Gabriel India gains 7% to hit new high; up 60% in 2 mths on strong outlook

Operating margins are seen around 8-9%; the improvement is likely to be driven by stable RM prices, positive operating leverage benefits and cost optimization measures by the firm, said CRISIL

Shares of Gabriel India surged 7 per cent to hit a fresh high of Rs 346 on the BSE in Thursday’s intra-day amid heavy volumes.

The average trading volumes on the counter more than doubled today. A combined 850,275 equity shares, representing 0.59 per cent of total equity of Gabriel India, had changed hands on the NSE and BSE till 11:03 AM.

In the past two months, the stock of the auto component manufacturer has zoomed 60 per cent on a strong outlook.

The company posted a healthy operational performance in June quarter (Q1FY24) and reported an 11.8 per cent year on year (YoY) jump in revenue from operations at Rs 806 crore.  

Earnings before interest, taxes, depreciation, and amortization (Ebitda) grew 35.7 per cent YoY at Rs 69 crore; margin expanded 150 bps to 8.6 per cent. Profit after tax rose 29.1 per cent to Rs 42.5 crore.

Gabriel India said the growth was primarily driven by efforts in terms of improving market share with key customers, higher efforts in terms of developing new products and on account of strong acceptance of end products in the market.

Gabriel India is the flagship of the ANAND group. The company is specialized in producing a diverse range of ride control products, including shock absorbers, struts, and front forks.

Gabriel India also has extensive presence across various business segments, including Two- and Three-Wheelers, Passenger Cars, Commercial Vehicles, Railways, and Aftermarket.

Gabriel India has set its sights on achieving a place in the top 5 shock absorber manufacturers globally, and is working tirelessly towards realizing this vision.

In addition to its core business of shock absorber manufacturing, the company is also considering diversification as a means of expanding its business. This strategic move will enable the company to tap into new markets and explore new opportunities for growth.

With a clear focus on innovation and customer satisfaction, the company is well-positioned to achieve its ambitious goals and maintain itself as a dominant player in the global market for shock absorbers.

According to CRISIL Ratings, Gabriel India’s turnover is expected to grow 8-10 per cent over the medium term driven by launch of new models within 2-wheeler / PV / CV auto segments, and growing presence in the aftermarket segment.

Operating margins are expected around 8-9 per cent; the improvement is expected to be driven by stable raw material prices, positive operating leverage benefits and various cost optimisation measures adopted by the company.

Gabriel India will continue to benefit from its established market position in the suspensions division, revenue diversity, and healthy operating efficiencies. The company's financial risk profile is expected to remain comfortable over the medium term backed by healthy cash reserves, steady cash flows, and strong capital structure, the rating agency said in a rationale.