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Strong core growth amid margin and PV challenges:

GABR reported consolidated revenue, EBITDA and APAT growth of 22.9%, 11.9% and 15.4% YoY, respectively, supported by a robust OEM demand, higher suspension volumes and the consolidation of Anchemco. Standalone revenue increased 22.7% YoY, while EBITDA grew 14.6%, although margin moderated to 8.2% due to commodity inflation and delayed cost recoveries. In H1FY27, 2W/3W suspension sales grew 25.4% YoY, supported by new programme additions, while CV sales increased 12.8% YoY, retaining 88% market share. However, PV sales grew just 7.3% against 21% industry growth, reflecting lower exposure to faster-growing utility vehicle models. We expect strong 2W/3W traction, CV leadership and new programme ramp-ups to sustain growth; however, PV underperformance and delayed commodity cost recoveries remain key monitorables

Strategic expansion broadens growth engines:

The Forvia JV marks Gabriel’s entry into seating systems, with transferred business expected to contribute ~INR 1,500 Mn revenue at ~10% margin; facilities are planned in Chennai and Pune. HL Mando Anand and HL Klemove expand exposure to braking, steering, ADAS and automotive electronics. New sunroof programmes have commenced production. We believe these platforms can improve product mix and content per vehicle. However, delayed cost pass-throughs, sunroof ramp-up, weak PV growth, integration requirements and annual capex of INR 10,000–15,000 Mn could constrain near-term margin and returns.

Q2FY27: Revenue better, EBITDA margin in line with estimate

* Revenue was up 22.9% YoY and 12.8 QoQ to INR 16,080 Mn (vs CIE est. of INR 14,886 Mn)

* EBITDA was up 11.9% YoY and 13.5% QoQ to INR 1,409 Mn (vs CIE est. of INR 1,317 Mn). EBITDA margin was down 86 bps YoY and up 5 bps QoQ at 8.8% (vs CIE est. of 8.8%)

* APAT was up 15.4% YoY and 14.7% QoQ to INR 1,231 Mn (vs CIE est. of INR 1,284 Mn)

View and Valuation:

We have reduced our FY27E EPS estimate by 12.2%, factoring in the delayed ramp-up of the sunroof business and near-term execution challenges, while largely maintaining our FY28E EPS estimate, as we expect inorganic growth contributions from recent acquisitions to provide long-term earnings visibility. We value the stock at 34x P/E (implied PEG of 1.5) on average FY28/29E EPS and revise our target price upwards to INR 1,500 (earlier: INR 1,315). Accordingly, we upgrade our rating from ‘REDUCE’ to ‘ADD’, driven by the earnings potential from HL Mando Anand, HL Klemove and the newly announced Forvia seating JV, alongside diversification into high-value automotive technologies and improved long-term growth visibility. However, integration risks, higher leverage and delayed sunroof ramp-up remain key monitorables

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