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ICICI Securities
Asahi India (Buy)
Target: ₹279
CMP: ₹274.50
Asahi India Glass (AISG) along with a consortium of glass manufacturers filed for the imposition of countervailing (CVD)/anti-subsidy duty on the import of ‘clear float glass’ from Malaysia with the designated authority. The conclusion of the investigation has led to imposition of over 10 per cent additional CVD on key Malaysian exporters.
This action coupled with the earlier renewed anti-dumping duty (ADD) could effectively lead to price increase of imports into India by about 19-34 per cent (assuming other costs are stable).
For example: If the CIF/landed value of exports to India by Xinyi for PUC is US$250/MT, Xinyi has to pay $22.87/MT as ADD and $24.35/MT (as CVD. With the same price of exports, other exporters will be paying $76/MT as ADD, and $10.05/MT as CVD.
We believe this could have twin effects of a) increased utilisation of domestic players, b) increase in domestic pricing of clear glass which could aid profitability.
We reiterate our positive stance on AISG driven by: a) improvement in business outlook on architectural side as more import restrictions are put in place; b) steady auto demand coupled with healthy product mix (rising share of SUVs) even as AISG remains a dominant supplier; and c) healthy operating leverage and financial deleveraging play.
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