GABRIEL Share Price Target - Broker Reports - 2019
Price @ Call: 119.13
Gabriel’s revenue growth in FY20 is expected to be flat as demand will likelyremain under pressure until BSVI implementation. Company’s EBITDA marginwas down in FY19 and we expect further contraction in FY20. In FY21, we build in margin improvement as we factor in current weakness in commodity prices, cost control measures by the company and revival in demand. On the back of weak 2QFY20 operating performance, we lower our FY20 and F21 earnings estimate. We retain ADD rating on the stock with revised price target of Rs126 (earlier Rs133). We value the stock at 15x PE on FY21E EPS.
We believe Gabriel would continue to face challenges in PV and CV segment and increasing industry slowdown will arrest its overall growth in FY20. Accordingly, we cut down our revenue estimate and expect revenues to grow by 4% CAGR in FY19-21E. We have also cut down our P/E multiple for Gabriel to 15.5XFY21E (5 year forward mean -1 STD) to arrive at a target price of Rs 115. We recommend a BUY rating due to inexpensive valuation. However, we advise investors to BUY in a staggered manner for better entry price in current market volatility.
Given slowdown in the industry volumes, we expect the company’s performancein FY20E to be subdued. While the company has gained market share in the two wheeler segment; its performance in the passenger vehicle segment is likely tostay weak in FY20. Led by new business wins, we expect Gabriel’s passengervehicle segment to witness improvement in FY21. We retain BUY with an unchanged price target of Rs119. We value the stock at 15x PE on FY21E EPS.
Gabriel reported healthy revenue growth on the back of strong growth in the two wheeler segment. Given slowdown in industry volumes, we expect thecompany’s performance in FY20 to be subdued. In FY21, we expect thecompany’s performance to improve. Given significant decline in production andsales of automobiles in the first four months of FY20 and expected challenging situation in the near term, we lower our FY20/FY21 estimates. We revise our price target lower to Rs119 (earlier Rs153) and retain BUY rating on the stock. We value the stock at 15x PE on FY21E EPS.
Despite negative impact of higher raw material price and slow pick up in the Auto sector we believe new orders, R&D & automation will be the growth catalyst for the next two years. However considering the near term headwinds in the auto sector and margin dilution due to lower PV share (especially from Maruti Suzuki) we lower our earning estimates by 14% & 13% for FY20 & FY21 respectively. We believe that the slowdown to continue till H1FY20 and hence we value GIL at a P/E of 14x (previous 15x) FY21E EPS and downgrade our rating to reduce from Hold with a revised target of 126.
Steep cut in earnings; retain Hold with PT of 145 as we rollover to FY2021 earnings:Gabriel’s Q4FY2019 results were significantlybelow the estimates on the operational front. Given the volume slowdown and cost pressures, we have cut our FY2020 earnings estimates by 18%. We rollover our target multiple to FY2021 earnings. We retain Hold rating on the stock with an unchanged PT of Rs 145. At the CMP, the stock is trading at 21.9x and 19.4x its FY20E and FY21E earnings respectively, which is closer to the higher end of its long term historical average multiple, thus leaving limited scope of upside from current levels.
Being an approved vendor to Indian Railways, Gabriel would also benefit from the capital expenditure undertaken by Indian Railways. Increase in number of shock absorbers per coach for the new coaches will also open up big business opportunity for Gabriel. The orders for supply of shock absorbers to Railways are expected to contribute materially to the revenues over next 5 years. We have introduced estimates for FY21 and recommend a HOLD with price target of Rs 147/- given the current demand slowdown in 2W, PV segment.
Gabriel’s revenue growth is broadly dependent on the OEM’s (85% in FY19). We expect automobile growth going ahead to receive boost from low base and expected pre-buying ahead of BSVI implementation. Management highlighted that raw material cost pass through negotiations will conclude in 1QFY20. We thereby expect gradual sequential improvement in EBITDA margin for the company. In view of weak demand, we have marginally revised our FY20/FY21 estimates lower. We rate the stock as ADD with revised price target of Rs153 (earlier Rs160). We value the company at PER of 17x (unchanged) FY21E earnings.
We revise our FY19/FY20 estimates to factor in lower production by OEM’s and expected near term subdued demand. We also introduce FY21 estimates and roll over our target price on FY21E earnings. We maintain ADD rating on the stock with revised price target of Rs160 (earlier Rs153). We value the company at PER of 17x FY21E earnings (earlier valued at 18x FY20E earnings).
Despite negative impact of higher raw material price and slow pick up in the Auto sector we believe new orders, R&D & automation will be the growth catalyst for the next two years. Considering the near term headwinds in the Auto sector and margin dilution due to lower PV share, we lower our earning estimates by 8% & 11% for FY19. We value GIL at P/E of 15x as we roll forward to FY21E with a revised target of Rs155 and downgrade to Hold.