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ICICI Securities Report
Asahi India Glass Ltd.'s Q1 FY21 operating numbers came in below consensus estimates as Ebitda margins came in at down 11.7%. This was largely driven by negative operating leverage amidst steep revenue drop (down 68% YoY).
Going ahead, we expect improvement in revenue growth trajectory (down 8%/15%) in Q2/H2 FY21, respectively, due to positive growth outlook, favourable base effect.
Positive levers of fixed cost reduction measures and benefits of lower gas costs, are also likely to be back-ended in H2 FY21.
Automotive segment is expected to recover well in FY22 (expect approximately 15-20% original equipment manufacturer volume growth), while architectural segment is likely to build grow faster than recent past with increased curbs on imports.
We expect reduced capex intensity, improving free cash flow (approximately Rs 4.5 billion in FY22) to drive deleveraging from FY22 onwards (approximately Rs 2 billion reduction).
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