Asahi India Glass (Rs 69.9): Stock Buy
We recommend a buy in the stock of Asahi India Glass from a shortterm perspective. It is evident from the charts of the stock that after registering a 52-week low at Rs 48 in late December 2012, it bottomed out. This reversal was triggered by positive divergence in weekly relative strength and moving average convergence divergence indicators. Since then, the stock has been on an intermediateterm uptrend. The stock’s significant medium-term support in the band between Rs 56 and Rs 59 provided base of the stock while trending upwards. In early August, the stock bounced up taking base at the aforesaid band and has been on a short-term uptrend. Subsequently, the stock breached its 50 and 200-day moving averages and is hovering well above them. Over the month ago, the stock jumped 6% accompanied by above average volume, breaking through its immediate resistance at Rs 67. The daily RSI has entered the bullish zone from the neutral region and weekly RSI is on the brink of entering this zone from the neutral region. Both daily and weekly moving average convergence divergence indicators are hovering in the positive terrain implying upward momentum. We are bullish on the stock from a short-term perspective. We anticipate the stock’s rally to prolong and knock our price target of Rs 72.5 or Rs 74.5 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 67.5.
Asahi India undergoes Rs 140 crore expansion programme
India’s leading automotive glass manufacturer, eyeing the auto boom in the Indian market, is investing Rs 140 crore to ramp up its laminated glass capacity up to 5. 3 million units in a year’s time. While speaking to the reporters, Sanjay Labroo, Managing Director and CEO of AIG said: “We are revamping our laminated glass business and we are spending Rs 130-140 crore in the next twelve months. After the completion of the expansion, our capacity would be increased from the current 3.5 million units to 5.3 million units a year. We are also targeting a total group revenue of Rs 1700 crore in the current financial year, as against the Rs 1450 crore turnover we made in the year ago period.” Asahi has production facilities across the country including Bawal (Harayana), Roorkee (Uttarakhand), Chennai and Mumbai. The company manufactures a range of automotive safety glass, float glass, architectural processed glass and other glass products. AIS Auto Glass is the largest supplier of high quality automotive glass to almost the entire passenger car industry in India. It has the unique distinction of being the only glass player in the country being conferred the prestigious Deming Application Prize in 2007. The Deming Prize certifies the outstanding performance improvements achieved by AIS through application of Total Quality Management (TQM). AIS Auto Glass is one of the pioneers in the automotive glass business in India and has continued to maintain leadership position for almost two decades in a row. This is a result of years of high-quality efforts and investments put in at every level to ensure that it meets the highest standards of quality, delivery and customer satisfaction. In 1987, AIS Auto Glass started operations with manufacturing toughened glass for automobiles. Today, it has four plants located at Bawal – Haryana, Roorkee – Uttarakhand (North), Chennai – Tamil Nadu (South) and Taloja - Maharashtra (West) and three subassembly units / warehouses at Halol – Gujarat, Pune – Maharashtra (West) and Bangalore – Karnataka (South).
The plants and sub-assemblies are strategically located in proximity of India’s automotive manufacturing hubs and produce a complete range of automotive safety glass, engineered to the highest global quality standards
Chairman B. M. Labroo’s Message
In the first quarter of 2009, the global economy was in the middle of deepest slump since the end of the ‘Great Depression’ and there were fears that the slowdown would continue for more than a year. It did not happen that way. Thanks to governments across the world, pumping in trillions of dollars to create liquidity and stimulate demand; global growth in 2009 has been an impressive four and a quarter percent. The US economy has reported three straight quarters of GDP growth and looks like it is out of the recessionary phase. China grew by 8.7% in 2009 and is back to double digit growth figures during the last two quarters, with a forecast that 2010 will see Chinese GDP grow anywhere between 9.5% and 10.5%. And India, after a 6.7% GDP growth in 2008-09, experts forecast that for the current year, India will grow at 8.5%. Growth, however, has not been even – there are problem areas, especially in Europe. Greece’s economic woes have grabbed headlines during recent times; however, even Spain and Portugal give rise to concern. The euro zone as a whole can, at best, hope for 1% growth in 2010. Asia, led by China and India, looks to be the global growth drivers of the near future. The India growth story is especially encouraging and a substantial part of it is being driven by excellent manufacturing growth. From a low of 2.8% in 2008-09, manufacturing growth has spurted to reach 10.9% at the end of 2009-10. This is now evident in the automotive segment as well. According the recent published reports, Indian automotive sales for May 2010 grew 33% over the same month last year. The performance of
the automotive segment has greatly helped your Company. Your Company’s financial performance during 200910 reflects this optimism. Consolidated gross sales grew at 6.4% to reach Rs. 147,303 lakhs; net sales for the same period grew 4.4% to touch Rs. 129,323 lakhs. Operating earnings before interest, depreciation and taxes (operating EBIDTA) increased 76%: from Rs. 14,583 lakhs in 2008-09 to Rs. 25,674 lakhs in 2009-10. Part of this was due to an increase in other operating income (from Rs. 810 lakhs last year to Rs. 2,550 lakhs in the year under review); however, even if we were to exclude the impact of this, operating EBIDTA growth has been an extremely impressive 63.5% year-on-year. And, profit after tax (PAT) has moved back into the black, with a profit of Rs. 138 lakhs in 200910, compared to a loss of Rs. 4,315 lakhs during the previous year. While the finer details of your Company’s performance in 200910 is covered in the Management Discussion & Analysis, I would like to highlight that during my last communication to you, I had written about AIS’s ‘Look Within’ initiatives to maximise operational efficiencies.
Consolidated gross sales grew at 6.4% to reach Rs. 147,303 lakhs; net sales for the same period grew 4.4% to touch Rs. 129,323 lakhs. Operating earnings before interest, depreciation and taxes (operating EBIDTA) increased 76%: from Rs. 14,583 lakhs in 2008-09 to Rs. 25,674 lakhs in 2009-10. Part of this was due to an increase in other operating income (from Rs. 810 lakhs last year to Rs. 2,550 lakhs in the year under review); however, even if we were to exclude the impact of this, operating EBIDTA growth has been an extremely impressive 63.5% year-on-year.
These have evidently worked and are reflected in a 63.5% increase in operating earnings. Let me give you one example: that of reducing fuel costs. Power and fuel is a major input in the manufacture of float glass and one where price volatility can significantly impact profitability. AIS’s Taloja plant examined ways and means of substituting furnace oil with natural gas as a fuel source; the initiative has paid off. Taloja has now stabilised its manufacturing process using natural gas for fuel – and AIS has reduced power and fuel costs by 7.6% during the year. I assure that throughout the year and across all plants, we have been continuously looking at ways and means to be a better quality producer at a lower cost – and these initiatives will continue. Before I conclude, I would like to take this opportunity to thank all our stakeholders – shareholders, customers, business partners and bankers – for being with us through the turbulences of the recent years. I also thank AGC for its continued support to AIS. My unreserved thanks to the management team and all employees of AIS for having put in tremendous efforts and sacrifices in making AIS an admired Company.