ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 1

Reco : BUY INITIATING COVERAGE

CMP
Target Price
: INR338
: INR425
Asahi India Glass
Potential Return : 26% A clear view of growth
https://www.euromoney.com/Brokers
Asahi India Glass (AISG) is India's leading value-added and integrated glass
Asiamoney Brokers’ Poll 2021
https://www.euromoney.com/Brokers solutions company. It is a dominant player both in the automotive and
https://www.euromoney.com/Brokers architectural glass segments. It has 73% market share in the Indian
P Vote for ANTIQUE
https://www.euromoney.com/Brokers
https://asiamoney.com/brokers
https://www.euromoney.com/Brokers passenger vehicle (PV) glass market. We expect AIS to be a key beneficiary
https://www.euromoney.com/Brokers
Voting closes on 6th August of growth in PV production in India, coupled with rise in content led by
https://www.euromoney.com/Brokers
premiumisation and rising share of SUVs. The demand outlook for the
architectural glass has improved with the revival in residential real-estate
demand. The government has imposed restrictions on import of float glass
Amit Mishra in the country, which has led to higher profitability for the domestic
amit.mishra@antiquelimited.com manufacturers like AISG. We expect PAT CAGR of 53% over FY21-24E, led by
18% revenue CAGR, EBITDA margin improvement on cost savings, operating
Udaykiran Paluri leverage, import restrictions on float glass and reduction in net debt. We
uday.paluri@antiquelimited.com initiate coverage on AISG with a BUY rating and target price of INR 425,
based on 25x FY23E PER.
Dominant market leader in the passenger vehicle glass segment
Market data Automotive Glass contributed 54% to Asahi's revenue in FY21 and we expect its share to rise
Sensex : 52,319 to 62% by FY24E. ~80% of automotive glass revenue comes from the supplies to OEMs for
Sector : Auto new vehicles and the remaining from the aftermarkets and exports. It has a ~73% market
Market Cap (INRbn) : 82.0 share in the Indian PV glass market and it is the preferred supplier for all the leading car
Market Cap (USDbn) : 1.100 makers. AISG will be supplying to over 80% of the new PV models that will be launched in
O/S Shares (m) : 243.1 the coming years, which provides visibility on sustainability of its market share. It has expanded
its presence in the commercial vehicles, railways, metros, tractors and off-highways segments,
52-wk HI/LO (INR) : 359/158
too. It has a 60% market share in the automotive aftermarket segment. After a decline of 20%
Avg Daily Vol ('000) : 225
over the last two years due to cyclical factors, regulatory changes and the pandemic, we
Bloomberg : AISG IN expect domestic PV sales to grow 25% in FY22E and 15% in FY23E, led by normalisation in
Source: Bloomberg economic activities, low interest rates, preference for personal mobility and pent-up demand.
Valuation Further, we expect the share of UVs in PV sales mix to rise to 45% in FY23, up from 39% in
FY23e FY24e FY25e
FY21 led by new model launches and changing consumer preferences. Asahi's content per
vehicle will rise with the improving segment mix and rise in penetration of value added
EPS (INR) 17.0 19.6 22.6
glasses like IR and UV shield glasses.
P/E 19.9 17.2 15.0
P/BV 3.9 3.3 2.7
Architecture glass demand is improving, import restrictions boost margin
EV/EBITDA 11.8 10.9 9.9 Architecture Glass contributed 43% to AISG's revenue in FY21. AISG is the second largest
Dividend Yield (%) 0.6 0.7 0.9 producer and supplier of architectural glass in India, with a 13% share of the total market in
FY20. We expect recovery in the residential real estate demand over the next three years,
Source: Bloomberg
due to pent-up demand and improved affordability given low interest rates and moderate
Returns (%) price corrections. Float glass imports had formed a major component of the industry's domestic
1m 3m 6m 12m sales and accounted for over 20% of the total market of 2.54mn MT in FY20. Government
Absolute 8 10 21 92 has imposed anti-dumping duty (ADD) and countervailing duty (CVD) on import of float glass
Relative 7 5 11 32
from China, Malaysia as well as other countries. Subsequently, the share of imports have
declined to 10-12% of domestic demand, which has resulted in 10-15% increase in realizations
Source: Bloomberg
for the domestic industry.
Shareholding pattern Strong earnings growth, positive FCF and rising RoCE
Promoters : 54% We expect AIS's revenue to grow at 18% CAGR over FY21-24E, led by 23% CAGR in automotive
Public : 46% glass and 11% CAGR in float glass. The recent commissioning of automotive plant in Gujarat
Others : 0%
will provide adequate capacity for growth in the segment. In the float glass, we expect AIS to
continue to focus on value added products. We expect EBITDA margin to improve 410bp
Source: Bloomberg over FY21-24E to 22.5% led by operating leverage, fixed cost reduction and higher realisations
due to import restrictions. Post the recent commissioning of its Gujarat plant, AISG is entering
Price performance vs Nifty
a phase of low capex cycle. We expect AISG to generate FCF of INR 10bn over the next
210 three years, leading to net debt reducing to INR 5.7bn by FY24 end. We estimate RoCE to
170 improve from 11% in FY21 to 24% in FY24E. AISG stock is trading at 11.6x FY23E EV/
EBITDA, 19.8x FY23E PER and 5.0% FCF yield. We value AISG stock at INR 425, based on
130 25x FY23E PER, which is 25% lower than last five year average multiple.
90 Key risks to earnings estimates and investment thesis
Jul-20 Nov-20 Mar-21 Jul-21
The key risks are: 1) a slowdown in automotive and residential real-estate demand in
Asahi India Glass NIFTY India; 2) sharp rise in raw material, fuel and power costs; and 3) reversal of various measures
Source: Bloomberg Indexed to 100 taken to curb import of float glass.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 2

Revenue to grow at 18% CAGR over FY21-24E EBITDA to grow at 26% CAGR over FY21-24E
45 25
INR bn 9.0
33 23
40 8.0
28 21
35 7.0
23 19
30 6.0
18 17
25 13 5.0 15
20 8 4.0 13
15 3 3.0 11
10 (2) 2.0 9
5 (7) 1.0 7
- (12) 0.0 5

FY22E
FY23E
FY24E
FY25E

FY21E
FY22E
FY23E
FY24E
FY25E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21

FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Auto Glass Float Glass % Grow th YoY AISG - EBITDA (Rs mn) EBITDA margin (%)
Source: Company, Antique Source: Company, Antique

Auto Glass - revenue and EBIT margin Architecture Glass - revenue and EBIT margin
30 INR bn 20% INR bn 30%
14
18% 25%
25
16% 12
20%
14% 10
20
12% 15%
8
15 10% 10%
8% 6 5%
10
6% 4 0%
4%
5 2
2% -5%
- 0% - -10%
FY22E
FY23E
FY24E
FY25E

FY22E
FY23E
FY24E
FY25E
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21

FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Auto Glass Revenue EBIT margin (%) Architecture Glass Revenue EBIT margin (%)
Source: Company, Antique Source: Company, Antique

RoCE to improve with asset-turn and higher margin Net debt to decline sharply by FY24E
20 1800%
22%

25%
18
20%

1600%
24%

20% 16 1400%
15%
14%

14%

14
1200%
13%

15% 12
11%

1000%
10%
10%

10
800%
8%

10% 8
6%

600%
5%

5%
5%

6
4 400%
2%

2%

5%
1%

1%

2 200%
0% 0 0%
FY21E
FY22E
FY23E
FY24E
FY25E
FY21E
FY22E
FY23E
FY24E
FY25E

FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20

ROCE (%) Net debt/equity Net Debt (INR bn)

Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 3

Company Profile
Asahi India Glass is India's leading value-added and integrated glass solutions company. It
was formed as a joint venture between the Labroo family, Asahi Glass Co. Ltd. (now AGC
Inc.) and Maruti Udyog Limited (now Maruti Suzuki India Limited) in 1984. It started
manufacturing toughened glass for MSIL in 1985. Subsequently, with the acquisition of Float
glass India limited, AISG forayed into the construction glass business. AISG was listed on the
stock exchanges through an IPO in 1986.

AISG Shareholding as of 31 Mar 2021 Revenue mix by product segments (FY21)

Others
Asahi Glass 3%
Company
22%

Others
44%
Float Glass
Maruti Suzuki 43%
11%

DII
1% Labroo Auto Glass
Family & 54%

FPI Others
1% 21%

Source: Company, Antique Source: Company, Antique

Asahi India Glass has grown from being a 'single-plant single-customer' company to an
integrated glass manufacturer in India with 12 plants, including sub-assembly units. With a
successful acquisition of Floatglass India limited, AISG ventured into the construction glass
business in Sep'02. It has three strategic business units (SBUs) - Automotive, Architectural and
Consumer. It is engaged in the production and delivery of glass products and solutions to
retail and institutional customers through these SBUs. It provides end-to-end solutions across
the entire value chain - from the manufacturing of float glass to glass processing, fabrication
and installation. AIS caters to customers in domestic as well as international markets.
Automotive Glass SBU: AISG holds 73% of the passenger car glass market. It is a
preferred partner to all the major carmakers in India like Maruti Suzuki, Hyundai, Tata Motors,
Kia, M&M, Toyota, Renault Nissan, Ford, MG Motor, Honda and VW Group. Asahi's products
for commercial vehicles (trucks and buses), railways, city metro, tractors, and off-highways
are also finding increasing traction.
Architectural Glass SBU: Asahi's product and service portfolio span complete glass
solutions for exterior and interior architecture. The architectural glass solutions are carved in
the evolving industry trend, which is increasingly shifting towards green buildings and
sustainability. AIS Glass Solutions is into the manufacturing and distribution of processed and
value-added glass solutions like tempering, laminating, insulating units etc.
Consumer Glass SBU: AISG provides consultation-led customized solutions to the end
customer, catering consumers' needs across its automotive and architectural businesses through:
n AIS Windshield Experts: It is India's first and largest car windscreen repair and
replacement network with a presence in over 42 cities with more than 80 conveniently
located service centres.
n AIS Glasxperts: It is India's first organised glass design and installation service. Its
offerings include privacy, aesthetics, security, acoustic, energy-efficiency and door and
window solutions.
n AIS Windows: It offers end-to-end solutions from glass and frame selection to installation
on site. The product range includes high-performance uPVC, aluminium door and window
systems and glass solutions that include acoustic, privacy, energy efficiency and safety
and security solutions.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 4

Asahi India Glass

Strong earnings growth, positive free-cash flow and improving return ratios
We expect AIS's revenue to grow at 18% CAGR over FY21-24E, led by 23% CAGR in automotive
glass and 11% CAGR in float glass. The recent commissioning of automotive plant in Gujarat
will provide adequate capacity for growth in the segment. In the float glass, we expect AIS to
continue to focus on value added products. We expect EBITDA margin to improve 410bp
over FY21-24E to 22.5% led by operating leverage, fixed cost reduction and higher realisations
due to import restrictions. Post the recent commissioning of its Gujarat plant, AISG is entering
a phase of low capex cycle. We expect AISG to generate FCF of INR 10bn over the next
three years, leading to net debt reducing to INR 5.7bn by FY24 end. We estimate RoCE to
improve from 11% in FY21 to 24% in FY24E. AISG stock is trading at 11.6x FY23E EV/
EBITDA, 19.8x FY23E PER and 5.0% FCF yield. We value AISG stock at INR 425, based on
25x FY23E PER, which is 25% lower than last five year average multiple.

AIS - Strong positive FCF over FY21-24E AIS - Net debt to decline sharply by FY25E
7.0 20 1800%
18 1600%
5.0 16 1400%
14
3.0 1200%
12
1000%
1.0 10
800%
8
(1.0) 600%
6
4 400%
(3.0)
2 200%

(5.0) 0 0%

FY21E
FY22E
FY23E
FY24E
FY25E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
FY24E
FY25E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20

Operating Cash Flow (INR bn) Free Cash Flow (INR bn) Net debt/equity Net Debt (INR bn)
Source: Company, Antique Source: Company, Antique

Asahi India - stock is trading at a discount to India auto component peers

Bloomberg Market Cap CMP TP PER EV/EBITDA PBV RoE FCF Yield
Company Code Rating US$ mn INR INR FY22E FY23E FY22E FY23E FY22E FY23E FY23E
Bharat Forge BHFC IN BUY 4,790 766 890 58.3 30.1 26.4 17.4 6.1 17.4 3%
Endurance Tech ENDU IN HOLD 3,122 1,651 1,500 36.1 27.5 19.0 15.6 5.7 17.8 4%
Schaeffler India SCHFL IN BUY 2,331 5,545 6,305 36.4 30.8 20.9 17.6 4.9 15.3 1%
Minda Industries MNDA IN BUY 2,362 646 700 39.5 27.7 17.0 13.6 6.5 19.4 3%
Apollo Tyres APTY IN BUY 2,139 228 280 14.3 12.2 6.5 5.9 1.3 10.2 10%
SKF India SKF IN BUY 1,795 2,700 3,000 38.6 31.5 26.0 21.0 7.3 21.2 2%
Timken India TMKN IN BUY 1,496 1,479 1,750 53.6 33.3 31.7 21.0 7.4 20.3 2%
Mahindra CIE MACA IN BUY 1,193 235 245 21.2 17.1 11.2 9.6 1.6 9.4 5%
Asahi Inda Glass AISG IN BUY 1,120 337 425 24.3 19.8 13.1 11.6 4.7 3.9 5%
CEAT CEAT IN BUY 743 1,365 1,725 13.5 11.9 7.2 5.7 1.5 12.2 -1%
Average 38.5 26.1 19.7 15.0 5.2 15.9 4%
Source: Bloomberg, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 5

AIS - 1-year forward PER valuation AIS - 1-year forward PBV valuation
55 9.0

50 8.0
45
7.0
40
6.0
35
5.0
30
4.0
25

20 3.0

15 2.0
Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21
1-Yr Fw d PER Average PER 1-Yr Fw d PER Average PER
1+SD 1-SD 1+SD 1-SD
Source: Bloomberg, Antique Source: Bloomberg, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 6

Dominant market leader in the automotive glass segment

The automotive and construction sectors are the largest demand drivers for the glass industry.
Automotive Glass contributed 55% to Asahi's revenue in FY21 and we expect its share to
increase to 62% by FY24E. ~80% of automotive glass revenue comes from the supplies to
OEM's for new vehicles and the remaining from the aftermarkets and exports. It has a dominant
73% market share in the Indian PV glass market and it is the preferred supplier for all the
leading car makers. AISG will be supplying to over 80% of the new PV models that will be
launched in India in the coming years, which provides visibility on sustainability of its dominant
market share. It has expanded its presence in the commercial vehicles (CV), railways, metros,
tractors and off-highways segments, too. AISG has a 60% market share in the automotive
aftermarket segment.

AIS supplies to 3 out of 4 PVs produced in India 80% of Auto Glass revenue comes from OEM
Aftermarket
& Exports
Saint Gobain,
20%
27%

Asahi India OEM,

Glass, 80%
73%

Source: Company, Antique Source: Company, Antique

Preferred supplier of glass to all the major automotive OEMs

AIS has over three decades of experience in supplying high quality glass product to global
and Indian OEM customers in India. It has emerged as the preferred manufacturer of
automotive glass for passenger and commercial vehicles, railways, metros, tractors and off-
highways. It has a strong leadership position in the automotive glass segment in India. AIS
Auto's product portfolio encompasses IR cut glass, UV cut glass, Solar control glass,
Encapsulated glass, Laminated windshield, Defogger glass, Tempered glass for sidelites
and backlites, Rain sensor windshield, Heated windshield, Plug-in window and several other
value-added products. AIS Auto has world-class manufacturing facilities with in-house research,
design and development of new products, production technologies and equipment. AIS
supplies auto glass to a majority of leading OEMs in the domestic market including Maruti
Suzuki, KIA Motors, MG Motor, Hyundai Motors, Honda Cars, Tata Motors, Mahindra &
Mahindra, Toyota, Volkswagen Group, Ford and FCA.

AIS Auto supplies to most of the new PV models launched in last five years
FY16 FY17 FY18 FY19 FY20
Maruti Suzuki Baleno Maruti Suzuki Vitara Brezza Maruti Suzuki New Dzire Maruti Suzuki New Ertiga Maruti Suzuki S-Presso
Maruti Suzuki S-Cross Maruti Suzuki Ignis Maruti Suzuki New Swift Maruti Suzuki New WagonR Hyundai Venue
Hyundai Creta Honda BR-V Skoda Kodiaq Honda Civic Hyundai Grand i10 Nios
Honda New Jazz Honda WR-V Jeep Compass Toyota Yaris Hyundai Aura
M&M KUV 100 Toyota Innova Crysta JCB 3DX/4DX Mahindra Marazzo Kia Seltos
M&M TUV 300 Toyota New Fortuner Tata Hitachi Shinrai Mahindra TUV 300+ Tata Altroz
Tata Tiago Datsun Redi-Go Scania Metro Link Bus Renault Triber
Renault Kwid Volkswagen Ameo Tata Marcopolo Y1 Ultra MG Hector
Ford Aspire Tata Tigor Daimler 9T
Eicher Multix Delhi Metro Violet Line
Delhi Metro Magenta Line
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 7

AIS Auto's five plants are present across all automotive production hub

Source: PV volumes: SIAM, Antique

AIS Auto Glass to benefit from strong growth in PV production

There are strong tailwinds for auto sales growth over the next three years. We expect domestic
automotive industry to register strong sales growth in FY22E and FY23E, albeit off a low base,
led by continued recovery in economic activities, lower cost of vehicle financing, personal
income growth, improving consumer sentiment and higher infrastructure spending. Production
Linked Incentive (PLI) scheme is likely to make industry more competitive, thus driving exports
growth and increasing localization. After a decline of 20% over the last two years due to
cyclical factors, regulatory changes and pandemic, we expect domestic PV sales to grow
26% in FY22E and 14% in FY23E, led by normalisation in economic activities, low interest
rates, preference for personal mobility and pent-up demand.
Due to the economic and pandemic related uncertainties, the consumers have delayed the
replacement of PVs over the last two years. We expect PV domestic sales CAGR of 14% over
FY21-25E led by economic growth, increasing disposable income and relatively stable cost
of vehicle ownership. Other factors that would aid demand are increasing urbanization,
government support to farm incomes, and improved availability of finance. However, increasing
congestion in metro cities and rising popularity of shared mobility services are likely to restrict
car sales in the long term. We expect exports to grow at 8-10% CAGR as OEMs expand
presence in new markets and on back of incentive schemes like PLI.

PV production is expected to grow at 14% CAGR over FY21-25E

5.0

4.0

3.0

2.0

1.0

0.0
FY22E

FY23E

FY24E

FY25E
FY16

FY17

FY18

FY19

FY20

FY21

Domestic Exports
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 8

AIS Auto Glass to benefit from growing share of UVs

Further, we expect the share of UVs in PV sales mix to rise to 45% in FY23 and 47% in FY25E,
up from 39% in FY21 led by slew of new model launches and changing consumer preferences.
AIS' content per vehicle will rise with the improving segment mix and increase in penetration
of value added glasses like IR and UV shield glasses.

Share of UVs in domestic sales mix will increase from 39% in FY21 to 45% in FY24E

4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY24E FY25E
Cars UV Vans

Source: : SIAM, Antique

Underpenetrated market offers large growth potential for cars & UVs
India's car market is highly underpenetrated compared with most developed economies and
some developing nations. As of FY20, India had approximately 24 passenger vehicles per
1,000 people. This is significantly lower than both developed nations and even other nations
in the BRIC block (Brazil, Russia, and China), based on per-capita GDP. Brazil, Russia and
China has 173, 307 and 99 passenger vehicles per 1,000 people respectively in 2015.
Thus, the country holds tremendous potential for car manufacturers to grow volumes over the
next several years.

Low penetration of cars in India offers large growth opportunity

Source: OICA, World Bank, CRISIL

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 9

Asahi's value added automotive glass product range

AIS Auto segment has continuously expanded its portfolio of innovative glass products and
solutions benchmarked to international standards of quality and versatility. The new and
emerging auto industry trends towards electric mobility, light weighting, vehicle safety,
digitalization and infotainment will open opportunities for AIS to add more advanced features
to its products, enabling it to maintain its market leadership position.
AIS Auto's range of products include thinner Windshield, UV Cut Glass, Dark Green UV Cut
Glass, Solar Green Glass along with IR Cut and Acoustic Windshields, Water Repellant
Sidelites, Head Up Display (HUD), Laminated Windshields, Tempered Glass for Sidelites
and Backlites, Defogger Glass, Glass Antenna, Encapsulated Glass, Plug-in Window, Solar
Control Glass, Flush Fitting Glass, Rain Sensor Windshield, Heated Windshield, Acoustic
Windshield, Extruded Windscreen or Molding, Wiper Heated Windshield, Glass with
Assembly, Privacy glass, Sliding Windows for Buses and Trucks, Thinner Glazing (2+1.8mm,
2+1.6mm, 2.8 mm), Bullet Resistant Glass, IGU for Metro and Railways. All these products
and new technologies are well accepted by AIS's customers.

AIS Auto value added product range

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 10

AIS Auto value added product range

Source: Company, Antique

AIS Auto value added product range

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 11

Global trends in automotive industry and AGC's product range

Improving OEM's environmental footprints: Thin glazing products can reduce vehicle
weight with direct impact on CO2 emissions. When glass becomes the electronics interface
for HUD, touch screen or rearview mirrors, selective glazing may enable removing some car
components (roofs or window shading), reducing air-conditioning demand, eliminating other
display devices, all reducing overall vehicle weight.
Visibility and Safety: Glass solutions are available to enhance visibility in all weather
conditions by repelling water or technologies to remove fog or frost from the windows. ADAS
are designed to enhance vehicle safety; head-up displays help the driver stay focused on the
road. Protects vehicle occupants and possessions through laminated glazing applied to all
windows or filters integrated in the glass to block UV rays, harmful for the skin.
Comfort & Convenience: Glazing technologies that greatly reduce noise and increase
thermal comfort for a more pleasant journey. Convenient solutions are also available to save
time and effort such as the windshields that defrost electrically in winter, making manual
scraping and de-icing in the cold a thing of the past.
Design & Style: Glazing contributes considerably to the look and the aesthetics of the
vehicle such as dark tinted glass or chrome framed windows. Glass suppliers can create
unique shapes of glazing surfaces, add colored patterns to the windows, or provide a high-
gloss finish with glazing appliques.
Infotainment & Connected Car systems: Vehicles are becoming more and more
connected, vehicle-to-infrastructure or vehicle-to-vehicle, for providing multiple services or for
enhancing their safety. Connectivity requires increasingly powerful antennas. By designing
and incorporating high performance antennas into vehicle glazing, glass manufacturers
ensure advanced technology does not spoil the lines of the vehicle.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 12

AGC Automotive product range

Source: AGC, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 13

Architecture glass demand is improving, import restrictions

boost margin
Architectural glass is the second major business segment, where AIS offers a wide range of
end-to-end solutions for use in real estate construction. It has a widespread distribution network
spread across the country. Its portfolio includes a wide range of float glass, processed glass
and other value-added products. Its product range includes heat reflective glass, energy-efficient
reflective glass, solar control glass, uPVC windows, tempered burglar-proof glass, lacquered
glass, frosted glass, sound resistant glass, impact resistant glass, etc. Architecture glass segment
contributed 45% to AISG's revenue in FY21. We expect recovery in the residential real estate
demand over the next three years, due to pent-up demand and improved affordability.
Key drivers of architectural glass demand:
n Rapid urbanization causing increased demand for urban office space, malls and
residential properties
n Government's initiatives including Smart Cities Mission, Housing for All and falling interest
rate scenario
n Regulatory developments like RERA and REIT, aimed at boosting construction activity
n Increased investment in building construction and railway sectors announced in the budget
n Growing prevalence of glass windows, especially in commercial and premium residential
spaces
n Growing popularity of high performance glasses in buildings, led by hot climatic conditions
n Government's push for solar energy, coupled with growing environmental concerns leading
to growing demand for solar glasses
Five players manufacture float glass in India
AISG is the second largest producer and supplier of architectural glass in India, with a 13%
share of the business of the total market volume in FY20. It is the second largest player in the
value-added glass segment with estimated market share of 26%. Saint Gobain is the market
leader in the float glass segment. Other global players are Gold Plus, Gujarat Guardian (JV
of Modi Group and Guardian) and Sisecam. Float glass imports had formed a major
component of the industry's sales and accounted for over 20% of the total market of 2.54mn
MT in FY20. Government has imposed anti-dumping duty (ADD) and countervailing duty
(CVD) on import of float glass from China, Malaysia as well as other countries. Subsequently,
the share of imports have declined to 10-12% of domestic demand, which has resulted in 10-
15% increase in realizations for the domestic industry.

Float glass is manufactured by five companies in India

Company Plant Location Installed Capacity (MT/day) Operating since
Saint-Gobain India Sriperumbudur (Tamil Nadu) 750 2000
Sriperumbudur (Tamil Nadu) 750 2003
Sriperumbudur (Tamil Nadu) 750 2019
Jahagadia (Gujarat) 550 2010
Bhiwadi (Rajasthan) 1000 2014

Asahi India Glass Roorkee (Uttarakhand) 700 2007

Taloja (Maharashtra) 500 2017

Gold Plus Glass Roorkee (Uttarakhand) 450 2010

Roorkee (Uttarakhand) 800 2018

Gujarat Guardian Ankleshwar (Gujarat) 550 1993

Sisecam Halol (Gujarat) 600 2010

Source: AIMFG, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 14

Asahi's value added architecture glass product range

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 15

Demand outlook for residential real-estate has improved

Glass is one of the most sophisticated and versatile materials used in the real estate construction
and it is fast replacing concrete and other building materials. The construction sector in India
absorbs nearly 65-70% of the supply from the glass industry. In last three to four years, the
real estate sector in India has witnessed several changes because of demonetization, the
liquidity crisis and the implementation of RERA and GST. Despite the pandemic, the Indian
residential sector made a significant comeback in Q4 CY20 with absorption rebounding to
86% of the corresponding period in 2019. Top Seven Indian Markets recorded absorption of
approximately 138,000 units in 2020 against 261,000 units in 2019. Further, new supply
declined 46% to ~128,000 units in 2020 from ~237,000 units in 2019. In addition, there has
been a continuous decline in the overall unsold inventory, primarily because absorption in the
past years have exceeded total launches consistently since 2016. The unsold inventory of the
Top Seven Indian Markets declined by 2% from approximately 648,400 units as of the end
of 2019 to approximately 638,020 units as of the end of 2020.

Supply, absorption and unsold inventory trends in Inflow of Foreign Direct Investment (FDI) in construction
the top seven markets (in '000 units) development (US$ mn)
300 900 600
800
250
700 500
200 600
400
500
150
400 300
100 300
200
200
50
100
100
- -
113 105 540 213 617 118
2016 2017 2018 2019 2020 0
Supply Absorbtion Unsold Inventory FY16 FY17 FY18 FY19 FY20 1HFY21
Source: Industry, Antique Source: Government Data, Antique

Rapid Urbanization Boosting Urban Population

Demographic shifts in a country affect demand for real estate in that country. India's large
population base of 1.37bn provides huge domestic demand base, which attracts businesses
from across the world to setup their operations in India. Along with increasing population,
India's urbanization rate is also increasing at a fast pace. As per the United Nations
Development Programme, eight cities in India are projected to have a population base of
over 10 million by 2035, and approximately 50% of India's population is projected to be
urban by 2046. Rapid urbanization in India is expected to drive the demand for residential,
offices and other real estate asset classes in the medium to long term.

50% of India's population is projected to be urban by 2046

Source: UNDP, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 16

Signs of revival in the backdrop of economic recovery and demand

Real estate sector with key asset classes including residential, warehousing and office spaces
showed signs of recovery in 2HFY21. The residential segment was quick to pick momentum in
the backdrop of growing homeownership sentiment, which was accentuated by the exigencies
of the Covid-19 pandemic. This pent-up demand was further accelerated by ongoing discounts
and offers, low home loan interest rates, and limited period of stamp duty cuts in states such
as Maharashtra. On account of rising sales, developers released new supply into the market
leading to a 2% YoY jump in supply in Q4 2020 against the same period in 2019.
Demand re-configuration
With respect to office spaces, social distancing and hygiene norms are expected to increase
per capita office allocations even though a segment of employees continue to work from
home. During the last decade, per capita office space allocation has reduced from 100 to
125 sq-ft to 75 to 100 sq-ft in Jan'20. Additionally, there is an increase in demand for
township projects in the residential sector. Since work from home has become a new normal
for certain industries, homebuyers are preferring spacious and flexible homes in a self-sustained
environment at affordable prices in peripheral areas of the tier-1 cities and at developed
locations in tier-2 cities.
Reduction in home loan interest rates
In order to infuse liquidity into the market, the RBI reduced the repo rate by 140 basis points
from February 2020 to October 2020, which resulted in reduction in the home loan interest
rates. Increase in household income coupled with steady ticket prices have resulted in an
increase in affordability of residential units. While the home loan interest rate is falling, the
rental yield from residential properties is increasing gradually, with an exception in 2020.
Hence, the difference between home loan interest rate and rental yield is at decadal low
making home buying more attractive than renting.

Affordability has been steadily improving

Source: Industry, Antique

The net cost of home ownership over rental yield, adjusted for tax incentives on home loans,
has reduced to less than 2% for some buyers, which is amongst the lowest in the last two
decades. With reduction in home loan rates coupled with other policy level interventions by
the government, real estate has emerged as one of the favored investment options in the
country.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 17

Home loan interest rates versus rental yield from residential properties
10%
9% 9.9%
8% 9.2%
8.5% 8.6% 8.6%
7%
6% 6.8%
5%
3.4% 3.4% 3.4% 3.5% 3.6% 3.4%
4%
3%
2%
1%
0%
FY16 FY17 FY18 FY19 FY20 FY21
SBI Home Loan Rate Rental Yield
Source: Industry, Antique

Import restrictions has led to better realization for domestic float glass manufacturers
Asahi India Glass, Gold Plus Glass, Saint-Gobain Glass and Sisecam Flat Glass had filed
an application with DGTR for imposition of countervailing/anti-subsidy duty (CVD) on imports
of "Clear Float Glass" originating in or exported from Malaysia. The conclusion of the
investigation has led to imposition of 10-11% additional CVD on key Malaysian exporters -
Xinyi and Kibing Group. This action coupled with the earlier renewed anti-dumping duty
(ADD) has made imports expensive by 19-34%. For example, if the CIF/landed value of
exports to India by Xinyi for clear float glass is USD 250/MT, Xinyi has to pay USD 22.87/MT
as ADD and USD 24.35/MT (as CVD). With the same price of exports, other exporters will
be paying USD 76/MT as ADD and USD 10.05/MT as CVD. After the imposition of CVD,
the import of glass into the country has nearly halved and the price of locally manufactured
float glass has increased by ~15%.

Imports had formed 15-20% of the domestic float glass market

100%
90%
80%
70%
60% 82% 80% 84%
86%
50%
40%
30%
20% 4%
5% 6% 1%
2%
10% 2%
11% 13% 10% 13%
0%
FY16 FY17 FY18 FY19
Imports from Malaysia Imports from countries attracting ADD Other imports Domestic Production

Source: DGTR
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 18

Import of float glass from Malaysia had increased sharply since FY18
Particulars Units FY16 FY17 FY18 FY19
Imports from Malaysia MT 129,794 192,379
Imports from other countries attracting ADD MT 122,768 154,210 75,604 33,263
Imports from other countries MT 24,071 62,776 56,517 10,628
Total imports MT 146,839 216,986 261,915 236,270

Sale of Domestic Industry MT 799,041 815,669 875,931 1,013,390

Trend Indexed 100 102 110 127

Sales of other Domestic Producers MT 143,650 144,500 190,000 230,000

Trend Indexed 100 101 132 160

Total Domestic Sales MT 942,691 960,169 1,065,931 1,243,390

Trend Indexed 100 102 113 132

Demand MT 1,089,530 1,177,155 1,327,846 1,479,660

Trend Indexed 100 108 122 136
Source: DGTR

Imported glass were selling at a discount of 17-27% to domestic price

Particulars Units FY18 FY19
Landed price from subject country INR/MT 17,980 18,124
Net selling price of domestic industry INR/MT 22,755 21,206
Price under-cutting INR/MT 4,775 3,082
Price under-cutting % 27 17
Source: DGTR

>10% CVD has been levied on clear float glass import from Malaysia
Country of Duty amount
Country of Origin export Producer as % CIF value
Malaysia Any country Xinyi Energy Smart (Malaysia) Sdn. Bhd. 9.7%
Malaysia Any country Kibing Group (M) Sdn. Bhd. 11.2%
Malaysia Any country Any other than Xinyi and Kibing 4.0%
Any other than Malaysia Malaysia Any 4.0%
Source: DGTR

Float glass prices have risen sharply in the international market

The price of float glass in the international market, particularly in China, has increased
substantially in the last 12 months due to strong demand and closure of 40-50 units due to
the environmental concerns. Consequently, Chinese glass manufacturers have diverted
production from their Malaysian plants to China market. The tight demand supply situation
has resulted in an increase in price of float glass.

Float glass price in China (RMB/sq. m)

40

39

38

37

36

35

34

33

32
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21

Source: Industry, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 19

Consumer Glass SBU

With an increasing trend of creating ideal, efficient spaces at home and office, people re-
evaluating their options of material usage, there is an increased play of glass in creating
more open and welcoming spaces. AIS Consumer Glass SBU aims at helping the consumers
to create the ideal personal and workspaces by offering the best-in-class products for
architectural and automotive glass requirements.
AIS Windshield Experts: It is India's first and largest car windscreen repair and replacement
network with presence in over 48 cities with more than 82 conveniently located service centres.
AIS Windshield Experts offers automotive safety glass repair and replacement solutions across
India. Windshield Experts has tie ups with almost all insurance companies in India to manage
their automotive glass claims. The company provides a fast, world class and guaranteed
service and has served more than a million customers. Windshield Experts also offers a host
of value-added services including battery check & replacement, wiper blade replacement,
car sanitization and detailing services. The company has also drawn up aggressive expansion
plans to further increase reach and tap the market potential in tier 2 and 3 cities mainly
through franchisee route.
AIS Glasxperts: It is India's first organised glass design and installation service. Glasxperts
brings together an integrated approach and specialized knowledge in glass and allied
products and services. It provides complete Glass, Window and Door solutions for aesthetic,
safety & security, energy efficiency, acoustic and privacy needs.
It provides 360 degree solutions, starting with expert and customized guidance for product
selection and purchase, site assessment and consultation, installation, project management
and post-installation support.
AIS Windows: It offers end-to-end solutions from glass and frame selection to installation
on site. The product range includes high-performance uPVC, aluminium door and window
systems and glass solutions that include acoustic, privacy, energy efficiency and safety and
security solutions. It offers fenestration products in uPVC, wood and aluminium substrates and
available in a range of customizable options designed for use in both residential and
commercial spaces.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 20

Strong earnings growth, positive FCF and rising RoCE

We expect AIS's revenue to grow at 18% CAGR over FY21-24E, led by 23% CAGR in automotive
glass and 11% CAGR in float glass. The recent commissioning of automotive plant in Gujarat
will provide adequate capacity for growth in the segment. In the float glass, we expect AIS to
continue to focus on value added products. We expect EBITDA margin to improve 410bp
over FY21-24E to 22.5% led by operating leverage, fixed cost reduction and higher realisations
due to import restrictions. Post the recent commissioning of its Gujarat plant, AISG is entering
a phase of low capex cycle. We expect AISG to generate FCF of INR 10bn over the next
three years, leading to net debt reducing to INR 5.7bn by FY24 end. We estimate RoCE to
improve from 11% in FY21 to 24% in FY24E. AISG stock is trading at 11.6x FY23E EV/
EBITDA, 19.8x FY23E PER and 5.0% FCF yield. We value AISG stock at INR 425, based on
25x FY23E PER, which is 25% lower than last five year average multiple.

Auto Glass - revenue and EBIT margin Architecture Glass - revenue and EBIT margin
30 INR bn 20% INR bn 30%
14
18% 25%
25
16% 12
20%
14%
20 10
12% 15%
15 10% 8
10%
8% 6 5%
10
6%
4 0%
4%
5
2% 2 -5%
- 0% - -10%
FY22E
FY23E
FY24E
FY25E

FY22E
FY23E
FY24E
FY25E
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21

FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Auto Glass Revenue EBIT margin (%) Architecture Glass Revenue EBIT margin (%)
Source: Company, Antique Source: Company, Antique

Glass industry is highly energy intensive

Power and fuel costs constitutes 15-16% AISG's revenue and 18-19% of total operating costs.
Float glass operation is more power intensive as the company operates furnace continuously.
The company sources automotive float glass through imports from AGC Indonesia as well as
from the other domestic suppliers. The price of crude oil and natural gas remain volatile and
any upward movement in the crude oil prices can impact the operating margins of the
company. We expect the impact of fuel prices inflation to be limited in FY22/23E, as supply
shortage of float glass will allow the industry to raise prices to mitigate the impact. Further, the
company is in a position to change the fuel mix as per the fuel's respective prevailing prices
to enable optimum savings in the fuel cost after upgrading its facilities to allow use of furnace
oil and/or natural gas as fuel.

Domestic Natural Gas Prices Brent Crude Oil price

5.5 US$/mmBtu US$/bbl
140
4.7

5.0
5.1

120
4.5
3.8

3.7

4.0 100
3.4

3.2

3.5 80
3.1

3.1
2.9

3.0
2.5

2.5

60
2.4

2.5
40
1.8
1.8

2.0
20
1.5
Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21
Sep-15

Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21

0
Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21
Source: Bloomberg, Antique Source: Bloomberg, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 21

They key raw material for glass manufacturing is Polyvinyl Butyral (PVB) films and Soda Ash.
For the automotive glass, AIS imports float glass from AGC Indonesia. AIS is exposed to the
risks associated with volatility in foreign exchange rates mainly on account of import of raw
materials, stores & spares and foreign currency loan payments. The net exposure of the
company in foreign currency stood at INR 5.7bn as on Mar'20 (INR 5.7bn as on Mar'19).
However, the foreign currency loan of the company is fully hedged, as the company has
entered into CIRS (Currency Interest Rate Swap) against any INR vs USD movement.

Raw material cost break-up Raw material is largely imported

Others
10%
Indigenous
26%
Soda Ash
10%

PVB Films Float Glass

21% 59% Imported
74%

Source: Company, Antique Source: Company, Antique

Total Debt of the company stood at INR 17.6bn as on Mar'20, which we estimate would
have declined to INR 15.1bn by Mar'21 end. Glass industry is capital intensive. AIS has
commissioned its new automotive glass plant in Gujarat and we expect capex to be low over
the next three years. We expect net debt to decline from INR 14.5bn at FY21 end to INR
5.7bn by FY24E end.

AIS - strong FCF generation over the next three years Net debt will decline sharply by FY24E end
7.0 20 1800%
18 1600%
5.0 16 1400%
14 1200%
3.0
12
1000%
1.0 10
800%
8
(1.0) 600%
6
4 400%
(3.0)
2 200%
(5.0) 0 0%
FY21E
FY22E
FY23E
FY24E
FY25E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
FY24E
FY25E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20

Operating Cash Flow (INR bn) Free Cash Flow (INR bn) Net debt/equity Net Debt (INR bn)
Source: Company, Antique Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 22

RoCE to improve with asset-turn and higher margin RoE to improve to >20% over FY22E
23%

22%
25%

20%
21%

24%

22%
21%

21%
20% 19%

20%
15%
14%

14%
17%

13%

18%
17%
15%

11%

17%
15%

10%

16%
10%
13%
8%

10%
6%

11%

12%
5%

5%
5%

9%
2%

2%

5%

10%
1%

1%

7%
0% 5%

FY21E

FY22E

FY23E

FY24E

FY25E
FY16

FY17

FY18

FY19

FY20
FY21E
FY22E
FY23E
FY24E
FY25E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
ROCE (%) FY20 ROE (%)
Source: Company, Antique Source: Company, Antique

Profit & Loss Account

Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
Net Revenue 26,330 29,130 26,432 24,343 31,688 35,958 39,555
Op. Expenses 21,692 24,026 22,085 19,866 24,371 27,781 30,666
EBITDA 4,638 5,105 4,347 4,477 7,318 8,177 8,889
Depreciation 948 1,185 1,371 1,323 1,447 1,492 1,567
EBIT 3,690 3,920 2,977 3,155 5,871 6,685 7,322
Other income 243 189 129 231 251 266 278
Interest Exp. 1,237 1,352 1,461 1,432 1,189 881 589
Extra Ordinary Items -gain/(loss) 49 26 35 - - - -
Reported PBT 2,745 2,783 1,680 1,955 4,933 6,070 7,011
Tax 930 921 195 742 1,726 2,125 2,454
Reported PAT 1,815 1,862 1,485 1,213 3,206 3,946 4,557
Minority Int./Profit (loss) From Asso. 57 93 122 118 154 188 207
Net Profit 1,871 1,955 1,607 1,331 3,360 4,134 4,764
Adjusted PAT 1,823 1,928 1,572 1,331 3,360 4,134 4,764
Adjusted EPS (INR) 7.5 7.9 6.5 5.5 13.8 17.0 19.6
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 23

Balance Sheet
Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
Share Capital 243 243 243 243 243 243 243
Reserves & Surplus 10,513 11,914 12,779 14,155 17,150 20,797 24,953
Networth 10,756 12,157 13,022 14,398 17,393 21,040 25,196
Debt 13,741 16,440 17,624 15,055 12,080 8,900 5,000
Minority Interest (94) (113) (137) (162) (188) (217) (249)
Net deferred Tax liabilities 1,148 305 693 603 603 603 603
Capital Employed 25,551 28,790 31,202 29,894 29,888 30,326 30,550

Gross Fixed Assets 20,645 22,180 24,527 27,703 28,703 30,203 31,703
Accumulated Depreciation 1,612 2,647 4,188 5,511 6,958 8,450 10,017
Capital work in progress 1,143 4,525 4,886 2,624 2,624 2,624 2,624
Net Fixed Assets 20,176 24,058 25,225 24,817 24,370 24,377 24,310
Investments 419 482 550 686 686 686 686

Current Assets, Loans & Advances 12,219 12,356 12,855 12,231 14,774 16,549 18,042
Inventory 6,143 6,910 7,221 6,543 7,955 9,009 9,894
Debtors 3,225 2,695 2,612 2,682 3,849 4,530 5,103
Cash & Bank balance 171 216 142 577 541 581 615
Loans & advances and others 2,680 2,535 2,881 2,429 2,429 2,429 2,429
Current Liabilities & Provisions 7,263 8,105 7,428 7,840 9,942 11,287 12,488
Liabilities 7,175 8,037 7,359 7,792 9,894 11,239 12,440
Provisions 88 68 69 48 48 48 48
Net Current Assets 4,956 4,251 5,427 4,392 4,832 5,263 5,554
Application of Funds 25,551 28,790 31,202 29,894 29,888 30,326 30,550
Source: Company, Antique

Cash Flow
Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
PBT 2,647 2,730 1,610 1,979 4,959 6,099 7,043
Depreciation & amortisation 948 1,185 1,371 1,323 1,447 1,492 1,567
Interest expense 1,184 1,344 1,484 1,444 938 614 311
(Inc)/Dec in working capital 636 (114) (1,358) 1,267 (477) (390) (257)
Tax paid (922) (908) (175) (753) (1,726) (2,125) (2,454)
Cash Flow from operating activities 4,493 4,238 2,932 5,259 5,141 5,691 6,210
Capital expenditure (4,485) (5,125) (2,273) (1,045) (1,000) (1,500) (1,500)
Inc/(Dec) in investments 114 76 110 97 - - -
Add: Interest/Div. Income Recd. 124 83 246 208 127 159 175
Cash Flow from investing activities (4,475) (5,118) (2,137) (934) (873) (1,341) (1,325)
Inc/(Dec) in debt 1,518 2,700 1,114 (2,384) (3,002) (3,209) (3,932)
Dividend Paid (293) (440) (586) - (365) (486) (608)
Others (1,237) (1,352) (1,461) (1,432) (938) (614) (311)
Cash Flow from financing activities (12) 908 (932) (3,815) (4,304) (4,310) (4,851)
Net cash flow 5 28 (138) 509 (36) 40 34
Opening balance 151 156 184 46 555 519 560
Closing balance 156 184 46 555 519 560 594
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 24

Per share data

Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
No. of shares (m) 243 243 243 243 243 243 243
Diluted no. of shares (m) 243 243 243 243 243 243 243
BVPS (INR) 44.2 50.0 53.6 59.2 71.5 86.6 103.7
CEPS (INR) 11.4 12.5 11.7 10.4 19.1 22.4 25.2
DPS (INR) 1.0 1.5 2.0 1.0 1.5 2.0 2.5
Source: Company, Antique

Margins (%)
Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
EBITDA Margin(%) 17.6 17.5 16.4 18.4 23.1 22.7 22.5
EBIT Margin(%) 14.0 13.5 11.3 13.0 18.5 18.6 18.5
PAT Margin(%) 6.9 6.6 5.9 5.4 10.5 11.4 12.0
Source: Company, Antique

Financial Ratios
Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
Profit&Loss
RM/Net Revenue 59.8% 58.6% 58.4% 57.5% 54.3% 55.1% 55.5%
Emp Exp/Net Revenue 10.2% 9.6% 10.2% 10.8% 9.8% 9.5% 9.5%
Other Exp/Net Revenue 12.4% 14.2% 15.0% 13.3% 12.8% 12.6% 12.6%
BalanceSheet
RoE (%) 16.9 15.9 12.1 9.2 19.3 19.6 18.9
RoCE (%) 15.4 14.3 10.0 11.3 20.5 22.9 24.9
Asset/T.O (x) 1.1 1.1 0.9 0.8 1.1 1.2 1.3
Net Debt/Equity (x) 1.3 1.3 1.3 1.0 0.7 0.4 0.2
EBIT/Interest (x) 3.2 3.0 2.1 2.4 5.1 7.9 12.9
Source: Company, Antique

Valuation (x)
Year ended 31 Mar FY18 FY19 FY20 FY21 FY22e FY23e FY24e
P/E 44.9 42.5 52.1 61.6 24.4 19.8 17.2
P/BV 7.6 6.7 6.3 5.7 4.7 3.9 3.3
EV/EBITDA 20.8 18.9 22.1 21.5 13.2 11.8 10.8
EV/Sales 3.7 3.3 3.6 4.0 3.0 2.7 2.4
Dividend Yield (%) 0.3 0.4 0.6 0.3 0.4 0.6 0.7
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 25

Key risks to earnings estimates and investment thesis

1) A slowdown in automotive and residential real-estate demand in India
Asahi India is heavily dependent on factors affecting, automotive and construction industry
in India, in particular the growth of their key customers. Any adverse growth of these
industries will have negative impact on the growth of our business. The automotive and
construction industry is sensitive to factors such as inflation, consumer demand, interest
rates, fuel prices and general economic conditions in India. In addition, the automotive
and construction industry may witness changes in performance due to policy/regulatory
changes. If the automotive and realty industry does not grow or grows at a slower rate
than we expect, or the policies and actions of market players do not match our forecasts
and assumptions, the demand and/or price for Asahi's products may be adversely
affected, which would have a material adverse effect on its business, prospects, results
of operations, cash flows and financial condition.
2) Sharp rise in raw material, fuel and power costs
Asahi's operations and performance are directly related to and affected by the cost of
various inputs including raw glass, PVB, silica sand, soda ash, power and fuel, packing,
logistics and forwarding costs. The cost of these inputs especially the cost of raw materials
and power and fuel constitute a significant percentage of its product costs. Any increase
in prices of such inputs as well as limitations and/or disruptions in the supply of inputs,
will adversely affect the company's operations. If company is not able to timely and
adequately affect any prices increases corresponding to the input costs escalation, it may
affect its profitability and performance.
3) Reversal of various measures taken to curb import of float glass
Government has levied ADD, CVD and other restriction on the import of float glass in the
country. If these restrictions are lifted, we may see an increase in dumping of float glass
into the country. This may impact the profitability of domestic glass manufacturers, including
Asahi India.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 26

Strong board and leadership team

AISG is promoted by the AGC Inc., Japan (formerly known as Asahi Glass Co. Ltd; shareholding
of 22%), Labroo family (shareholding of 21% share) and Maruti Suzuki India (MSIL IN;
shareholding of 11%). AGC is the leading glass manufacturer of the world with 12% global
market share in the float glass segment and 30% global market share in the automotive glass
segment. The operations of AISG are being managed by Mr. B.M. Labroo (Chairman) who
has vast experience in marketing, finance and corporate governance. Mr. Sanjay Labroo,
(Managing Director) has dual degree in Finance and Management from Wharton School of
Business and Finance, USA. He is former Director of Central Board of Directors of the Reserve
Bank of India (RBI). The board of AISG has representatives from AGC, MSIL, Mitsubushi and
Subros among other independent directors.

AISG's board of directors

Name Designation
B.M. Labroo Promoter, Non-Executive Chairman Promoter; on company's board since 1985
Sanjay Labroo Promoter, Managing Director and CEO Promoter; on company's board since 1989
Satoshi Ogata Deputy Managing Director and CTO (Auto) Nominee Director of AGC Japan
Masahiro Takeda Promoter, Non-Executive Director Regional President for Asia Pacific, AGC
Satoshi Ishizuka Promoter, Non-Executive Director Nominee Director of Maruti Suzuki
Yoji Taguchi Independent Director Chairman & MD - Mitsubishi Corporation India
Gurvirendra Singh Talwar Independent Director Chairman & Managing Partner at Sabre Capital Worldwide
Rahul Rana Independent Director Managing Partner, G2020 Advisors, KBS Pacific Advisors
Shradha Suri Independent Director Chairman & MD - Subros Ltd
Source: Company, Antique

AISG's leadership team

Name Designation
Sanjay Labroo Promoter, Managing Director and CEO Former Director of Central Board of Directors of RBI
Satoshi Ogata Deputy MD and CTO (Auto Glass) Nominee Director of AGC Japan
Bhupinder Singh Kanwar COO (Auto Glass) Over 30 years of experience in the field of technology,
operations and general administration; associated with the
company since 1987
Sanjay Ganjoo COO (Architectural Glass) 30 years of experience in the field of development, design,
fabrication and engineering of automotive glass; associated
with the company since 1989
Vikram Khanna COO (Consumer Glass), CMO, CIO Over 30 years of experience in the field of supply chain
management, sales and marketing and general management;
associated with the company since 1996
Shailesh Agarwal Executive Director and CFO Over 25 years of experience in the field of accounts, finance,
taxation and systems; associated with the company since 2007
Gopal Ganatra Executive Director, General Counsel, CS Over 20 years of experience in the field of litigation manage-
ment, legal and statutory compliance, contract management;
associated with the company since 2005
Source: Company, Antique

Manufacturing plants are strategically located

AISG started its operations in March 1987, with a sole manufacturing facility for toughened
glass products for automotive windshields at Bawal (Haryana) and over the years AIS has
enhanced its production facility by setting up more manufacturing facilities at Roorkee
(Uttarakhand), Chennai (Tamil Nadu), Taloja (Maharashtra) and Patan (Gujarat) and four
sub-assembly units/warehouses at Kadi (Gujarat), Pune (Maharashtra), Bangalore (Karnataka)
and Anantapur (Andhra Pradesh). The plants and sub-assemblies are strategically located
in proximity to India's automotive glass manufacturing hubs. Total installed capacity stood at
12mn square metres for tempered glass, 6.5mn pieces for laminated glass and 78.3mn
Converted Square metres (CSQM) for float glass. The manufacturing facilities of AISG are
strategically located at Haryana, Uttarakhand, Tamil Nadu, Maharashtra and Gujarat.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 27

AISG's manufacturing footprint across the country

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 28

Glass Manufacturing Process

Source: Company, Antique

The float glass is manufactured by the PPG process. This process was invented by Sir Alistair
Pilkington in 1952 and is the most popular and widely used process that describes how to
make glass for architectural purposes in the world today.

It consists of the following steps

Stage 1- Melting & Refining:
Fine grained ingredients closely controlled for quality, are mixed to make a batch, which
flows into the furnace, which is heated up to 1500 degree Celsius. This temperature is the
melting point of glass.
The raw materials that float glass is made up of are:
SiO2 - Silica Sand
Na2O - Sodium Oxide from Soda Ash
MgO - Dolomite
Al2O3 - Feldspar
The above raw materials primarily mixed in batch helps to make clear glass. If certain metal
oxides are mixed to this batch they impart colors to the glass giving it a body tint.
Apart from the above basic raw material, broken glass aka cullet, is added to the mixture to
the tune of nearly 25% ~ 30% which acts primarily as flux. The flux in a batch helps in
reducing the melting point of the batch thus reducing the energy consumed to carry out the
process.
Stage 2 - Float Bath:
Glass from the furnace gently flows over the refractory spout on to the mirror-like surface of
molten tin, starting at 1100 degree Celsius and leaving the float bath as solid ribbon at 600
degree Celsius.
Stage 3 - Coating (for making reflective glasses):
Coatings that make profound changes in optical properties can be applied by advanced
high temperature technology to the cooling ribbon of glass. Online Chemical Vapour Deposition
(CVD) is the most significant advance in the float process since it was invented. CVD can be
used to lay down a variety of coatings, a few microns thick, for reflect visible and infra-red
radiance for instance. Multiple coatings can be deposited in the few seconds available as
the glass flows beneath the coater (e.g. Sunergy)
Stage 4 - Annealing:
Despite the tranquility with which the glass is formed, considerable stresses are developed in
the ribbon as the glass cools. The glass is made to move through the annealing lehr where
such internal stresses are removed, as the glass is cooled gradually, to make the glass more
prone to cutting.
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 29

Stage 5 - Inspection:
To ensure the highest quality, glass manufacturers carry out inspection at every stage.
Occasionally a bubble that is not removed during refining, a sand grain that refuses to melt
or a tremor in the tin puts ripples in the glass ribbon. Automated online inspection reveals
process faults upstream that can be corrected. And it enables computers downstream to steer
round the flaws. Inspection technology now allows 100mn inspections per second to be
made across the ribbon, locating flaws the unaided eye would be unable to see.
Stage 6 - Cutting to Order:
The entire process of glass making is finally complete when diamond steels trim off selvedge
- stressed edges- and cut ribbon to size dictated by the computer. Glass is finally sold only in
square meters.

Float glass processing industry

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 30

Financials
Profit and loss account (INRm) Cash flow statement (INRm)
Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e
Net Revenue 24,343 31,688 35,958 39,555 43,636 PBT 1,979 4,959 6,099 7,043 8,120
Op. Expenses 19,866 24,371 27,781 30,666 33,925 Depreciation & amortisation 1,323 1,447 1,492 1,567 1,667
EBITDA 4,477 7,318 8,177 8,889 9,711 Interest expense 1,444 938 614 311 (40)
Depreciation 1,323 1,447 1,492 1,567 1,667 (Inc)/Dec in working capital 1,267 (477) (390) (257) (513)
EBIT 3,155 5,871 6,685 7,322 8,044 Tax paid (753) (1,726) (2,125) (2,454) (2,830)
Other income 231 251 266 278 291 CF from operating activities 5,259 5,141 5,691 6,210 6,404
Interest Exp. 1,432 1,189 881 589 250 Capital expenditure (1,045) (1,000) (1,500) (1,500) (1,500)
Reported PBT 1,955 4,933 6,070 7,011 8,085 Inc/(Dec) in investments 97 - - - -
Tax 742 1,726 2,125 2,454 2,830 Add: Interest/Div. Income Recd. 208 127 159 175 192
Reported PAT 1,213 3,206 3,946 4,557 5,255 CF from investing activities (934) (873) (1,341) (1,325) (1,308)
Minority Int./Profit (loss) From Asso. 118 154 188 207 227 Inc/(Dec) in debt (2,384) (3,002) (3,209) (3,932) (4,385)
Net Profit 1,331 3,360 4,134 4,764 5,482 Dividend Paid - (365) (486) (608) (729)
Adjusted PAT 1,331 3,360 4,134 4,764 5,482 Others (1,432) (938) (614) (311) 40
Adjusted EPS (INR) 5.5 13.8 17.0 19.6 22.6 CF from financing activities (3,815) (4,304) (4,310) (4,851) (5,074)
Net cash flow 509 (36) 40 34 22
Balance sheet (INRm) Opening balance 46 555 519 560 594
Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e Closing balance 555 519 560 594 615
Share Capital 243 243 243 243 243
Reserves & Surplus 14,155 17,150 20,797 24,953 29,706 Growth indicators (%)
Networth 14,398 17,393 21,040 25,196 29,950 Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e
Debt 15,055 12,080 8,900 5,000 650 Revenue(%) -7.9 30.2 13.5 10.0 10.3
Minority Interest (162) (188) (217) (249) (285) EBITDA(%) 3.0 63.4 11.7 8.7 9.2
Net deferred Tax liabilities 603 603 603 603 603 Adj PAT(%) -15.4 152.5 23.0 15.3 15.1
Capital Employed 29,894 29,888 30,326 30,550 30,918 Adj EPS(%) -15.4 152.5 23.0 15.3 15.1
Gross Fixed Assets 27,703 28,703 30,203 31,703 33,203
Accumulated Depreciation 5,511 6,958 8,450 10,017 11,685 Valuation (x)
Capital work in progress 2,624 2,624 2,624 2,624 2,624 Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e
Net Fixed Assets 24,817 24,370 24,377 24,310 24,143 P/E 61.7 24.5 19.9 17.2 15.0
Investments 686 686 686 686 686 P/BV 5.7 4.7 3.9 3.3 2.7
Current Assets, Loans & Adv. 12,231 14,774 16,549 18,042 19,719 EV/EBITDA 21.5 13.2 11.8 10.9 9.9
Inventory 6,543 7,955 9,009 9,894 10,900 EV/Sales 4.0 3.0 2.7 2.4 2.2
Debtors 2,682 3,849 4,530 5,103 5,753 Dividend Yield (%) 0.3 0.4 0.6 0.7 0.9
Cash & Bank balance 577 541 581 615 637
Loans & advances and others 2,429 2,429 2,429 2,429 2,429
Financial ratios
Current Liabilities & Prov. 7,840 9,942 11,287 12,488 13,630
Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e
RoE (%) 9.2 19.3 19.6 18.9 18.3
Liabilities 7,792 9,894 11,239 12,440 13,582
RoCE (%) 11.3 20.5 22.9 24.9 27.0
Provisions 48 48 48 48 48
Asset/T.O (x) 0.8 1.1 1.2 1.3 1.5
Net Current Assets 4,392 4,832 5,263 5,554 6,089
Net Debt/Equity (x) 1.0 0.7 0.4 0.2 0.0
Application of Funds 29,894 29,888 30,326 30,550 30,918
EBIT/Interest (x) 2.4 5.1 7.9 12.9 33.3
Per share data
Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e
Margins (%)
No. of shares (m) 243 243 243 243 243
Year ended 31 Mar FY21 FY22e FY23e FY24e FY25e
EBITDA Margin(%) 18.4 23.1 22.7 22.5 22.3
Diluted no. of shares (m) 243 243 243 243 243
EBIT Margin(%) 13.0 18.5 18.6 18.5 18.4
BVPS (INR) 59.2 71.5 86.6 103.7 123.2
PAT Margin(%) 5.4 10.5 11.4 12.0 12.5
CEPS (INR) 10.4 19.1 22.4 25.2 28.5
DPS (INR) 1.0 1.5 2.0 2.5 3.0 Source: Company Antique

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 2 July 2021 | 31

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