Asahi India Glass Q2 Results Review - Profitability Finally Witnessing Mean Reversion: ICICI Securities

ICICI Securities Report

Asahi India Glass Ltd.'s Q2 FY23 Ebitda margin came in at 22.1% (down 260 basis points QoQ).

The margin decline was largely due to 410 bps contraction in gross margin, albeit mitigated by a combination of 50 bps QoQ improvement in power and fuel cost and 65 bps reduction in ‘other expenses’.

Gross margin compression was caused by a mix of negatives including currency devaluation, elevated raw material costs, and limited scope for pricing action.

Though Asahi India Glass witnessed 200 bps QoQ hit in both auto and architectural segments compared to last four-quarter rolling average.

Auto margin was down on a base (Q1 FY23] of 10% against ~34% for the architectural segment. Company did a commendable job in maintaining architectural segment margins above 30% amid multiple adversities.

However, fear of increasing imports with declining container costs may further add to pricing pressures and eventually margins.

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