Buy Gabriel India; target of Rs 1260: Anand Rathi

Anand Rathi's research report on Gabriel India

Broadly in-line with ARe of Rs1.128bn, Gabriel’s consolidated EBITDA grew 14% y/y to Rs1.129bn in Q2. We expect its consolidated revenue/EBITDA/EPS to clock 16/18/34% CAGR over FY25-28, driven by: (1) suspensions, as greater wallet-share is likely to drive 13% revenue growth; (2) M&As: new product-line expansion leveraging the Anand Group to drive further growth like its recent foray into fasteners and lubricants biz; and (3) group consolidation announcements. ~Rs40bn Anand group consolidated (refer pg 5). Further ~60% of Anand Group’s (~Rs120bn revenue) could boost earnings (currently i.e. Rs70bn sales exHL Mando Anand or ~35% of Anand group factored).

Outlook

We maintain BUY rating on the stock with a lower SOTP-based TP of Rs1,260 (from Rs1,440 earlier), valuing it at 32x on consolidated Sep’27e EPS of Rs31.9 (Rs1,020), future group consolidation (Rs140) and M&A potential (Rs100).