Asahi India Glass rating: Buy; new import duties to help the company

Asahi India Glass (AISG) along with a consortium of glass manufacturers had filed for the imposition of countervailing (CVD)/anti-subsidy duty on the import of ‘clear float glass’ from Malaysia with the designated authority. This has led to imposition of >10% additional CVD on key Malaysian exporters. This action coupled with the earlier renewed anti-dumping duty (ADD) could effectively lead to price increase of imports into India by ~19-34% (assuming other costs are stable).

We reiterate our positive stance on AISG driven by: (i) improvement in business outlook on architectural side as more import restrictions are put in place; (ii) steady auto demand coupled with healthy product mix (rising share of SUVs) even as AISG remains a dominant supplier; and (iii) healthy operating leverage and financial deleveraging play. Maintain Buy.

Auto segment remains resilient: Domestic PV industry is witnessing stabilisation of demand and with the success of new products (SUVs), it is likely to aid product mix for AISG. The commissioning of Gujarat plant in coming months is likely to create more capacity headroom for growth; thus it will aid further improvement in asset utilisation, return ratios.

Maintain Buy: We like Asahi’s business as it: (i) has a dominant automotive market share and limited EV risk; (ii) is a proxy play to the growing architectural segment. We revise our earnings marginally by ~4%/2%/2% for FY21e/22e/23e, on the back of strong cost reductions. We value Asahi at an unchanged multiple of 12x Dec’22e EV/Ebitda. Maintain Buy with a revised TP of `320/share (earlier: Rs 316).