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Motilal Oswal Report
A flagship auto-ancillary company of the Anand Group, Gabriel India Ltd.'s shares are likely to remain in focus after Motilal Oswal initiated coverage on the stock with a ‘Buy' rating, citing strong growth visibility and a structural transformation into a diversified mobility platform.
The brokerage has set a target price of Rs 1,266, implying a potential upside of around 29% from the current market price of Rs 981.
For nearly six decades, Gabriel India has operated as a single-product suspension player, which inherently constrained its scalability. The company is now undergoing a structural transformation into a diversified mobility platform with a significantly larger growth runway.
Over the past two years, management has adopted a more aggressive stance (the group aspires to scale revenue to Rs 50,000 crore by 2030), with plans to launch at least one new product annually and expand into adjacencies such as sunroofs, solar dampers, and e-mobility.
While the Anand Group has historically diversified across multiple verticals through global partnerships, much of this value remained outside Gabriel. This is now changing, with the latter being positioned as the primary growth vehicle for the group, as evidenced by recent restructuring initiatives (integration of Dana and Henkel) and joint ventures (Enmove, Jinhap) being routed through the listed entity, driving long-term shareholder wealth creation.
Motilal Oswal estimates a 55% earnings compound annual growth rate for the consolidated business (FY26-FY28E), primarily driven by restructuring. Gabriel maintains a strong balance sheet with a net cash position, enabling growth investments without leverage.
The business benefits from a lean working capital cycle (~27 days) and strong return ratios (30%+ core RoCE), driven by efficient capital deployment. Cash flow conversion remains healthy. Consistent dividend payouts (20%+) reflects the company's ability to generate and return surplus cash to shareholders across business cycles.
Further, the group consolidation could unlock a significant upside, with unlisted Anand Group ventures (Rs 230 crore PAT) potentially equivalent to the value of Gabriel's standalone suspension business.
At current market price of Rs 981, the stock trades at 27.1x FY28E EPS.
The brokerage has initiated coverage on Gabriel with a Buy rating and has set a target price of Rs 1,266, based on 35x FY28E.
A premium to its historical average one-year forward multiple is warranted by:
- restructuring-led earnings growth, and
- Gabriel's emergence as the group's primary growth platform for future restructuring and JV opportunities.
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