This auto ancillary stock surged 14% on Monday on healthy outlook

Shares of Gabriel India recovered 27 per cent from their recent lows. They had tanked 37 per cent from the 52-week high level of Rs 440, touched on December 6, 2023

Shares of Gabriel India surged 14 per cent to Rs 352 on the BSE in Monday's intraday trade, amid heavy volumes, on healthy business outlook. In the past three trading days, the stock of the auto ancillary company has recovered 27 per cent from its recent lows. The stock had tanked 37 per cent from its 52-week high level of Rs 440, touched on December 6, 2023.

At 01:48 PM, Gabriel India was quoting 10 per cent higher at Rs 338.15 as compared to 0.16 per cent gain in the S&P BSE Sensex. A combined 2.3 million shares, representing 1.6 per cent of total equity of the company, changed hands on the NSE and BSE.

Gabriel India is a global top-10 shock absorber manufacturer, serving two-wheelers (2-W), three-wheelers (3-W), passenger vehicles (PV), commercial vehicles (CV), railway and aftermarket segments.

The company has specialised in producing a diverse range of ride control products, including shock absorbers, struts, and front forks. The company has expanded its product line over the years to meet the needs of top automotive Original Equipment Manufacturers (OEMs) and diverse business segments.

With an aim to expand its presence in hot selling SUV space, and to catch up on premiumisation trend, Gabriel India has entered into a joint venture (JV) with Inalfa (the second largest sunroof manufacturer globally) for manufacturing sunroof system and related components for OEMs in India.

Analysts at ICICI Securities have assigned a B'UY' rating on Gabriel India amidst its electric vehicle (EV) agnostic product profile, structural levers in place for industry leading growth, double digit margin endeavour, capital efficient business model (~20 per cent), and healthy cash rich balance sheet.

The recent prints in the 2-W space are very encouraging with Jan-Feb24 volumes up ~25 per cent plus on Y-o-Y basis with industry commentary suggesting double digit volume growth next fiscal year as well amid rural demand recovery & increasing financing penetration.

"On high base and impending union election, industry commentary is cautious on growth prospects in the PV & CV space for FY25E, with 2-W emerging as a sole shining star and expected to outperform the industry going forward, driven by both revival in domestic demand and bottoming out of export volumes," ICICI Securities said in a stock update report.

Gabriel India, with 32 per cent market share in this segment with key OEM clients such as TVS Motors, Bajaj Auto, etc. in ICE domain & Ola Electric, Ather, etc in EV domain,is expected to outperform going forward, analyst said.

Increasing share of PV-SUV space in overall sales pie and presence in premium products like sunroof is structurally positive for Gabriel India, and provides a good play on PV premiumisation domestically, it added.