Phillip Capital starts 'Buy' on Gabriel India; sunroofs to drive margin

PhillipCapital has initiated coverage on Gabriel India with a ‘Buy’ rating and a target price of ₹1,100, betting on a combination of strong core execution in suspension, a scaling sunroof business, and a planned consolidation of Anand Group entities from FY27 that could broaden the product portfolio and improve margins. The target implies 22 per cent upside from current levels. 

 

At 12:35 PM, Grabriel India's share price was trading 0.26 per cent higher at ₹901.85 per share. In comparison, BSE Sensex slipped 1.16 per cent to 77,299.72.

 

Gabriel, a Pune-based auto components company established in 1961, has evolved from a single-product shock absorber maker into a more diversified player. Phillip Capital said the company’s entry into sunroofs in FY24 and the proposed merger of four Anand Group entities from FY27 are expected to expand its exposure to “critical” components and strengthen its position as the group’s key growth engine.

 

Core suspension business outperforms; wins new orders

Phillip Capital highlighted that Gabriel’s suspension franchise has outperformed the broader industry during FY19–FY25 across two-wheelers, passenger vehicles, and commercial vehicles, aided by market share gains at key original equipment manufacturers (OEMs) and disciplined execution, including in electric vehicle (EV) programs.

 

The brokerage noted that Gabriel is winning new business from Maruti Suzuki, Mahindra & Mahindra (M&M), and Tata Motors, and was the first in India to introduce Frequency Selective Damping (FSD) technology, where it is seeing early traction. It also added Hero MotoCorp as a new client in this segment.

Better-margin segments

Phillip Capital said Gabriel is seeing visible traction in higher-margin areas such as commercial vehicles, railways, exports and aftermarket.

 

Exports currently contribute about 3 per cent of revenue, which the company aims to take to over 10 per cent, supported by client relationships and benefits from free trade and bilateral agreements. It also flagged a commercial vehicle (CV) upcycle and accelerating railway modernisation as supportive tailwinds.

 

The aftermarket business—backed by 26,000+ retail touchpoints—was described as cash-generative and margin-accretive, adding durability to earnings.

 

Sunroofs

Gabriel’s sunroof venture now contributes about 10 per cent of consolidated revenue and 17 per cent of Earnings before interest, tax, depreciation and amortisation (Ebitda), Phillip Capital said, benefiting from rising penetration and an import-substitution theme.

 

The company has won three platforms from Hyundai, and a proposed plant near a key customer is expected to support scale-up. The brokerage said margins are in the mid-teens, and further localisation could help sustain profitability.

FY27 consolidation seen as 41 per cent EPS accretive

From FY27, Gabriel plans to fold in Anchemo India, Anand CY Myutec, DANA Anand, and Henkel Anand through a share-swap. Phillip Capital estimates the consolidation could be 41 per cent earnings per share (EPS) accretive, while promoter ownership could rise to 63.5 per cent. It also expects the move to add products, widen the revenue base, and improve margins.

 

The brokerage added that partnerships with Korea’s Jinos and SK Enmove in adjacent areas such as fasteners and lubricants could broaden the product suite and deepen share of business.

Financial outlook and valuation

Phillip Capital estimates FY25–FY28 consolidated revenue/Ebitda/PAT CAGR of 19 per cent/21 per cent/36 pe cent, supported by customer growth, portfolio expansion, group consolidation, and increased focus on exports and aftermarket.

 

It expects consolidated revenue to rise to ₹6,840 crore in FY28 from ₹4,060 crore in FY25, with margin expansion driven by mix improvement and consolidation. The company has generated positive free cash flow for 13 consecutive years and carries negligible leverage, the note said.

 

Gabriel trades at about 26x FY28 EPS, Phillip Capital said, valuing it at 32x FY28 EPS to arrive at a fair value of ₹1,100, citing improving scale, broader exposure, and consolidation-led earnings visibility.  Disclaimer: The views and investment tips expressed by the analysts/brokerage are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.