Asahi India Glass Q3 Results Review - Profitability Back To Long-Term Mean Levels: ICICI Securities

ICICI Securities Report

Asahi India Glass Ltd.’s Q3 FY23 Ebitda margin came in at 19.6% (down ~250 basis points QoQ). The decline was due to 180 bps contraction in gross margin, post falling ~400 bps QoQ in Q2 FY23.

‘Power and fuel cost to sales’ remained steady QoQ and 50 bps increase in ‘other expenses to sales’ added to Ebitdam decline beyond gross margin. We believe gross margin compression is attributable to adverse currency moves and adverse input commodity costs, and will get partly recovered in the coming quarters with lagged price hikes.

Though Asahi India Glass witnessed ~300 bps QoQ hit in both auto and architectural segments’ Ebit margins, auto margin was down to ~5%, a multi-year low barring the covid-impacted quarters. Architectural segment Ebit margin at 28%, though higher than long-term mean levels, was ~400 bps lower than the past six-quarter mean.

We believe, the possibility of reviving imports with declining container costs poses a risk to architectural segment margin turnaround despite continued focus on increasing coated glass’ share in the revenue mix.

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