Gabriel India Limited · 2021. 3. 15. · Reco/View Reco: Buy CMP: Rs. 116 Price Target: Rs. 160 áUpgrade Maintain âDowngrade Price chart Summary We re-initiate our coverage on

March 12, 2021 1

Automobiles Sharekhan code: GABRIEL Company Update

Gabriel India LimitedPiecing together a strong growth story

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Company details

Market cap: Rs. 1,666 cr

52-week high/low: Rs. 135 / 40

NSE volume: (No of shares)

4.1 lakh

BSE code: 505714

NSE code: GABRIEL

Free float: (No of shares)

6.8 cr

Shareholding (%)

Promoters 52.8

FII 4.3

DII 11.3

Others 31.7

Price performance

(%) 1m 3m 6m 12m

Absolute 0.0 -1.7 7.6 33.9

Relative to Sensex

1.1 -11.9 -24.8 -8.6

Sharekhan Research, Bloomberg

Reco/View

Reco: Buy

CMP: Rs. 116

Price Target: Rs. 160

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Price chart

Summary

� We re-initiate our coverage on Gabriel India Limited (Gabriel) with Buy rating and a PT of Rs. 160 owing to its leadership position and brand recall in the suspension components segment; company would also benefit from rising automotive demand.

� Gabriel is well-positioned to gain from the government’s push on rapid adoption of EVs, especially in 2W and 3W segments, where it is developing products with leading players.

� Net earnings set to clock a 55.2% CAGR over FY21E-23E, driven by an 18% CAGR during FY2021E-23E and a 270 bps rise in EBITDA margins.

� Stock trades at attractive P/E multiple of 13.1x and EV/EBITDA multiple of 7.1x its FY2023E estimates.

We re-initiate our coverage on Gabriel India Limited (Gabriel) with Buy rating and a PT of Rs. 160 owing to its leadership position and brand recall in the suspension components of domestic automotive industry and a key beneficiary of improving automotive demand. The company has a strong presence across segments with 25% market share in the 2W and 3W segment, 18% in PV segment and 75% market shares CV segment. Gabriel has stronghold in the aftermarket market with ~40% market share in the products it sells through its outlets. Also, the company is well positioned to benefit from the government’s push towards fast adoption of electric vehicles (EVs). Besides, incentives under the FAME-II (Faster Adoption and Manufacturing of EVs) scheme and the government’s ‘Go Electric’ media campaign would spread awareness of the benefits of e-mobility and EV charging infrastructure. Further, FAME-II throws the spotlight on e-2Ws and e-3Ws, with ~52% subsidies provided under the scheme. Gabriel is already developing products for EV OEMs such as OLA Electric, Okinawa, Ather Energy, and TVS among e-2W OEMs, and Bajaj, M&M, and Tube Investment among e-3W OEMs. Gabriel has signed an LoI with Ola Electric for supplying suspension components for production in India solely. We expect Gabriel to be the among the top beneficiaries of an increase in penetration of e-2Ws and e-3Ws, due to a strong brand, leadership and technological edge. The company has laid down plans well to increase its market shares in across segments, through leveraging its established relationships with domestic and global OEMs (original equipment manufacturers) and OESs (original equipment suppliers) . The company has one of best suspension component technology in 2W, 3W and CV segments. The company has technology collaboration with KYB (Japan) for passenger cars segment and KONI (Netherland) for commercial vehicle segment, where it is working on latest technology that can evolved in Indian markets. The company expects a faster growth in its aftermarket and export segments taking combined contribution to 20% of revenues in FY23E from 15% in FY20E, aided by extensive dealership network, new product launches and leveraging from established relationship from its global OEM clients in India to penetrate their global operations. Based on the company’s well thought and workable strategies and its inherent capabilities, we expect Gabriel’s net earnings to grow at 55.2% CAGR over FY21E-23E, driven by 18% CAGR during FY2021E-23E and a 270 bps improvement in EBITDA margin at 8.8%. We re-initiate our coverage on Gabriel with a Buy rating and a PT of Rs. 160.

Our Call

Valuation - Recommend Buy with a PT of Rs. 160: Gabriel India is witnessing a strong traction from domestic and global OEMs, as automotive demand recovers, driven by a strong brand recall and leadership position in suspension components. Outlook remains positive with strong recovery expected from FY2022, driven by normalisation of economic activities and roll out of COVID-19 vaccination in the country. The company is expected to improve its incremental revenues driven by client additions, new product launches, sector expansion, increasing domestic and global penetration, and value additions in its products. OPM would expand led by cost reduction measures, increase in localisation, operating leverage and enhanced value addition. We believe Gabriel will clock a strong earnings growth of 55.2% CAGR over FY21E-23E, driven by 18% CAGR during FY2021E-23E and a 270 bps improvement in EBITDA margin at 8.8%. We value the stock by assigning a P/E multiple of 18x, on Gabriel’s FY2023E earnings to arrive at a PT of Rs. 160. The stock is attractively valued, below its historical average at a P/E multiple of 13.1x and EV/EBITDA multiple of 7.1x its FY2023 estimates. We re-initiate coverage on Gabriel with a Buy rating and a PT of Rs. 160.

Key Risks

A second wave of COVID-19 can hamper economic activities and affect revenue growth. Also, pricing pressures from OEMs may hit profitability.

Valuation (Standalone) Rs cr

Particulars FY19 FY20 FY21E FY22E FY23E

Revenues 2,076 1,870 1,679 2,025 2,339

Growth (%) 13.3 (9.9) (10.2) 20.6 15.5

EBIDTA 178 138 102 168 206

OPM (%) 8.6 7.4 6.1 8.3 8.8

Net Profit 95 85 53 100 127

Growth (%) 0.8 (10.8) (37.6) 88.4 27.9

EPS 6.6 5.9 3.7 6.9 8.9

P/E 17.5 19.7 31.5 16.7 13.1

P/BV 2.8 2.6 2.4 2.2 2.0

EV/EBIDTA 9.1 11.7 14.8 8.9 7.1

ROE (%) 16.1 13.0 7.6 13.1 14.9

ROCE (%) 21.4 15.3 10.3 17.3 19.8 Source: Company; Sharekhan estimates

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Beneficiary of improved automotive business outlook and diversifying portfolio: Gabriel India Limited (Gabriel) is expected to be gain from an improved business outlook for automotive in India and the world. The company has a strong presence in the domestic market and is one of the largest players for automobile suspension components. Besides its established relationships with leading OEMs, Gabriel has penetrated aftermarket and export segments through 12,000 retailers in 19 locations. The company has a robust revenue mix comprising two-wheelers (2W), three wheelers (3W), passenger vehicles (PVs) and commercial vehicles (CVs). 2Ws and 3Ws remain key revenue contributors with a 67% share in sales, while PVs, CVs and trading contribute 22%, 9% and 2%, respectively. The company’s focus has been to reduce the cyclical nature of its businesses, by widening scope of business from all segments of the automobile sector. The company has been steadily looking to develop businesses from the aftermarket and export channels by leveraging on its brand recall, developing new products from its core segment, increasing distribution network, leveraging relationship with global OEMs in India to penetrate their global operations and focusing on new markets. We believe Gabriel is well-positioned to benefit from the strong recovery in automobile sector and expectations of double-digit growth in 2Ws, PVs and CVs. The upcycle in the CV industry is likely to stay and would benefit the company in the medium term. Also, the company is expected to benefit from the recovery in 3W sales, where we expect the volumes to gain momentum from H2FY22, after the successful roll-out of COVID-19 vaccines throughout the country.

Presence across key automotive segments (as % of revenue)

Source: Company Data; Sharekhan Research

Gabriel to benefit from recovery in automotive sales, especially from 2Ws and PVs segments


Strong and long-lasting client base provides revenue visibility: Gabriel has strong relationships with large OEMs, which brightens revenue visibility. The company has been increasing its market share with OEMs continuously. The company has 25% market share in the 2W and 3W segments, 18% in PVs segment and a 75% market share in the CV segment, including aftermarket sales.

In the 2W and 3W segments, the company has been continuously increasing its market share with its respective clients, which currently is at 25%. Incremental revenues are driven by new product development and strong acceptance of its end-products in the markets. The company is working on new products with TVS Motor and Bajaj Auto. The top three customers in the 2W & 3W segments are TVS Motor, Yamaha and Bajaj Auto.

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2W and 3W segments remain the core


The PV faced challenging times from FY19 through FY20, mainly due to loss of business with Maruti Suzuki. The company’s PV segment sales decline at 10% CAGR during FY18-20. The growth was impacted by discontinuation of Maruti Omni due to safety norms and replacement of Wagon R with newer model where Gabriel is not the supplier. However, the company is working with Maruti Suzuki on OEM’s new product launch (code named Y0M), expected to be launched by the festive season of CY21. Besides this, the company is working in multiple projects with M&M, Volkswagen, PSA and Tata Motors. We expect renewed focus on the PV segment augurs well for the company and would strengthen its position. The top three customers in the segment include Maruti Suzuki, Volkswagen and M&M.

PV segment back on track aided by new businesses from Maruti Suzuki and other OEMs


The CV segment is a promising one for Gabriel, as the company is seeing a recovery in OEM production schedules after a washout in Q1FY21, owing to the COVID-19 pandemic. The company has a dominant position in CV segment with 75% market share including aftermarket sales in product range it provides. In the CV space, its top three customers include Tata Motors, M&M and Maruti Suzuki. We are positive on the CV segment’s growth prospects and believe the CV upcycle to remain for multi years. Gabriel will be a likely beneficiary of the expected recovery in CV volumes. Also, the company is focussing on growing its business in the railways segment, which was hit by the COVID-19 pandemic, impacting government tenders. However, the scenario is expected to improve as the government is expected start tender bids. Gabriel is making way to tap into locomotive business as well. We expect Gabriel’s share of CV and railways to improve from ~10% in FY21E to 13.5% in FY23E, aided by a 36.9% CAGR during FY21E-23E.

CVs to put growth in top gear


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EV penetration to add to growth sparks: Gabriel is the largest domestic manufacturer of suspension components and is well-positioned to benefit from rising penetration of electric vehicles (EVs), especially in the two-wheeler space. The company has been selectively identifying partners in e-2W and e-3W segment, given a large number of new entrants. The company is developing products for electric vehicle OEMs such as OLA Electric, Okinawa, Ather Energy, TVs among e-2W OEMs, and Bajaj Auto, M&M, Tube Investment of India among e-3W OEMs. Gabriel has signed an LoI with Ola Electric for supplying suspension components for its production in India solely.

The e-2W/3W market is currently is small but it is exciting as there have been major capacity addition announcements by existing and new entrants in e-2W space. Large OEMs such as Hero MotoCorp, Bajaj Auto and TVS Motor have started investing in the e-2W space. Bajaj Auto and TVS Motor has already launched e-scooters in 2020, while Hero MotoCorp has invested in Ather Energy and holds a 34.6% stake in the same. Hero MotoCorp is working on mass scale e-2W model, which is slated to be launched next year. Greaves Cotton is investing in the e-2W space through its subsidiary Ampere Electric. Ola Electric has signed an MoU with the Tamil Nadu government to set up e-scooter facility with an investment of Rs. 2,400 crore, with an initial production capacity of 20 lakh electric vehicles per annum. Ola Electric is building ‘Future Factory’ spread over 500 acres and expects the capacity to ramp up to 100 lakh electric vehicle units per annum in the medium to long term. The announcements coupled with Government’s initiatives through FAME-II and ‘Go Electric’ campaign is likely to augur faster adoption of EVs in India. We expect Gabriel is well positioned to benefit from the penetration of e-2W and e-3W, due to its strong brand, leadership and technological edge.

Renewed focus on aftermarket: Gabriel has stronghold in the aftermarket market with ~40% market share in the products it sells through its outlets. The company has strong brand recall in shock absorbers and struts (contributes ~80% of aftermarket sales), which it is leveraging in the aftermarket markets to launch new products. Gabriel’s key strategies to increase aftermarket sales are leveraging its existing OEMs and OESs relationships, focussing on tier-2 & 3 cities, engaging with mechanics, reaching out closer to customers through retailers and adding new products to basket. Gabriel remains committed to expand its product portfolio but very much to its core segments. It has operationalised two product lines to produce drive shaft, brake fluid and brake pads. The initial response has been positive. The company has launched 11 new product lines to strengthen product portfolio. The company has an extensive distribution network comprising 11 CFA locations, 664 dealers and 12,000 retail outlets in the aftermarket segment across six continents. The company aims to increase domestic aftermarket sales through national channels with major focus in tier -2 and tie-3 cities. It is also looking to increase the aftermarket’s contribution in exports to 20% by FY2023 from the 15.5% in FY21E. We expect the aftermarket revenue to grow at 22.5% CAGR over FY2021E-23E, taking its contribution to revenue mix at 14% in FY23E from 11% in FY2019.

New products, wider network to boost aftermarket sales


Capacity expansion plans of OEMs in e-2W

Source: Media; Sharekhan Research

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Eyeing the overseas growth pie: Suspension components are critical for vehicles and undergo a tight validation process by global OEMs. The company has been able to bag new contracts this year, which includes OEMs such as DAF Netherlands and Volkswagen Russia. Gabriel is in discussion with existing global OEM clients in India to penetrate their global operations. Also, the company has bagged a multi-year order from a global OEM during Q4FY21. In the CV segment, the company has bagged order ISUZU for Thailand and Indonesia. The company has a well-diversified presence across geographies and is well-positioned to benefit from export going forward. The company aims to contribute ~10% of its revenue through exports over the next 3-4 years from 4% contribution in FY22. We expect Gabriel’s export revenues to clock a 44.5% CAGR over FY2021E-23E, taking its contribution to revenue mix at 6% in FY23E from 4% in FY2019.

Export getting momentum on new orders


Management sets optimistic target of 10% contribution from exports in 3-4 years


New businesses and value addition: The company is on a continuous thrive for adding new revenue streams through client additions, product launches, sector expansions, rising domestic and global penetration and value addition in products. Gabriel has a strong in-house R&D in Chakan (Maharashtra) and Hosur (Karnataka). It has technology partnerships with KYB (Japan) for passenger cars segment and KONI (Netherland) for the CV segment. The company is working on a newer technology with OEMs in both CV (cabin shock absorbers) and PV (electronic damper) segments for enhanced customer experience. In the passenger vehicle segment, the company has reduced weight of the components by 30% for electric vehicles. The company is also actively involved in reducing carbon footprints, which is a preferred criterion by global OEMs/OESs. We expect Gabriel to be benefitted from its widening product portfolio and value addition in the medium term.

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Africa, 20%USA, 17%

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Australia, 11%

North America, 4% Europe, 2% OEM, 40%

Aftermarket, 60%

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Reduction in carbon footprints: An eye-catcher for global OEMs/OESs

� Reducing energy consumption per unit of shock absorber through reduction in manufacturing losses

� 6,464 MT reduction in carbon footprint since FY12

� Invested in solar rooftops across manufacturing plants with a capacity of 1.1 MW

� Invested in group captive wind power plant to source renewable power at Hosur of 3.6 million units annually.

� 19.5% of power from renewable sources from 0% in FY14

Source: Company Presentation; Sharekhan Research

Capex plans: Gabriel can produce 36 million units of suspension components and can increase capacity by another 10-15% through debottlenecking. The company is planning to invest towards creating capacity for backward integration and become less dependent on imports. Gabriel is contemplating to increase local procurement through creating captive capacity and engaging local suppliers. It has budgeted ~Rs. 20 crore towards its localisation project, in addition to its regular capex of Rs50-70 crore in a year. The company follows SBU-based facilities to keep just-in-time supply and lower logistic costs. It has a seven manufacturing facilities and four satellite facilities, having a presence across all the regions. Gabriel is well prepared to increase its capacity to render supply to additional requirements.

Strategic manufacturing footprint across India and key customers

Source: Company Presentation; Sharekhan Research

Plant Location

Segment Served

Commence-ment Year

Products Clients

Nashik 2W / 3W 1990 Shock absorb-ers, front forks

Bajaj Auto, HMSI , Suzuki, Yamaha, Piaggio, M&M, Atul Auto

Hosur 2W / 3W 1997 Shock absorb-ers, front forks

TVS, HMSI, Royal Enfield, Yamaha, Suzuki, M&M

Parwanoo 2W, PV, CV, After-

market

2007 Shock absorb-ers, front forks, struts

TVS, Tata Motors, M&M

Chakan PV, Rail-ways &2W

1997 Shock absorb-ers, struts

Volkswagen, M&M, Toyota, Tata Motors, Bajaj Auto, Piaggio, DAF & Indian Railways

Khandsa PV 2007 Shock absorb-ers, struts

Maruti Suzuki, Honda Cars

Sanand 2W, PV 2010 Shock absorb-ers, struts (fi-nal assembly)

HMSI, Tata Motors

Dewas OE, Aftermar-ket and Exports

1992 Shox – Com-mercial Vehi-cles

Tata Motors, M&M, Daim-ler, Force Motors, Ashok Leyland, VECV

*Maps not to scale. All data, information, and maps are provided “as is” without warranty or any representation of accuracy, timeliness or completeness.

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Management guidance: The company is witnessing strong a recovery in sales and is optimistic about growth in FY2022, especially in the CV business segment, where Gabriel expects 40-50% jump in revenues. The company expects volumes to remain robust in the coming quarters, given the normalisation of economic activities and roll-out of COVID-19 vaccines in India. Exports are doing well and with the addition of expected new orders, the company is on track to gradually increase its export contribution to revenue. In terms of margin expectation, the company expects to reach double-digit EBITDA margin in 2-3 years, through cost reduction measures, increase in localisation, operating leverage and enhancing value addition. The company has laid down internal program to become among the top 5 global player in shock absorber manufacturers, aided by increase in export penetration, maintaining domestic dominance, technology edge and an inorganic growth path.

Latest quarterly results surprised; margins improved and likely to sustain: Q3FY21 results were strong registering a 40.1% y-o-y PAT growth, driven by 17.8% growth in revenues and a 20 bps improvement in EBITDA margin at 7.3%. The revenue was driven by improving wallet share with key customers, and new product launches. EBIDTA margins improvement was driven by cost reduction measures. We expect operating profit margins to remain firm going forward.

Healthy balance sheet and Strong broad-based growth: The company has a strong long-term revenue visibility, given its strong relationships with OEMs, both in India and globally. We expect the EBITDA margins to remain firm going forward, driven by cost reduction measures, increase in localisation, operating leverage and enhanced value addition. We expect Gabriel’s net earnings to grow at 55.2% CAGR over FY21E-23E, driven by 18% CAGR during FY2021E-23E and a 270 bps improvement in EBITDA margin at 8.8%. Also, the company has strong balance sheet with cash accruals expected to be Rs. 70-90 crore over the medium term, sufficient to meet the incremental capex and working capital requirements.

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Financials in charts

Revenue and Growth Trend

Source: Company, Sharekhan Research

Net profit and Growth Trend


Revenue Mix (%)


EBITDA and OPM Trend


RoCE trend


RoE trend


2Ws/ 3Ws, 67%

PCs, 22%

CVR, 9%

Trading, 2%

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Outlook and Valuation

n Sector Outlook – Auto demand revving up in India and around the globe

Q3FY21 was a strong quarter for both automobile and auto-ancillary companies, as expected. Sales as well as operational performance improved, with some companies reporting their highest-ever quarterly sales and profits. Q3FY21 was a strong comeback after a clean washout in Q1FY21. Companies learned the hard way to improve operational efficiencies, which has led to strong foundations for a structurally improved operational performance in the long run. A shift towards digitalisation, controlling of administrative costs, focus on core business, expansion of business through product innovations were the key factors that resulted into superior results. We expect the recovery to remain strong across the automobile segments in FY22 and FY23, not only in India but also globally, driven by normalisation of economic activities and roll-out of COVID-19 vaccines in India.

n Company Outlook - Beneficiary of leadership position, established relationship with clients, technological edge and strong earnings growth

Gabriel is expected to be among the top beneficiaries of rising penetration of e-2Ws/e-3Ws in India, due to a strong brand, leadership and technological edge. The company has well laid down its plans to increase its market shares in across segments, through leveraging its established relationships with domestic OEMS, global OEMs and OESs. The company has one of best suspension component technology in 2W, 3W and CV segments. The company has technology collaboration with KYB (Japan) for passenger cars segment and KONI (Netherlands) for the CV segment, where it is working on the latest technology that can evolved in Indian markets. The company expects a faster growth in the aftermarket and export segments, which will be a key differentiator for the company, aiming to be among top five global manufacturers of shock absorbers.

n Valuation - Recommend Buy with a PT of Rs. 160:

Gabriel India is witnessing a strong traction from domestic and global OEMs, as automotive demand recovers, driven by a strong brand recall and leadership position in suspension components. Outlook remains positive with strong recovery expected from FY2022, driven by normalisation of economic activities and roll out of COVID-19 vaccination in the country. The company is expected to improve its incremental revenues driven by client additions, new product launches, sector expansion, increasing domestic and global penetration, and value additions in its products. OPM would expand led by cost reduction measures, increase in localisation, operating leverage and enhanced value addition. We believe Gabriel will clock a strong earnings growth of 55.2% CAGR over FY21E-23E, driven by 18% CAGR during FY2021E-23E and a 270 bps improvement in EBITDA margin at 8.8%. We value the stock by assigning a P/E multiple of 18x, on Gabriel’s FY2023E earnings to arrive at a PT of Rs. 160. The stock is attractively valued, below its historical average at a P/E multiple of 13.1x and EV/EBITDA multiple of 7.1x its FY2023 estimates. We re-initiate coverage on Gabriel with a Buy rating and a PT of Rs. 160.

Price Target Calculation

Rs/Share

FY23E EPS 8.9

Target P/E Multiple (x) 18

Target Price 160

Upside (%) 38%Source: Company; Sharekhan Research

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One-year forward P/E (x) band

0

5

10

15

20

25

30

35

Mar

-10

Jul-1

0

Nov

-10

Mar

-11

Jul-1

1

Nov

-11

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-12

Jul-1

2

Nov

-12

Mar

-13

Jul-1

3

Nov

-13

Mar

-14

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4

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-14

Mar

-15

Jul-1

5

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-15

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-16

Jul-1

6

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-16

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-17

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7

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-17

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-18

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8

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-18

Mar

-19

Jul-1

9

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-19

Mar

-20

Jul-2

0

Nov

-20

Mar

-21

Fwd P/E (x) Avg P/E (x) Peak P/E (x) Trough P/E(x)

Source: Sharekhan Research

Peer Comparison

ParticularsP/E (x) EV/EBIDTA (x) RoCE (%)

FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E

Gabriel India 31.5 16.7 13.1 14.8 8.9 7.1 10.3 17.3 19.8

GNA Axles 16.9 13.1 10.7 7.6 6.1 5.1 11.8 13.6 15.2

Lumax Auto Technologies 25.1 16.8 13.7 12.0 8.4 7.0 10.7 14.2 15.3 Source: Company, Sharekhan estimates

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About companyGabriel India Limited (Gabriel) is flagship company of Anand Group and is one of the leading manufacturers of suspension components. The Company’s portfolio includes a range of ride control products, which consists of shock absorbers, struts and front forks for every automotive segment. Its business units include Commercial Vehicles & Railways, 2-Wheelers & 3-Wheelers, Passenger Cars and Aftermarket. It manufactures front forks and rear shock absorbers for two-wheelers; McPherson struts and shock absorbers for passenger cars; cabin dampers, seat dampers and suspension shock absorbers for commercial vehicles, and shock absorbers for railway coaches. Its ride control products for various segments are marketed across the globe. It has manufacturing seven manufacturing facilities and four satellite facilities.

Investment themeGabriel has a leadership position and strong brand recall in manufacturing of suspension components in India. The company has a strong presence across segments with 25% market share in the 2W and 3W segment, 18% in PV segment and 75% market shares CV segment. Gabriel has stronghold in the aftermarket market with ~40% market share in the products it sells through its outlets. Also, the company is well positioned to benefit from the government’s push towards fast adoption of electric vehicles (EVs). Gabriel is already developing products for EV OEMs such as OLA Electric, Okinawa, Ather Energy, and TVS among e-2W OEMs, and Bajaj, M&M, and Tube Investment among e-3W OEMs. We expect Gabriel will be the among the top beneficiaries of the increase in penetration of e-2W and e-3W, due to its strong brand, leadership and technological edge. The company has well laid down its plans to increase its market shares in across segments, through leveraging its established relationships with domestic OEMS, global OEMs and OESs. The company has well laid down its plans to increase its market shares in across segments, through leveraging its established relationships with domestic OEMS, global OEMs and OESs. The company has one of best suspension component technology in 2W, 3W and CV segments, through in-house R&D and technical collaborations with KYB (Japan) and KONI (Netherlands). Based on the company’s well thought and workable strategies and its inherent capabilities, we expect Gabriel to benefit in medium to long term and thus, recommending Buy rating on the stock.

Key Risks � The second wave of COVID-19 can lead to slow down in the economic activities again and can impact revenue

growth of the company. � Pricing pressures from automotive OEM customers can impact profitability.

Additional Data

Key management personnel

Ms Anjali Singh Executive Chairperson

Mr Manoj Kolhatkar Managing Director

Mr Jagdish Kumar Group President & Group CFO

Mr Rishi Luharuka Chief Financial OfficerSource: Company Website

Top 10 shareholders

Sr. No. Holder Name Holding (%)

1 Asia Investments Pvt Ltd 50.39

2 KYB Corp 5.53

3 PINEBRIDGE INVESTMENTS LP 2.73

4 Hdfc Small Cap Fund 5.52

5 Anand Deep C 1.49

6 Icici Lombard General Insurance Company Ltd 1.52

7 Anand Kuldip Chand 1.17

8 Plutus Wealth Management Llp 1.04

9 Matthews International Capital Man 0.48

10 ANAND KIRAN D 0.45Source: Bloomberg

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.

Understanding the Sharekhan 3R Matrix

Right Sector

Positive Strong industry fundamentals (favorable demand-supply scenario, consistent

industry growth), increasing investments, higher entry barrier, and favorable

government policies

Neutral Stagnancy in the industry growth due to macro factors and lower incremental

investments by Government/private companies

Negative Unable to recover from low in the stable economic environment, adverse

government policies affecting the business fundamentals and global challenges

(currency headwinds and unfavorable policies implemented by global industrial

institutions) and any significant increase in commodity prices affecting profitability.

Right Quality

Positive Sector leader, Strong management bandwidth, Strong financial track-record,

Healthy Balance sheet/cash flows, differentiated product/service portfolio and

Good corporate governance.

Neutral Macro slowdown affecting near term growth profile, Untoward events such as

natural calamities resulting in near term uncertainty, Company specific events

such as factory shutdown, lack of positive triggers/events in near term, raw

material price movement turning unfavourable

Negative Weakening growth trend led by led by external/internal factors, reshuffling of

key management personal, questionable corporate governance, high commodity

prices/weak realisation environment resulting in margin pressure and detoriating

balance sheet

Right Valuation

Positive Strong earnings growth expectation and improving return ratios but valuations

are trading at discount to industry leaders/historical average multiples, Expansion

in valuation multiple due to expected outperformance amongst its peers and

Industry up-cycle with conducive business environment.

Neutral Trading at par to historical valuations and having limited scope of expansion in

valuation multiples.

Negative Trading at premium valuations but earnings outlook are weak; Emergence of

roadblocks such as corporate governance issue, adverse government policies

and bleak global macro environment etc warranting for lower than historical

valuation multiple.Source: Sharekhan Research

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Gabriel India Limited · 2021. 3. 15. · Reco/View Reco: Buy CMP: Rs. 116 Price Target: Rs. 160 áUpgrade Maintain âDowngrade Price chart Summary We re-initiate our coverage on