This Mid-cap Auto Stock's Revenues Gained To Rs. 7.2bn, Up By 59.6%, Buy For Good Returns: Chola

Top brokerage firm Chola has suggested investors to buy the stock of Gabriel India (GIL). The company has reported a strong performance for the quarter as the revenues at Rs. 7.2bn increased by 59.6% YoY/5.3% QoQ led by higher volumes in CV & 2W/3W segment. Additionally, the company achieved 50% of YoY sales growth in the aftermarket division to Rs. 984mn. In the PCBU segment, the company recorded tremendous growth of 78% YoY.

Stock To Buy: Target Price & Financial Result

The Current Market Price (CMP) of Gabriel India is Rs. 154. Chola has estimated a Target Price for the stock at Rs. 173. This stock has the potential to give a 12.33% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 22.05 bn.

Stock Outlook
Current Market Price (CMP)	Rs. 154
Target Price	Rs. 173
Potential 1 year return	12.33%
52 week high share price	Rs. 168.15
52 week low share price	Rs. 102.00

Gabriel India (GIL)'s EBITDA at Rs. 0.5bn improved by 119% YoY/34.8% QoQ while PAT increased by 174.3% YoY/22.3% to Rs. 0.3bn. The EBITDA margin ascended by 190bps YoY/150bps QoQ to 7.1% led by adequate price hikes and improved product mix. The company maintained its market share in the Passenger Vehicle segment at 23%. The company observed 22% of total sales from new launches within major customers and increased traction in the SUV segment. The CV market share improved to 89%.

Why Should Investors Buy This Stock: Chola

According to Chola, "The strong demand outlook, improving volumes, and late cooling off in input cost are likely to auger well for the company in the near term. Subsequently, the margins are expected to revert to double digits. Thrust over EV developments, improving market share across the business segments, and expanding geographic presence bodes well for long-term growth. We maintain our Buy rating on the stock with a price target of Rs. 173, assigning a P/E of 16x FY24 EPS. Less than anticipated sales volumes at OEMs; deterioration of client's market share; margin volatility from competitive pressures."

Company Portfolio

Gabriel India Ltd.(GIL) is the flagship auto-ancillary company of Anand Group, offering the widest range of ride control products including shock absorbers, struts, and front forks. GIL has been consistently focusing on expanding its product portfolio. Currently, it has nine manufacturing facilities spread across the country with a strong 500 dealer network and 10,000 retail outlets. The company had launched over 1166 SKUs in the last 5 years, and around 45 SKUs were launched in 1QFY23 alone.

The company has a presence in the aftermarket segment in 6 continents. The industry continued to industry headwinds in terms of RM inflation, yet the company's order book status remained stronger than expected. The management anticipates an upbeat growth outlook and margins normalizing back to double-digit levels.

Disclaimer

The above stock was picked from the brokerage report of Chola. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.