24th June 2022

Asahi India Glass Ltd Robust Capex Activity!

Call: BUY at CMP INR 533 Enroute for Future Growth
Target Price: INR 640 (upside 20%)
Float-Glass Plant running at peak capacity ~90%
 Asahi India Glass Ltd (AIS) is one of India's leading glass manufacturers, primarily Key Stock Data
catering to the automotive segment (49% of topline). Asahi has a dominant market Bloomberg AISG:IN
share of ~74% in the Indian passenger car glass market and is the 2nd largest
producer of architectural glass in India (FY21 market share ~18%, up from 16% in Auto-
Sector
Ancillary
FY20).
Mkt Cap. (INR. bn) 121
 The company has shown an increased focus on its high-margin Float glass segment,
CMP 487
which contributed to 46% topline in FY22, compared to 42.5% in FY21. We believe
this segment to be a significant revenue driver given the revival in the real estate NIFTY 15,556
segment, increasing inculcation of glass infrastructure in urban buildings and overall
increasing industry demand (CAGR 16% FY23-24E). We forecast the Non-Auto O/s Shares (mn) 243
segment over FY23-24E to be 52 Week High / Low (INR.) 613/311
Face Value (INR.) 1.0
 The automotive segment would continue to be a stable moat for the company, given
its lion’s share over the automotive glass i.e. 74%. We believe this segment to Shareholding (%) Q4FY22
perform well over FY22-24E, with a CAGR of ~15% (FY22-24E). Promoters 54
DIIs 2
 AIS has guided a CAPEX of INR 16bn, primarily towards expanding the capacity of its
FIIs 2
float glass plants through both brownfield and greenfield initiatives. This CAPEX
would be partially funded by debt and internal accruals (60:40). We believe the Others 42
company's focus to set up newer capacity aggressively and capture additional
Financial Ratios
market share in a short span would be positively reflected in its topline from FY24
FY22 FY23E FY24E FY25E
itself.
ROE % 28.8 23.5 26.7 30.3
 The anti-dumping duty levied on Float glass from Malaysia is beneficial for Indian ROCE% 34.5 29.2 32.9 36.1
glass manufacturers like Asahi; this duty is expected to sustain till 2025, which will P/E (x) 35.3 20.6 14.7 9.6
help the company to maintain revenue and EBITDA margins over the same tenure. P/B (x) 6.7 5.3 4.1 3.0

 Rising need for solar panels could be a game-changer for AIS; as demand for solar
panels rises, so will the need for float glass. AIS already has involved itself in JV's
with solar-based companies to enter this segment, with plans to set up India's
largest solar glass manufacturing plant at competitive costs.

Valuation: Potential Upside on the back of Capacity Expansion

 We value the stock at a target price of INR 640 using an EPS of INR 50 (FY25E) and a
P/E multiple of 13x. The company is well poised to benefit in the building and solar NIFTY 50 ASAHI
segment, given both being high growth segments. We expect the company to Contact us on:
expand their market share to >20% in the architectural glass segment from current (91-22) 6651-0111
levels of ~18%. uljkresearch@uljk.in
Financial Snapshot
Figures (in mn) Q4FY22 Q4FY21 Y-o-Y (%) Q3FY21 Q-o-Q (%) FY22A FY23E FY24E FY25E
Revenues 9,404 8,088 16 8,248 14 31,637 40,697 49,497 56,497
EBITDA 4,548 3,853 18 4,042 12 7,800 12,708 16,888 21,323
EBITDA Margins % 48.3 47.6 70bps 49.0 (70bps) 24.7 31.2 34.1 37.7
PAT 1,276 842 51 998 28 3,429 5,821 8,151 12,454
PAT Margins % 13.5 10.4 300bps 12.0 150bps 10.8 14.3 16.5 22.0
EPS 5.3 3.5 180bps 4.1 120bps 14 24 33 50
BVPS 73 92 119 161
Source: Company, ULJK Research
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 AISG:IN

Exhibit 1: 68% Revenue CAGR over FY22-FY25E (INR mn) Exhibit 2: EBITDA to improve going forward on
account of cost reduction measures
60,000 56,497 38%
25,000 40%
34%
49,497
50,000 31% 21,323 35%
20,000
40,697 16,888 30%
25%
40,000 25%
15,000 19%
31,637 12,708
29,130 18% 18% 17% 20%
30,000 26,790 26,432
24,212 10,000 15%
7,800
20,000 4,881 5,294 4,441 4,709 10%
5,000
5%
10,000
- 0%
FY18 FY19 FY20 FY21 FY22A FY23E FY24E FY25E
-
FY18 FY19 FY20 FY21 FY22A FY23E FY24E FY25E EBITDA EBITDA Margins
Source: Company, ULJK Research Source: Company, ULJK Research

Exhibit 3: 42% PAT CAGR over FY22-FY25E (INR mn) Exhibit 4: Quarterly Growth in Revenue, EBITDA,
14,000 25% PAT
12,454 9,404
12,000 22%
8,088 7,950 8,248
20%
10,000 8,151
14% 16% 6,035
8,000 15%
11% 4,548
5,821 4,042
6,000 3,853 3,811
10%
7% 6% 2,775
4,000 6% 5% 3,429

1,815 1,862 1,513 5% 998 1,276

2,000 1,307 842 807
347

- 0%
Q4FY21 Q1FY22 Q2FY212 Q3FY22 Q4FY22
FY18 FY19 FY20 FY21 FY22A FY23E FY24E FY25E

PAT PAT Margins Revenue EBITDA PAT

Source: Company, ULJK Research Source: Company, ULJK Research

Exhibit 5: Revenue Breakup FY22 Exhibit 6: Return ratios

35% 33%
29% 30% 32%
5% 30%
28%
25% 23% 26%

20% 19% 18% 19%

49% 14%
15% 17% 12%
46% 15%
10% 12% 9%
5%

0%
FY18 FY19 FY20 FY21 FY22A FY23E FY24E FY25E
Automotive Glass Float Glass Others ROE ROCE
Source: Company, ULJK Research Source: Company, ULJK Research

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 AISG:IN

Company Overview
Asahi India Glass Ltd, incorporated in 1984 based out of Gurugram, India, is an integrated glass and windows
solutions company which manufactures and supplies various glass products in India and internationally. It
operates in two segments, Automotive Glass and Float Glass. The company offers various automotive glass
products, including tempered glass for sidelights and backlights, laminated windshields, defogger glasses, UV cut
glasses, solar control glasses, wiper heated windshields glasses with assembly, acoustic windshields, sliding
windows for buses and trucks etc. It also offers architectural glass goods such as clear, tinted, and frosted glasses,
coated solar control and heat-reflective glasses, back-painted mirror, and other options. Alongside catering to
both these segments, the company also manufactures glass for solar panels and automotive glass repair and
replacement services. Catering to prominent clientele such as Maruti Suzuki, Reva Motors, Ford India, Volvo
India, GM, M&M and others. Maruti Suzuki and M&M are 11.11% and 1.4% respectively shareholders of AIS Ltd.

Industry Overview
Widespread adoption of glass (especially laminated glass, tempered glass and value-added glass) owing to its
durability, easy installation, high resistance and low maintenance, as compared with traditional alternatives has
been a promotional factor for the Glass Industry.
There have been multiple factors resulting in preference for high-performance glass as a key building material
such as i) Glass that can withstand the hot climatic conditions in the subcontinent. ii) Governments thrust on the
revival and development of core sectors, like auto and real estate. iii) High demand potential in the residential
real estate segment, as buyers look to upgrade to bigger spaces and millennials make their first home purchases.
iv) Strong demand potential in the commercial real estate segment, on the back of rapid urbanization and
industrialization (including the launch of new Special Economic Zones).

Automotive glass is dependent on the demand from the OEM to a large extent. India, which is the fourth largest
automotive market in the world, is set to see a growth of 10% in 2022 on strong underlying demand reflecting
the general economic recovery and consumers' preference for personal vehicles over public transportation, the
report said. India had seen a 27% growth in the Automotive glass market in 2021.

Things to look out for

• Energy cost inflation could be a matter of concern, leading to shrinkage of margins. The recent increase in
Power and Fuel Costs has led power-intensive companies like AIL to see a shrinkage in their EBITDA margins.

• AIS procures nearly half of its revenues from OEMs. Headwinds in the auto sector due to rising inflation
concerns could lead to headwinds for the company as well. The shortage of semi-conductor chips has also
impacted the auto industry in the current fiscal. The performance of AIS remains vulnerable to economic
downturns.

• Significant part of the CAPEX would be debt-funded, which would put pressure on the company's internal
cash balance, which would then increase the D/E level to >3.

• The industry is CAPEX intensive; combined with the cyclicality of the Auto Sector, any uncertainty in the
economy could lead to a direct impact on ordering activity.

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 AISG:IN

ULJK returns compared to peers Source: Bloomberg

Outperformance compared to
Period (months) ULJK Average Return % Peers Average Return % peers
1 3.4% 2.2% 54.3%
3 2.1% 1.4% 52.9%
6 9.3% 5.8% 59.8%
12 34.0% 29.6% 14.8%
24 36.7% 26.9% 36.4%
36 59.4% 39.9% 48.7%

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ULJK’s Performance Tracker

ULJK's Average Returns - Sector wise
225%
125%
101%
82% 82% 79% 78% 76%
71% 68%
62% 58% 58% 56%
48% 42%
39% 38% 35% 31%
30% 29% 27% 26% 24%
19%

25
21
20
16 ULJK’s Open Calls – Sector wise
no. of tsocks

14
15 12
11 11
10 8 8
5 5 5 5 5
4
5 3 3
2 2 2 2
1 1 1 1 1 1 1 1
0

Average Returns of Top Time wise (Days) to % Returns

Performing Stocks
140%

Top 10 245% 120% 131%

Average Returns

100%
96%
80%
Stocks

Top 20 194% 60%

40% 49%
35%
20%
Top 30 164% 20%
0%
< 50 51-100 101-200 201-300 >300
Average returns
No. of Days

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 AISG:IN

Total Calls review: Closed Calls: 146 ; Average return: 60%; Average
period: 175 days
Stocks Sector Type Call Date Call Price Target Exit Date No of Days Total Return %

TATA Motors DVR Automotive & Ancillary BUY 8/3/2020 37 225 10/13/2021 436 508%
9/30/2021 341%
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SAIL Ltd Metals & Mining BUY 7/9/2020 35 140 4/30/2021 295 300%
Industrial Machinery & 9/13/2021 266%
Dynamatic Technologies Products BUY 2/16/2021 868 3175 209
IRCTC Others 11/19/2020 1,375 4470 11/6/2021 225%
BUY 352
9/28/2021 209%
Nelco Ltd IT BUY 1/18/2021 208 643 253
6/3/2021
First source solutions IT BUY 8/10/2020 54 150 297 177%
9/16/2021 175%
Eclerx Services IT BUY 12/28/2020 894 2455 262
Tata Chemicals Chemicals 11/19/2020 352 949 10/5/2021 320 170%
BUY
Indian Bank BFSI 8/20/2020 64 170 10/18/2021 166%
BUY 424

136 2/2/2021
Ashok Leyland Automotive & Ancillary BUY 6/27/2020 52 220 162%
BUY
State Bank of India BFSI 7/7/2020 185 470 9/17/2021 437 154%
BUY 10/14/2021 151%
Mindtree IT 3/15/2021 1935 4857 213

NMDC limited Metals & Mining BUY 7/1/2020 81 203 5/12/2021 315 151%
99 3/5/2021 136%
Mangalore Chemicals Chemicals BUY 12/9/2020 42 86
Industrial Machinery & BUY 4/2/2021 132%
HEG ltd Products 12/23/2020 865 2010 100
Zee Entertainment
Enterprises Limited Media BUY 8/4/2020 141 319 9/22/2021 414 126%
Industrial Machinery & BUY 4/3/2021 121%
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9/28/2021 115%
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ONGC Energy, Oil & Petroleum BUY 10/19/2020 72 154 11/5/2021 382 114%

Wockhardt Pharmaceuticals BUY 11/19/2020 332 685 5/19/2021 106%

181
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BUY 302
8/3/2021 102%
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Industries Ltd. Sugar BUY 10/9/2020 78 153 213
GHCL Limited Chemicals 9/7/2020 164 7/15/2021 94%
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11/8/2021 89%
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11/1/2021 85%
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BUY 312
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 AISG:IN

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