Buy Asahi India Glass; target of Rs 150: Gupta Equities

Gupta Equities is bullish on Asahi India Glass and has recommended buy rating on the stock with a target of Rs 150 in its November 29, 2010 research report.

“Asahi India Glass was first recommended by us (VOL 2 No 20) at the then price of Rs 65 and projected to be priced at Rs 90 in a year's time frame and was repeated (VOL 3 No 12) at the then price of Rs 82 with a price target of Rs 120. The stock has recently hit our target price & the performance of the company during this period has also undergone a sea change for the better times ahead. Enthused with the recent performance & good outlook for future we have once again opted to repeat our recommendation and this time price target has been enhanced to Rs 150 in a year’s time frame.”

“A brief re-cap about the company & industry it is involved in. Glass - its products are as abundant & durable as the sand from which it is made. The magical transparent property of glass has made it one of society's most beneficial creations. The glass industry has always been evolving - the changes come so rapidly that many of the glass products we take for granted today, were only developed in the last decade. The glass business mostly comprises of float glass (basic raw glass), automotive glass (value added float glass used for automotives), architectural glass (float glass having applications in buildings, offices), mirrors reflective glass & container glass to mention a few. India's largest integrated float glass company namely Asahi India Glass Ltd (AIGL) is jointly promoted by Labroo family, Asahi Glass Company of Japan and Maruti Suzuki India Ltd.”

“The years 2007/09 were challenging ones for AIGL as it had to face steep price increase in key raw materials & these cost increases had to be absorbed by the company as there was a time lag in passing them to its customers. AIGL took steps to counter these increases by optimization of resources, tying up long term supply contracts & capitalizing on the synergies of integration of being an end-to-end glass player. The benefits of this were visible in the last quarter of FY10 & have become more evident in the performance of Q2-FY11. The Chairman rightly puts it that 'with major investments in place, the time is now to reap the benefits by execution for excellence'.”

“We expect a further improvement in the performance in the second half of FY11. Asahi is strictly recommended for those investors who have patience and long term view on investments. One can thus add this stock slowly and discreetly to their portfolio for long term gains only. Buy AIGL with target of Rs 150,” says Gupta Equities research report.

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