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Asahi India Glass Ltd

Established in 1984, AIS is India’s leading integrated glass manufacturer of all types of glass and a dominant player in the automotive and architectural glass value chains.

Asahi India Glass Ltd. –Pioneering glass manufacturing in the country Incorporated in the year 1984, Asahi India Glass’ origin can be traced to the JV agreement between the Labroo family, Asahi Glass Co. Ltd. (AGC), Japan and Maruti Suzuki India Ltd. As promoter group, the three entities jointly hold about 55% of paid-up equity capital of AIS with the balance 45% being held by the public. Initially the company has presence in the auto glass market with a sole manufacturing facility in Haryana. Later in 2001, Asahi India Glass has forayed into float glass segment post the acquisition of Float glass India Ltd in 2001. Over the years, the company has entered into diverse segments like consumer glass segment - comprising businesses like GlasXperts, Windshield Experts and glass processing. Further, the company has also entered into manufacturing solar glass to cater to the rising significance of glass in the solar energy market. The company continues to focus towards expansion and has undergone significant expansion in the past that will allow the company to further fortify its strength in terms of its capabilities, internal processes and competitive positioning. The strong performance of the automotive business lies in the fact that the company is having strong relationships with majority of leading OEMs in the domestic market. While in float glass segment, the company manufactures products catering to diverse needs like reflective glass, tinted glass, among others and the same are sold through the dealer-network.

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.

Financials 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 147, 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 200, which implies potential upside of ~25% to the CMP from 1 year perspective.