AIS) printed an impressive earning performance in 2Q. EBITDA grew 13% YoY to Rs.1.2bn with expanded margin at 19.1% (+235bps YoY) led by lower fuel cost and cost control measures. EBIT margin for Automotive glass expanded by 175bps YoY to 14.4% and for Architecture glass by 314bps YoY to 17.3%. We expect the company to be a key beneficiary of revival in the volume of Automotive and Architectural glass segments. Moreover, strong traction in aftermarket business will also aid profitability. In the...

The company has strong symbiotic relationships with most of the global and local OEMs in India. There is inherent mutual trust in these relationships which is backed by decades of strong and reliable performance for long-term mutual benefit. Company is a preferred choice of major automotive companies including Maruti Suzuki, Hyundai Motors, Mahindra & Mahindra, Tata...