Gabriel India Ltd Research Report By Kotak Securities

Gabriel is the flagship company of ANAND Group. Gabriel was set up in 1961 in collaboration with Maremont Corporation (now Gabriel Ride Control Products of Arvin Meritor Inc, USA). The company provides wide range of ride control products, including shock absorbers, struts and front forks to the automotive segment. With 83% revenues coming from OEM’s, Gabriel will be a key beneficiary of demand revival in the auto sector. Focus on aftermarket and export will further add to the growth. EBITDA margin improvement will likely continue over FY17/ FY18E. We thereby expect robust earnings CAGR growth of 21% over FY16-FY18E. Debt-free balance sheet, strong free cash flow and healthy return ratios provides high comfort. We initiate coverage on Gabriel with a BUY rating and price target of Rs124.

Investment Argument:

• Expect cyclical recovery for two-wheeler segment over FY16-FY18
• Passenger car segment to grow at a healthy pace
• Company to focus on aftermarket segment
• Diversified business model
• Debt free company with strong free cash flows