Gabriel India headquartered in Pune established in 1961 is the flagship company of the ANAND Group is one of the leaders in ride control products and entered into the manufacturing of E-Fork & sunroofs in FY23 and FY24 respectively. Gabriel is the leader in supplying ride control products to electric 2Ws in India. The company has a significant presence across OEMs (~84% of sales), aftermarket (~12%) and exports (~4%). It has four segments two & three wheelers (~63% of sales), passenger vehicles (~24%), commercial vehicles & railways (~12%), and Trading (~2%). Gabriel has technical collaborations with KYB Corporation (Japan), KYBSE (Spain), Yamaha Motor Hydraulic Systems (Japan), and KONI B. V. (The Netherlands). . GIL is one of the largest players in the automobile suspension component segment in India, with a presence across OEMs, and aftermarket and export segments, through more than 12,000 retailers and 600 dealers in six continents.
Partnered with one of the global leaders to enter into high-margin sunroof business it will add new growth avenues. Presently, the majority of the sunroofs are being imported in India, hence it’s an import substitution play. Gabriel India is going to enter the automobile sunroof manufacturing with Inalfa, Netherlands, which is the 2nd ranked player globally with a ~25% market share having customers including Mercedes, Audi, and BMW, among others. It has confirmed orders from Hyundai & Kia, expected to be Rs 4bn in revenue with a mid-single-digit margin in the 1st year itself in FY25. The deal is good as the sunroof is fast gaining traction, and eventually will be a common feature in the years to come. Additionally, the competition is less in India and the product’s margin is in double-digits.
Leadership position with 2W EV OEMs and sharp improvement in the EV industry triggering growth in the short term. The company supplies its products to electric 2W makers and commands a 73% Share of business. It has quality clients including Ola Electric, TVS Motor, Ather Energy, Okinawa, Bajaj Auto, and Hero Electric, among others. 2W EV OEM industry retails witnessed 476%/190% YoY jump in FY22/FY23 respectively. In Apr-Sept 2023, EV retails jumped by 37% YoY. Gabriel will benefit from the EV transition, and any volume loss from ICE vehicles will be offset by high EV sales.
Gabriel has one of the best Asset turns of 4.5x. Key clients like TVS Motor, M&M, Maruti Suzuki, Ashok Leyland, and Tata Motors, among others, are gaining share. The company’s key client TVS Motor has been gaining market share gradually across domestic and exports. M&M, Maruti, and VW are top revenue contributors in the PV segment. M&M has been clearly gaining share, while a giant of the PV industry (Maruti) woke up with a successful number of launches in the SUV space. VW too has aggressive plans ahead.
On the railways side, the company has been supplying shock absorbers for the last 20+ years now. Gabriel India is the 1st indigenous company to develop damper for Rajdhani/Shatabdi Coach (LHB) and Vande Bharat Coach. It also supplies damper for conventional coaches, EMU/MEMU coaches, and diesel locomotives. New dampers were introduced for semi-high-speed trains and electric locomotives. The company has also been serving BEML, Medha Rail Coach Factory, Bangladesh Railways, and Sri Lanka Railways, among others. Railways have been central to the government’s capital expenditure push and are going to accelerate further in this decade should benefit Gabriel, among other component players. There are about nine dampers required per passenger coach Hence, the opportunity size is enormous in railways as the government’s focus is to provide better interiors and comfort for the passengers along with the increasing number of trains including Vande Bharat.
Now let’s see has this story affected the share price as in the end, we need to create wealth. So now if we look at the share price it has nearly tripled in FY24 from 130 to 366 which the is current market price and just to tell you the potential of this stock it is still a small cap with so many growth drivers.
Ravi is a dynamic Equity Research Analyst, bringing together a unique blend of engineering expertise and a profound passion for finance. He specializes in deciphering the complexities of equities through thorough research, advanced financial modeling, and precise valuation techniques.
