Elara initiates a Buy on Gabriel India with a 30 percent higher target price

Gabriel India has a strong presence in the two-wheeler suspension segment, and plans to diversify to play on the SUV premiumisation theme.

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26 Aug, 2025 12:21

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Auto ancillary player Gabriel India's plans to diversify and ride the premiumisation theme has prompted a Buy rating from Elara Capital, which has initiated coverage and assigned a target price of Rs 624 a share, 30 percent higher than the current market price.

Gabriel India has a dominant 31% market share in India's 2W suspension segment, which added 61 percent to its total sales in FY24. With the expected recovery in the 2W industry (projected CAGR of 8% from FY24 to FY27E) and increasing premiumization, Elara believes Gabriel India is well-positioned to benefit.

Gabriel leads in e2W as well with a 70% market share, as of Q4FY24, and Elara Capital has forecast a 12% revenue growth in 2W segment for Gabriel India during FY24-27E, outpacing industry's production growth of 8%.

Gabriel India, once focused solely on suspension systems, is now diversifying into sunroofs to capitalize on the growing premiumization trend. Currently, sunroofs penetrate 25 percent of the PV market and are projected to reach 40 percent by FY27E, Elara said.

The company's joint venture with Inalfa Roof Systems Group from the Netherlands - the world's second-largest sunroof manufacturer which operates a plant in Chennai - will help double the capacity to 400,000 units annually by FY26.

Gabriel India's diversification strategy emphasizes products that are not tied to specific powertrains, do not overlap with existing Anand Group products, and do not involve distressed assets. This shift towards multi-product offerings is expected to trigger a re-valuation of the company, the report said.

In the PV segment, Gabriel India's market share has increased to around 23% in FY24 from 15% in FY20, driven by SUV penetration, which now accounts for 60% of the industry volume. The company commands a higher share in SUVs (35%) compared to its overall PV share (23%), enhancing its market position as SUVs outpace industry growth.

"We expect a revenue CAGR of 11% during FY24-27E vs 2W industry volume CAGR of 8%, an EBITDA CAGR of 17% and a PAT CAGR of 20%. With no major capex plans, we expect an FCF of Rs 600 crore during FY25-27E. The company targets 1-2 more product additions in the next 2-3 years, bolstering valuation. Margin expansion driven by 2W industry tailwind and diversifying into new products starting with sunroof will be a key catalyst going ahead", Elara report added.

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