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ICICI Securities Report
Asahi India Glass Ltd.'s Q1 FY24 Ebitdam at 20.1%, was up ~330 basis points QoQ and higher than our estimate of 17%. The beat was driven by auto segment Ebit margin improvement of ~730 basis points QoQ to 13.5% (nine-quarter high) versus architectural segment Ebit margin remaining flat QoQ at 21%.
Increase in the auto margin was driven by price hikes taken by Asahi India to pass on input cost inflation, operating leverage and improved mix.
We believe Asahi India can maintain its current margin levels in the auto segment in FY24E-FY25E, but non-auto margins are likely to be range-bound.
We are factoring-in ~21% Ebitdam in FY24E/FY25E with a revenue compound annual growth rate of ~12%, resulting in earnings CAGR of ~22% in FY23-FY25E.
Downgrade to 'Reduce' (from 'Hold') with a revised discounted cash flow-based target price of Rs 503 (earlier: Rs 468), implying 22 times FY25E earnings per share.
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