Buy Gabriel India Ltd Target Rs.189 - Sushil Finance
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Conference Call Highlights
* GIL posted yet another record quarterly turnover during Q3 FY22.
* The capex incurred during the 9M FY22 is Rs.54.7 cr; Going forward, the company intends to incur around Rs.100 cr annual capex over the next couple of years.
* 2W/3W: Growth was primarily driven by improvement in market share with key customers, new products & on account of strong acceptance of end products in the market; market share stood at 25%. The top 3 customers are TVS Motors, Yamaha & Bajaj Auto.
* Passenger Cars (PC): Growth impacted by discontinuation of Maruti Omni due to safety norms and replacement of Wagon-R with newer model where GIL is not the supplier; market share stood at 23%. The top 3 customers are Maruti Suzuki, Volkswagen, Mahindra & Mahindra.
* Commercial Vehicles (CV): Moderate growth coming back slowly reflecting in better production volumes by OEMs; CV volumes have started improving from October, 2021; market share stood at 85%. The top 3 customers are Tata Motors, Mahindra & Mahindra, Ashok Leyland.
* Exports: 30% of the exports came from after-market; new orders from Isuzu (Thailand), Isuzu (Indonesia), DAF (Netherlands), DAF (Brazil), Volkswagen (Russia) began from Q3 FY22.
* The capacity utilization stood at around 70%.
OUTLOOK & VALUATION
GIL is a leading manufacturer of shock absorbers & suspension related autocomponents. The company belongs to Anand Group and has an operating history of more than 60 years. GIL has strong dominance in OEMs as well as aftermarket. The company is focused on leveraging its international tie-ups & long-lasting relationships with global leaders to grow its exports business. The turnover was above our estimate but profits were slightly lower – accordingly, we have adjusted our projections to reflect the 9M FY22 performance. We expect GIL to deliver an EPS of Rs.8.6 in FY23; retaining our target multiple of 22x we maintain our target price of Rs.189 showcasing an upside potential of ~45% from current levels with an investment horizon of 12-18 months. Thus, we maintain our BUY rating for GIL.
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