ICICI Securities has given Buy recommendation for Asahi India Glass recommended buy rating on the stock with a target price of Rs 553 in its resear with a target price of Rs. 553 in its research report issued on Mar 14, 2022

ICICI Securities research report on Asahi India Glass

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. We therefore cut our FY23E/FY24E EBITDA margin by ~400bps/~300bps, resulting in an EBITDA cut of ~15%/10% respectively, with revenue estimates largely unchanged. We do not foresee much risk to the realisation levels for domestic float glass industry at least till FY23E, given: 1) limited global supply, 2) rising need from solar panel space, and 3) container shortage issues persisting. Domestic supply addition from GoldPlus and AIG (9-10% of industry capacity addition) will be in FY24EFY25E, thus allowing AIG to operate at close to full capacity by FY24E. Company is currently operating at ~75%/~90% utilisations in the auto/architectural glass segments, with equal revenue mix. Even post the reduction in EBITDA margin estimates, we expect the margin to be at robust levels of 24-25% as against FY18- FY22E mean of ~19%.

Outlook

Maintain BUY with a revised DCF-based target price of Rs553 (earlier: Rs671), implying 22x FY24E earnings (doubling in FY22E-FY24E).

More Info

At 16:01 hrs Asahi India Glass was quoting at Rs 418.30, down Rs 2.55, or 0.61 percent.

It has touched an intraday high of Rs 425.50 and an intraday low of Rs 412.55.

It was trading with volumes of 54,213 shares, compared to its thirty day average of 47,129 shares, an increase of 15.03 percent.

In the previous trading session, the share closed up 2.55 percent or Rs 10.45 at Rs 420.85.

The share touched its 52-week high Rs 612.70 and 52-week low Rs 283.80 on 03 February, 2022 and 30 March, 2021, respectively.

Currently, it is trading 31.73 percent below its 52-week high and 47.39 percent above its 52-week low.

Market capitalisation stands at Rs 10,168.45 crore.

Leave a Reply

Your email address will not be published.