Buy Gabriel India Stock; Anand Rathi Sets Target at ₹1400

Mumbai, July 7, 2025 — Auto components maker Gabriel India Ltd. surged in early trading on Monday following a bullish note from brokerage firm Anand Rathi, which has initiated a “Buy” call on the stock with a target price of ₹1400, implying a potential upside of over 25% from current levels.

The recommendation is grounded in expectations of robust growth in the domestic automobile sector, increasing exports, and strong operational performance. Gabriel India, known for its ride control products including shock absorbers, front forks, and suspension systems, is poised to benefit from multi-sectoral tailwinds across two-wheelers, passenger vehicles, commercial vehicles, and railways.

Key Investment Rationale

Auto Sector Upswing

According to Anand Rathi’s report, the revival in domestic two-wheeler and passenger vehicle segments, driven by rural recovery and premiumization trends, augurs well for Gabriel. The brokerage notes that Gabriel commands significant market share in the two-wheeler segment and has a diversified client base, including Bajaj Auto, TVS Motors, and Honda.

“We are positive on the auto ancillary space, especially companies like Gabriel India that are deeply embedded across OEM platforms. The two-wheeler cycle has turned around convincingly post-COVID, and Gabriel stands to gain on both volume and value fronts,” said Ravi Shenoy, VP – Equity Research at Anand Rathi.

Exports to Drive Margins and Diversification

Gabriel’s growing export footprint, particularly in North America and Europe, is another factor influencing the target price upgrade. In FY25, exports contributed nearly 18% of Gabriel’s revenues, up from 11% in FY23. The company’s partnerships with global OEMs and aftermarket players are helping it penetrate deeper into high-margin territories.

“Export contribution is increasing at a CAGR of 25%, offering natural hedge and margin stability amid domestic competition,” Shenoy added.

Focus on Premium Products and EV Integration

Anand Rathi’s note also highlighted Gabriel’s investments in premium product lines and readiness for the electric vehicle (EV) transition. With the rise in electric two-wheelers and passenger EVs, suspension systems are evolving to meet new demands.

Gabriel has been developing lighter and more durable suspension components for EV platforms, partnering with both legacy and emerging EV manufacturers.

Financial Performance Snapshot

Gabriel India reported a 28% YoY growth in revenue for FY25, reaching ₹2,450 crore, while net profit surged 33% to ₹212 crore. The company has managed to sustain EBITDA margins above 12%, driven by a favorable product mix and operating leverage.

As of Q4FY25, the company had a strong order book across segments and reduced its net working capital days by 7%, reflecting improved operational efficiency.

Valuation and Target Price Justification

The stock is currently trading around ₹1115 (as of July 7, 2025). At this price, it commands a P/E of 25x FY26E earnings, which analysts at Anand Rathi believe is justified considering its high RoCE, margin profile, and visibility of earnings growth.

The ₹1400 target is based on 28x FY26E EPS of ₹50, aligning with sectoral leaders and factoring in expected earnings growth of over 20% CAGR through FY26.

Risks and Concerns

Despite the positive outlook, Anand Rathi also outlined certain risks that could impact Gabriel’s performance:

• Raw Material Volatility: Steel and aluminum cost fluctuations can impact margins.

• Slower-than-expected EV adoption: Delay in EV penetration may affect Gabriel’s newer product lines.

• Export Headwinds: Currency fluctuations and geopolitical challenges in export markets could moderate international growth.

Market Context and Stock Movement

Following the report, Gabriel India shares opened 3.2% higher at ₹1149 on the NSE, outperforming the Nifty Auto Index, which rose 1.1% intraday.

The stock has already gained nearly 70% in the last 12 months, fueled by consistent earnings performance and investor confidence in the auto sector’s revival. Market participants are also tracking the government’s PLI (Production-Linked Incentive) scheme for auto components, under which Gabriel is an applicant.

Investor Outlook

Gabriel India offers a compelling opportunity for long-term investors seeking exposure to the auto component ecosystem with export leverage and EV adaptability. With a solid track record, prudent capital allocation, and focus on high-tech product lines, the company is likely to sustain its growth momentum.

“We view Gabriel as a long-term compounder in the auto ancillary space. Investors should consider accumulating the stock at current or lower levels with a 12-18 month view,” said Meenal Deshpande, independent equity advisor.

With Anand Rathi setting a target price of ₹1400, Gabriel India emerges as a standout pick in the mid-cap auto component space. Its diversified presence, strong financials, export momentum, and readiness for EV disruption make it a candidate for rerating in the coming quarters.