Buy Asahi India Glass Ltd For Target Rs.697 - Sushil Finance
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Established market position and persistent relationships with OEMs to aid growth going forward: AIGL commands an undisputed 72% market share in the Indian passenger car glass market and is the preferred supplier for all leading car makers. The company is also the 2nd largest producer and supplier of architectural glass in India. The company has ~17% market share of the domestic industry. With leading market share in both segments and the underlying segments witnessing good growth, we expect the company to do well in the medium to long term.
Strong and leading parent company, a multinational corporation, a major advantage: AIGL was formed as a joint venture between the Labroo family, a Japanese company, Asahi Glass Co. Ltd. (now AGC Inc.) & Maruti Udyog Limited (now Maruti Suzuki India Limited) (MSIL) in 1984. AGC Inc., Japan, established in 1907, is one of the world's leading glass producers with a global network of over 200 subsidiaries and affiliates worldwide. The group's operations comprise float glass and automotive glass. AGC group is the largest glass manufacturer in the world with a 12% global market share in the flat glass segment and a 30% global market share in the automotive glass segment.
AIGL to benefit from the rebound in MSIL’s volume: MSIL is a key contributor to the company’s sales and the volumes have witnessed a good rebound in FY23 with 19% yoy growth in the sales. If this momentum sustains, would aid the company to drive its volumes.
OUTLOOK & VALUATION
AIGL is one of the leading integrated glass solutions companies offering a complete range of glass products, solutions and services for automotive, architectural and consumer segments. AIGL commands 72% market share in the Indian passenger car glass market and is also the 2nd largest producer and supplier of architectural glass in India. We expect auto and construction industries to do well in the medium to long term thereby, having positive outlook on the company. Going forward, we expect the company to deliver an EPS of Rs.19.9 in FY26; assigning a target multiple of 35x, we arrive at a target price of Rs.697 showcasing an upside potential of 25% from current levels with an investment horizon of 18-24 months.
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