Gabriel India Ltd. share price target

Sector: Auto-ancillary /Mid-Cap | Earnings Update 4QFY19 Background: Gabriel India Ltd.(GIL) is the flagship company of Anand Group, offering the widest range of ride control products including shock absorbers, struts, and front forks. The Company commenced operations in 1961, with a single plant in Mulund, Mumbai and has grown manifold, currently it has nine manufacturing facilities spread across the country with strong 500 dealer network and 10,000 retail outlets. The company has strong R&D; capabilities with over 43 patents in products and process. GIL has technical collaboration with global majors such as KYB (Japan), KYBSE...

EBITDA margin contracted by 260bps due to higher material cost, lower product mix and Rupee depreciation. Despite getting new orders from Royal Enfied Classic and Honda for supplying of Front fork, lower sales in the passenger vehicle segment is deteriorating the product mix. The new Capex initiated for supplying Front Fork to Honda Motorcycle & Scooter ltd (HMSI) and backward integration of Piston Rods is expected to commence operation from Q4FY20....

Gabriel India reported muted set of results for Q4FY19; it reported Total revenues of Rs 510 cr (?3% YoY & flat QoQ)), the EBIDTA of Rs 37 cr (?24% annually & ?19% QoQ) with EBIDTA margin at 7.2% (contraction of 257 bps on annual comparison).

Results miss estimates marred by higher raw material costs: Gabriel India Limited (Gabriel) results were below ours as well as the street estimates. The revenue growth moderated sharply to 3% y-o-y (revenues were in line with estimates) due to a weak demand from OEM's, especially the 2wheeler segment and market share loss in the PV space. Operating margins...

Gabriel India Ltd (GIL) is one of the leading manufacturers of ride control products viz Shock Absorbers, Front Forks in automotive segments, with a market share of 25 %( 2W, PV) & 75 %( CV). Q3FY19 revenue grew by 14% on the back of strong orders from two wheeler manufacturers (19%YoY) and higher export share. However share from the PV segment declined by 9%YoY. EBITDA margin contracted by 60bps owing to change in product mix and elevated RM cost (+190bps)....

Gabriel India continued with its stellar set of performance; it reported Total revenues of Rs 544 cr (?15% YoY & ?5%QoQ)), the EBIDTA of Rs 54 cr (?14% annually & ?5% QoQ) with EBIDTA margin at 9.9% (flat on annual comparison).

Performance Reflects Automobile Industry Growth: For Q2FY19, Gabriel reported revenue of Rs. 5415 Mn, up by 14.8% YoY, which is in-line with our estimate. The automobile industry production grew by 13.3% YoY during H1FY19 and we think this has translated into higher revenue for the quarter as well.

Gabriel India Ltd (GIL) is one of the leading manufacturers of ride control products viz shock absorbers, front forks and struts having a market share of 25 % in two wheelers & cars and 75% in trucks. Strong outlook on auto coupled with GILs leadership position will help to reap robust OEM revenue (83% current mix) going forward. Revenue share from 2W segment to improve 200bps to 58% by FY20 supported by new client addition and order wins. Operating margin to improve by 120bps over FY18-20E to 10.5% led by...

competitors as long as technology is concerned. Wide client base reduces uncertainty of customer concentration 2W - Gabriel being the second largest shock absorber manufacturing company after Munjal Showa in the 2W segment (contributing 58% of revenues) growing at 25% in Q1 FY19 has a huge client base including all the big OEMs except HMCL in that space(Munjal Showa being their inhouse sole supplier). Gabriel is the largest vendor of HMSI, and fancies great chances to acquire secured long term business with HMSI's aggressive expansion of capacities and launch of new products. In order to cater to HMSI's requirement of front forks at its Gujarat plant where they are expanding their capacities (upcoming capacity of 1.2 mn), Gabriel has set up a capex of Rs50...

Gabriel India continued its stellar set of performance beating our estimates on sales/EBIDTA/PAT by 1%/4%/3% respectively.