Comments
Kotak Securities
Gabriel India (Buy)
CMP: ₹103
Target: ₹124
Gabriel India Ltd (Gabriel) is the flagship company of Anand Group. Gabriel was set up in 1961 in collaboration with Maremont Corporation (now Gabriel Ride Control Products of Arvin Meritor Inc, USA). With 80 per cent revenues coming from OEM’s, Gabriel will be a key beneficiary of demand revival in the auto sector. Focus on aftermarket and export will further add to the growth. EBITDA margin improvement will likely to continue over FY17/FY18. We thereby expect robust earnings CAGR growth of 21 per cent over FY16-FY18E. Debt-free balance sheet, strong free cash flow and healthy return ratios provides high comfort.
Key risks: a) We are expecting demand recovery in the automotive sector in FY17 and pick-up in growth in FY18. Delay in demand pick-up may impact Gabriel’s revenues and profitability.
b) Gabriel has various group companies that supply other auto ancillary product to the OEM’s. There is low probability of Gabriel adding new business segments, thereby limiting growth to that extent.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.