Automobile, Trending in the Economy

Gabriel India Ltd -Vision to be Amongst the Top 5

Gabriel India has a vision to be amongst the top 5 shock absorber manufacturers in the world by 2025.

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(A) About

Gabriel - logo

Gabriel India is part of ANAND Group. It is a leading auto component manufacturer, is widely recognized as one of India's most trusted and respected brands. Established in 1961, the Company has also specialized in producing a diverse range of ride control products, including shock absorbers, struts, and front forks.

Further, its products include shock absorbers, struts, front forks and others.

About Anand Group

ANAND Group was founded by Deep C Anand, and named after the founder. The company manufactures automotive components. Group is also a global leader in manufacturing world class systems & components for the automotive industry. In addition, the group also offers experiential luxury through the hospitality vertical, SUJAN. Moreover, the group has 20 companies spread across 60 locomotives in India. Additionally, it has 13 JV companies, including 7 Technical Collaborations and employs over 14000 people. Meanwhile, currently the group has a total turnover of $1.4 Bn.

(B) Journey

(C) Board Members

(D) Shareholding

Gabriel - Shareholding pattern
Gabriel - Shareholding

(E) Business Segment

(i) Two & Three Wheelers

  • Market Share - 32%
  • Top 3 Customers - TVS, Yamaha and Bajaj Auto

(ii) Passenger Vehicles

  • Market Share - 23%
  • Top 3 Customers - Maruti Suzuki, Volkswagen and M&M.

(iii) Commercial Vehicles & Railway

  • Market Share - 89%
  • Top 3 Customers - Tata Motors, M&M, Ashok Leyland

In railway segment segment, the company has also expanded its product line to serve all segments of Indian Railways including 'Vande Bharat Express' for which Gabriel India is the only qualified Indian supplier.

(iv) Aftermarket

It is the only company present in all segments of the market, namely TW, PC, CV & Railways and also has completed 4 IT-enablement projects.

(F) Revenue Classification

(G) Cost Structure

Gabriel - Cost Structure

(H) Financials

Gabriel - Financial Trend

Company has grown its revenue at 9.83% in past 10 years, while PAT grew at a CAGR of 13.27%. However, company is currently debt free.

Additionally, the company has paid Rs 58.5 Cr to its subsidiary as management fee which is 1.96% of sales and 44.3% of the Net Profit.

Gabriel - Du Pont Analysis

Company sales to total assets increased from 1.4 to 2.1 times from 2021 to 2023. While its assets to equity decreased from 2.1 to 1.6 times in the last 10 years.

(I) Management Discussion & Concall

  • In PV segment its market share increase from 23% in FY22 to 24% in FY23.
  • Even though it has maintained leadership position in electric 2 wheeler segment, but its market share has come down from 80% in Q4FY23 to 73% in Q1FY24. This is due to underperformance of few clients due to reduction in FAME subsidies.
  • Further, company is engaging with electric car players to expand its presence in EPV space.
  • Company is targeting to increase its export sales from 4% to 10%.
  • Moreover, its goal is to derive 50% of the energy needs from renewable sources by 2025.
  • Company has also received new programs like for Jimny and electric Citroen C3.

Opportunities

  • Shift towards Electric Vehicles - According to a report published by International Energy Agency, India is projected to emerge as the largest market for electric vehicles worldwide by 2030.
  • Customer Preferences Shift Towards Premium Products - With the rising income level the demand for premium passenger has also significantly risen.
  • Infrastructure Development - It is the key focus for government worldwide with substantial investments being made towards constructing essential components such as roads bridges and highways. As a result there has been a significant increase in demand for commercial vehicles.
  • Government Policies - The commercial vehicle industry is likely to experience a substantial boost by implementing government policies including incentives tailored to encourage the adoption of electric vehicles, scrappage programs and regulation regarding load carrying capacity.

INALFA Gabriel Sunroof Systems Ltd

This is a JV agreement with Inalfa Sunroof System Ltd. Additionally the company has made an investment for manufacturing and delivering sunroof system is $22 Mn, in which GIL shall have 49% stake in the JV partnership.

Moreover, after the completion it will have a capacity to produce 2 lakh sunroof p.a. Meanwhile, company expects its production will start in Jan 2024 after the completing PPAP by Hyundai Motors.

Q1FY24 Concall Highlights

  • Demand for sunroof for SUVs is almost ~70%-80%.
  • However, as per the company the market size for sunroof is almost Rs 4,500 Cr with ~35% penetration. Moreover company is looking for 40% market share in this.
  • Company has also opened Gabriel European engineering center.
  • Company is also going to supply to Ola electric newly launched models and going to be the single source supplier for it. Additionally, it is in advance discussion with Harrier EV, similarly with Mahindra for the EV.
  • Furthermore, its contribution from PV segment increase from 22% in FY23 to 24% in Q1FY24.
  • Meanwhile its railway business contributes to ~1% to the topline.
  • Additionally, company is also looking for opportunities in agnostic areas.
  • During the quarter company has also opened Gabriel European engineering center.

(J) Strengths & Weaknesses

Strengths

(i) Healthy market position with diversified segment base -

Gabriel is one of the largest players in the automobile suspension component segment in India, with presence across OEMs, and aftermarket and export segments, through more than 12,000 retailers and 600 dealers in six continents.

Weaknesses

(i) Susceptible to inherent cyclicality in the auto industry -

The automobile industry is highly susceptible and sensitive to macro-economic events, which also have a strong bearing on consumer demand.

(ii) Customer concentration risk to revenue -

Top-customer accounts for 24% of revenues and top-5 customers account for nearly 56% of revenues. Hence, the performance of GIL highly relates with the market share, production volumes, and the ability to adapt to shifting trends of its customers.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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