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). 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.
Outlook
We value GIL at P/E of 15x as we roll forward to FY21E with a revised target of Rs.155 and downgrade to HOLD.
Source: moneycontrol.com