Asahi India - Growth, Mix Surprise Aids Margin Improvement In Q3: ICICI Securities

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ICICI Securities Report

Asahi India Glass Ltd.’s Q3 FY21 operating numbers were a beat as Ebitda margins came in at 24% (up 640 basis points YoY), while revenues rose 9.3% YoY to Rs 7.4 billion.

The margin beat was driven by improvement of gross margins/lower fixed costs (both ~160 bps) coupled with lower power and fuel costs (~300 bps).

We remain positive on the stock due to -

1. strong recovery in auto segment expected in FY22 (expect 15-20% original equipment manufacturer volume growth);
2. continued growth momentum in architectural segment for domestic players on the back of improving housing demand and increased curbs on imports;
3. leaner fixed-cost structure aided by structural measures and
4. lower gas costs.

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