Buy Asahi India Glass; target of Rs 292: Dolat Capital Market

Dolat Capital Market is bullish on Asahi India Glass has recommended buy rating on the stock with a target price of Rs 292 in its research report dated November 05, 2020.

Broker Research

November 07, 2020 / 18:44 IST

26 Aug, 2025 12:21

Volume

Todays L/H

Dolat Capital Market's research report on Asahi India Glass

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 Automotive glass business, AIS would be the key beneficiary of uptick in volume of MSIL (current share of business from MSIL is above 90%). Architectural glass business has also shown strong recovery from July onwards, benefiting from reduced import in India from Asian countries. Also imposing anti-dumping duty for clear float glasses on Malaysia is positive especially for building products (accounts for 40% of revenue), which will help to gain in both pricing and volume. As most of the capex has already been incurred (~Rs.12bn over FY18-20 towards 2.5mn windshield in automotive and increasing capacity of Taloja plant), AIS is likely to generate strong free cash flow of ~Rs.13bn over FY21-23E (~18% of current EV) which would help to repay debt. The company is targeting to reduce debt by Rs.2.5-3bn in FY21.

Outlook

We forecast 125% CAGR in earning in FY21-23E, driven by a 20% increase in Revenue, 300bps margin expansion and benefits from the fall in interest and tax. We value the stock Rs.292 (based on 25x of FY23E EPS), and recommend BUY.

For all recommendations report, click here