Sell Gabriel India; target of Rs 275: Geojit

Geojit is bearish on Gabriel India has recommended sell rating on the stock with a target price of Rs 275 in its research report dated September 15, 2023.

Broker Research

September 17, 2023 / 15:52 IST

sell

Geojit's research report on Gabriel India

Gabriel India Ltd. (GIL) is one of the leading manufacturers and is engaged in producing ride control products, which include shock absorbers, struts, and front forks in every automotive segment. We expect the EV order book to be normal for the year due to the reduction in the subsidy and high scrutiny by the government to avail the PLI benefit. EV sales form almost 9% of the total sales, up from 3% last year. The company’s market share in EVs stand at over 60%, and it serves all the top models. OLA, Ather, TVS, Ampere and Okinawa. In Q1FY24, revenue grew by 12% YoY due to superior product mix and price hikes, driven by consistent growth in aftermarket sales and strong growth in the export market. EBITDA improved by 151bps YoY due to commodity price stabilization and an increased share in the EV mix. The stock has rallied 88% in the last one year and is trading at 25x on a 1yr fwd. basis. Considering this, we expect some consolidation in the near term. We recommend Sell rating at CMP (20x FY25E EPS).

Outlook

However, we foresee a near-term slowdown in new orders due to stricter regulation in the EV space. With the stock's 88% surge in the past year and touching a high P/E of 35x we expect some consolidation in the near term. On a 1 yr fwd. the stock is trading at 25x which is slightly expensive at CMP. we recommend Sell rating and value the stock at 20x FY25E EPS with a revised target price of Rs.275.

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