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ICICI Securities Report
Asahi India Glass Ltd.'s Q4 FY23 Ebitda margin came in at 16.8% (down 280 basis points QoQ) as gross margin contracted by ~500 bps QoQ (gross margin at 60% versus five-year mean of 67.5%).
Auto segment Ebitm remained subdued at ~6% (sub-10% for the third quarter in a row) versus non-auto segment Ebitm coming back to ~22% (roughly five-year mean) from a high of ~35% a year back.
Revenue grew 12% YoY to Rs 10 billion, largely in-line with estimates, with auto segment growing 24%YoY versus non-auto revenue remaining flat.
Fall in power and fuel cost/sales and other expenses/sales QoQ helped restrict Asahi India Glass profitability decline during the quarter against ~500 bps decline in gross margin.
With non-auto margin having declined to its longterm mean levels, power and fuel costs continuing to have a declining bias, and there being scope for auto margin to revive from present lows, we believe Ebitdam for Asahi India Glass bottomed out during the quarter.
Any decline in key input commodity prices (silica, soda ash, etc.) would bode well for gross margin to recover, we believe.
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