Buy Gabriel India; target of Rs 193: LKP Research
LKP Research’s report on Gabriel India
Gabriel India Ltd (Gabriel), the flagship company of Anand Group is a pioneer in ride control products in automobiles such as 1). Front forks and Rear Shox used in 2W and 3W 2). Struts and shock absorbers in passenger cars and 3). Shock absorbers and cabin & seat dampers for commercial vehicles. The company has seven manufacturing units and two satellite locations in India functioning at ~75% utilization rates. Gabriel operates in a market where there are many unorganized players as well, but Gabriel is firmly holding among the top 2-3 positions with a formidable market share in all the auto segments and a long running relationship with most of the auto OEMS in India. On the back of decent topline and bottomline growth and a clean and strong balance sheet we believe Gabriel is well poised to trace the inherent strength in the automobile industry throughout its crests and troughs.
Gabriel with ~20% ROE and ~25% ROCE along with a good dividend payout ratio (20% in FY 18) is currently trading at just 14x FY20E earnings which looks very attractive to us and should be accumulated from current levels for a one year price target of 193.
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