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Gabriel India
A leading shock-absorber manufacturer; initiate with Buy
We initiate coverage on Gabriel, with a Buy recommendation
and a target of `62. Gabriel is one of the leading manufacturers
of shock absorbers and likely to see a 42% earnings CAGR over
FY11-13e supported by a strong brand catering to stable demand,
its location advantage and expansion.
Stable auto demand. India’s auto sector is likely to see a 13.7%
volume CAGR over FY11-13e, boosted by two-wheelers and cars.
The country is already one of the world’s largest two-wheeler
markets and an established small-car global manufacturing hub.
We expect the nascent recovery in export demand to gather steam
as US/EU auto demand recovers in FY11 after hitting bottom in
CY08/CY09.
Strategic plant location; timely delivery. Gabriel’s plants are
strategically located, in proximity to original equipment
manufacturers (OEMs). This results in timely delivery to clients
at lower costs.
Adding capacities. The boom in the automobile industry has led
to Gabriel investing `1.5bn-2bn in the next 3-4 years to enhance
capacity to cater to the booming demand.
Valuation and risks. At our target price of `62, the stock would
trade at 11x FY12e earnings and EV/EBITDA of 4.9x. The target
PE is at a slight discount to the stock’s five-year average PE. Key
risks: higher interest rates and rise in raw material prices
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Gabriel India
A leading shock-absorber manufacturer; initiate with Buy
We initiate coverage on Gabriel, with a Buy recommendation
and a target of `62. Gabriel is one of the leading manufacturers
of shock absorbers and likely to see a 42% earnings CAGR over
FY11-13e supported by a strong brand catering to stable demand,
its location advantage and expansion.
Stable auto demand. India’s auto sector is likely to see a 13.7%
volume CAGR over FY11-13e, boosted by two-wheelers and cars.
The country is already one of the world’s largest two-wheeler
markets and an established small-car global manufacturing hub.
We expect the nascent recovery in export demand to gather steam
as US/EU auto demand recovers in FY11 after hitting bottom in
CY08/CY09.
Strategic plant location; timely delivery. Gabriel’s plants are
strategically located, in proximity to original equipment
manufacturers (OEMs). This results in timely delivery to clients
at lower costs.
Adding capacities. The boom in the automobile industry has led
to Gabriel investing `1.5bn-2bn in the next 3-4 years to enhance
capacity to cater to the booming demand.
Valuation and risks. At our target price of `62, the stock would
trade at 11x FY12e earnings and EV/EBITDA of 4.9x. The target
PE is at a slight discount to the stock’s five-year average PE. Key
risks: higher interest rates and rise in raw material prices
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