Buy Gabriel India, target price Rs 158: HDFC Securities

HDFC Securities has buy call on Gabriel India with a target price of Rs 158. The current market price of Gabriel India Ltd. is Rs 139. Time period given by analyst is six months when Gabriel India Ltd. price can reach defined target.

Gabriel India Ltd., incorporated in the year 1961, is a Small Cap company (having a market cap of Rs 1990.91 Crore) operating in Auto Ancillaries sector.

Gabriel India Ltd. key Products/Revenue Segments include Shock Absorbers & Struts, Scrap, Other Operating Revenue, Export Incentives and Sale of services for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 695.16 Crore, up 13.48 % from last quarter Total Income of Rs 612.61 Crore and up 18.43 % from last year same quarter Total Income of Rs 586.97 Crore. Company reported net profit after tax of Rs 26.92 Crore in latest quarter.

Investment Rationale
GIL witnessed strong sales growth in FY22 coming on the back of de-growth in FY20 and FY21. The growth was mainly driven by volumes indicating a revival in the automobile industry. The brokerage believes the uptick in sales volume could continue as the revival in economic activity would drive higher automobile sales. We expect GIL’s Revenue/EBITDA/PAT to grow at 13/22/22% CAGR over FY22-FY24E, led by increased demand from existing customers and addition of new clients. It believes investors can buy the stock in Rs 132-136 band and add on dips to Rs 119-123 band (13x FY24E EPS) for a base case fair value of Rs 149 (16x FY24E EPS) and bull case fair value of Rs 158 (17x FY24E EPS) over the next 2 quarters.

Promoter/FII Holdings
Promoters held 55.0 per cent stake in the company as of 31-Mar-2022, while FIIs owned 1.28 per cent, DIIs 9.22 per cent.