Surge in vaccination to fortify revenues growth of glass makers: Crisil

Sharp increase in Covid-19 vaccination led pharma demand as well as an expected healthy growth in end-user sectors like automobiles and construction is expected to drive revenue growth of glass makers, said ratings agency Crisil.

As per an analysis of 25 Crisil-rated glass-makers, revenues are expected to be driven up by 12 per cent on-year in fiscal 2022.

Besides, the recovery, already visible since the second half of fiscal 2021, is expected to continue in this fiscal, albeit some headwinds of second wave of Covid-19 in first quarter of current fiscal.

At present, glass is sold in two forms — flat and container — with the former accounting for 55 per cent of the total sales, mainly to the automotive and construction sectors.

The report cited that this segment, though impacted by the pandemic-led disruptions in the first half fiscal 2021, saw a sharp rebound from September 2020 onwards and is expected to grow by 15 per cent on-year in fiscal 2022, from a decline of 16 per cent in fiscal 2021.

On the other hand, container glass accounts for the remaining 45 per cent of total glass sales.

This segment caters to alcoholic beverages, food, pharmaceuticals, labware, and home appliances.

According to the ratings agency, rise in vaccinations will support demand for glass vials and other labware.

“Strong surge in vaccination led demand for glass vials coupled with growth in automobile volumes will drive revenue growth of glass makers in fiscal 2022,” said Dinesh Jain, Director, Crisil Ratings.

“Despite recent partial lock downs due to resurging second wave, the glass makers are expected to maintain their profitability in this fiscal.”

However, the agency pointed out that onset of second wave of the pandemic and increasing restrictions can impact demand especially from construction and automobiles.

In addition, supply chain disruptions if extending to the second quarter in the worse-case scenario can curtail the growth in glass makers’ revenues by half in this fiscal, it said.