Asahi India Glass Ltd is an integrated glass company manufacturing a wide range of international quality glass that finds application applications across multiple industries. The company is having a leadership position both in the car and building glass segment with 10 manufacturing facilities and three warehouses cum sub-assembly units. It is having a significant 77% share in the Indian car glass market. The company is broadly structured into four verticals viz; Auto, Architectural, Consumer Glass and Solar Glass. The company is having a rich clientele which includes market leaders like Maruti Suzuki, Hyundai Motors, Tata Motors, Mahindra & Mahindra, Toyota Kirloskar, Honda Cars India, Volkswagen India, Ford India, Skoda Auto and Fiat India.
Valuation and view
Asahi India Glass is present across the entire value chain of architectural and automotive glass. The company remained steadfast in introducing new products in order to stay competitive in the market. Despite the adverse business environment, the company has shown resilience and focused on generating incremental benefits in 9MFY15, on the back of product diversification and cost reduction initiative. Further, the company is on an expansion spree and is expanding the laminated glass line at Bawal (Haryana) from 1.5 million TPA to 2.2 million TPA, which will aid to the revenue growth.
At a CMP of Rs 125, Asahi India is currently trading at EV/EBITDA of 10.6x FY16E and 8.9x FY16E. Considering the company’s strong fundamentals, we recommend ‘BUY’ with a target price of Rs 156, which implies potential upside of ~25% to the CMP from 1 year perspective.