Buy Gabriel India; target of Rs 217: Sharekhan

Sharekhan's research report on Gabriel India

Q2FY2023 results were broadly in-line with estimates. Revenue, EBITDA, and PAT grew by 36.1% y-o-y, 37.4% y-o-y, and 46.7% y-o-y, respectively. Faster adoption of EVs in India would be the key growth driver for Gabriel, led by its increasing market share with its EV clients and first-mover advantage of developing EV suspension products that have light weight, noise reduction, and enhanced automation properties. Gabriel’s earnings are set to report a 42.8% CAGR over FY2022E-FY2024E, driven by an 18.3% revenue CAGR and a 220-bps expansion in EBITDA margin to 8.5% in FY2024E from 6.3% in FY2022. The stock trades at attractive valuations of 13.9x P/E multiple and 8.3x EV/EBITDA multiple its FY2024E estimates.

Outlook

We maintain Buy on Gabriel India Limited (Gabriel) with a revised PT of Rs. 217, factoring in robust automotive demand, its preparedness to benefit from the adoption of EVs in India, and rolling forward target multiple to December 2024E EPS.