Gabriel India LTD: Multiple Levers For Growth

Gabriel India Ltd
CMP
Multiple levers for growth
Rs.80
Gabriel is one of the largest shock absorber manufacturer in India and is the only company catering to all
automotive segments; 60% of revenue from 2&3 wheelers and 30% and 10% from PVs and CVs respectively.
Expect the company to outperform the industry in the next two years driven by higher exposure to OEMs with
high growth potential viz. HMSI, TVS, Yamaha, Royal Enfield and Suzuki in the two wheeler segment, increased
share of premium shocks in CV segment and broader product portfolio in the replacement segment. Expect
revenue and PAT CAGR of 18% and 35% respectively (FY14-FY17). The stock is currently trading at 11x Sep16
EPS estimate. Hence we believe there is a significant upside potential given the strong revenue and PAT drivers
Initiating coverage
Date
Sep 23, 2014
Market Data
SENSEX
27207
Nifty
8146
Outperformance driven by HMSI and Scooter segment: Gabriel has 25% market share and supplies almost 40% of
HMSIs requirement and also has high exposure to Royal Enfield, Yamaha and TVS. Expect these companies to record
steeper growth rates given the low base (FY14 growth 21% vs. 3% for Hero; Munjal Showa supplies exclusively to Hero
Motocorp). Gabriel also has higher exposure to the scooter segment and we expect the share of scooters in the twowheeler segment to improve further. Expect two-wheeler revenue for Gabriel to record a CAGR of ~20% in FY14-17.
Bloomberg
GABR IN
Shares o/s
144mn
Market Cap
Rs. 12bn
52-wk High-Low
Rs. 87-17
CV revival and sharper growth in HCVs: During the first half of FY15, growth in total supply tonnage was significantly
higher than the growth in the number of CVs, indicating a steeper recovery in >25MT segment. Historical analysis
suggests that although CVs account for a smaller pie of the Gabriels revenue, low utilizations hurt revenue growth and
margins. Gabriel enjoys an 80% market share in domestic CV supplies and a steep growth in CVs (more so in HCVs) is
expected to benefit Gabriel significantly. Moreover, media reports suggest that Gabriel is expected to soon enter into a
technology tie up with Koni group to increase supplies to HCVs. Expect CV segment revenue CAGR of 19% from FY14-17
3m Avg. Daily Vol
Rs. 69mn
Index member
BSESMCAP
Latest shareholding (%)

Promoters
54.6
Institutions
6.3
After market and exports: Gabriel has a strong presence in replacement market (55% market share) with a strong
Public
39.1
network ~5,000 retailers. It has recently entered into trading of other products (coolants & bush kits) under the Gabriel
brand and plans to expand the range in the next two years. In exports, Gabriel has recently entered the aftermarket Stock performance (%)
segment for shock absorbers in LATAM and Africa. And is also focused on securing OEM orders for supply to CVs in
1m
3m
North America and Europe. Expect CAGR (FY14-17) of 18% and 20% in aftermarket and exports respectively.
Gabriel
CVs to drive operating leverage: Gabriels EBITDA margin declined from 9.6% in FY11 to 7% in FY14 primarily driven
by steep drop in utilization (~50%) utilization of its dedicated plant catering to the CVs in Madhya Pradesh. We expect a Sensex
steep revival in CVs in FY16 & FY17 and hence aid in driving Gabriels margin from 7% in FY14 to 8.8% in FY17. We note BSE Auto
here EBITDA margin was at 9.6% in FY11 and last three years margin decline has mirrored decline in CV volumes.
Financial summary
Year
FY14
Revenues (Rs.
EBITDA (Rs. mn) EBITDA Margin
mn)
12,866
904
7.0%
Adj. PAT (Rs.

mn)
426
Adj. EPS (Rs.)
P/E(x)
EV/EBITDA(x)
3.0
27.0
13.4
FY15E
15,209
1,186
7.8%
633
4.4
18.1
10.2
FY16E
18,421
1,621
8.8%
933
6.5
12.3
7.5
Find Spark research on Bloomberg (SPAK <go>), Thomson First Call, Reuters Knowledge and Factset
12m
40%
68%
371%
3%
8%
34%
7%
23%
63%
Mukesh Saraf
mukesh@sparkcapital.in
+91 44 4344 0041
Rohit Krishna
rohitkrishna@sparkcapital.in
+91 44 4344 0020
Gabriel India Ltd
CMP
Focus Charts: Gabriel poised to outperform the industry
Rs.80
Gabriels strong presence in scooter segment to aid future growth in

2 wheeler sector
Companies which Gabriel has exposure to has recorded

significantly higher growth rates
25%
31.0%
20%
27.4%
28.0%
24.3%
15%
25.0%
22.0%
10%
17.5%
19.0%
5%
16.0%
0%
13.0%
FY12
-5%
10.0%
FY11
FY12
FY13
FY14
FY15e
FY16e
FY14
FY15e
FY16e
-10%
Bajaj Auto Ltd
Share of scooters in domestic 2W

Source: SIAM, Spark Capital Research
Hero Honda Motors Ltd
Others
Leveraging strong presence in replacement market network to enter

new product segments
Products traded under Gabriel brand has
increased
25.0
FY13
Higher tonnage vehicles require premium shocks which entail

higher realization and profitability
Total tonnage of vehicles > Number of vehicles sold
60%
45%
20.0
Rs. mn
30%
15.0
15%
10.0
0%
5.0
-15%
-30%
Jun/14
Apr/14
Feb/14
Dec/13
Oct/13
Aug/13
Jun/13
Apr/13
Feb/13
Dec/12
Oct/12
Aug/12
Jun/12
Apr/12
Feb/12
Oct/11
Dec/11
Aug/11
Jun/11
0.0
-45%
FY06
FY07
FY08
FY09
FY10
Total goods supply tonnage
FY11
FY12
FY13
FY14
YTD
FY15
Total goods vehicles
Purchase of traded goods

Source: Company, Spark Capital Research
2
Gabriel India Ltd
CMP
Rs.80
Corporate Factsheet
Promoter Background
Gabriel India, the flagship company of Anand group of companies, was set up in 1961 by Mr. Deep Anand in collaboration
with Maremont Corporation (now Gabriel Ride Control Products of ArvinMeritor Inc, USA). Anand group (19 companies) is a
leading manufacturer of automotive components with about 21 global partnerships and 15 JVs; the group has recorded
revenue in excess of INR 60bn in 2013.
Business
Gabriel India manufactures ride control components such as shock absorbers, front forks and struts for passenger cars,
commercial vehicles, two and three wheelers.
Mr. Deepak Chopra Chairman and Group CEO (Chartered Accountant, Company Secretary, Masters, Oxford University)
Mr. Manoj Kohlatkar Managing Director, Gabriel India
Management
Mr. HR Prasad Director, Gabriel India

Mr. Rajeev Vasudeva Director, Gabriel India
Mr. Gurdeep Singh Director, Gabriel India

Mr. Rohit Philip Director, Gabriel India
Presence
The company has manufacturing facilities at Pune, Nashik, Hosur, Dewas, Khandsa, Parwanoo and Sanad. It has established
R&D facilities at Pune and Hosur.
Corporate Structure
The promoters stake in Gabriel India (including through group companies) is 54.6% as of June 2014.
Revenue Model
The company derived 86% of its revenue in FY14 from direct sale to OEMs, 11% through aftermarket sale and 3% from
exports. Two/three wheelers contributed 60% of the overall revenue and, passenger cars and commercial vehicles
contributed 30% and 10% respectively.
Key Success Factors
Market leaders in ride control systems for commercial vehicles, long standing relationship with OEMs, technical collaboration
with KYB, Japan
Credit Rating
Crisil A+ (Long-term) and A1 (Short-term)
Corporate Bankers
Bank of India, HDFC, HSBC, Indus Ind Bank, ING Vysya Bank
Auditors
BK Khare & Co, New Marine Lines, Mumbai
Gabriel India Ltd
CMP
Product portfolio consists of ride control components
Rs.80
Shock Absorbers
Mechanical device designed to smooth out impulse and convert
kinetic energy to thermal energy which can be dissipated
Further, dampers are used in addition to shock absorbers in
commercial vehicles and SUVs to provide better ride comfort
Gabriel manufactures these for passenger cars, commercial vehicles,
two and three wheelers
Front Forks
Products
A motorcycle fork connects the front wheel and axle to the bikes
frame; it incorporates the front suspension and the brake.
Products
Gabriel manufactures
different type of forks for executive
motorcycles, scooters and high-end bikes.
Struts
An automotive suspension strut is part of the suspension system and
functions together with the shock absorber and damper; strut aid in
supporting load sideways
Gabriel manufactures these for all passenger cars and SUVs
Gabriel India Ltd
CMP
Products cater to all automotive segments
Rs.80
Strong presence in the two wheeler (scooters) and commercial vehicle segments
Segment
Two and three

wheelers
Passenger Vehicles
Commercial
Vehicles
Aftermarket and
export
Plants
4 plants
Customers
HMSI, TVS Motors,

Bajaj, Royal Enfield,
Yamaha, Suzuki
3 plants
Maruti, Tata Motors,

Honda. M&M,
Toyota, Volkswagen,
General Motors
1 plant
Tata Motors,
Mahindra, Bharat
Benz, Force Motors,
Wheels India, Ashok
Leyland, MAN trucks,
Asia Motor Works
Market
Share
Strategy
Our take
25%
Company doesnt supply to Hero

Motocorp (entire requirement
catered to by Munjal Showa);
nevertheless, company caters to
about 40% of HMSIs
requirement; management has
concentrated on securing orders
for different scooter models
We expect Yamaha, Royal Enfield, Suzuki and

HMSI to record steeper growth rates given
their low base and Gabriel to benefit from high
exposure to these companies. Also, the share
of scooters is expected to improve further in
the next two years and this would aid in
improving the overall market share for Gabriel.
30%
Competition in this segment is

intense and company has taken
a conscious decision to increase
the market share over an
extended period of time through
addition of new customers and
new models
Maruti has market share of 40% in the PV

segment and the top five models in Maruti
account for 80% of its overall volumes; Mando
caters to the entire requirement of Hyundai.
We believe that increasing supplies to existing
models is tough and improvement in market
share can come only from new models
80%
Company enjoys market

leadership in this segment;
revenue would move in line with
the industry; capacity utilization
in this segment is currently very
low at 50%
Transition to higher tonnage vehicles would

necessitate better ride control systems which
can result in higher realization for the
company; better utilization of the CV plant
would result in improved profitability for the
company
Aftermar
ket
55%
Company is planning to add

more products to the aftermarket
portfolio. It has entered
aftermarket segment in Latin
America and Africa.
The company has significant aftermarket

network of 5,000 retailers and more traded
products would aid in boosting revenue. The
company can leverage the relationship with
global CVs and technology tie-ups to secure
export orders.
5
Gabriel India Ltd
CMP
Manufacturing facilities strategically located near auto OEM hubs
Rs.80
Location: Parwanoo, HP
Commenced: 2007
Products: Shock Absorbers, Struts and
Front Forks
Customers: TVS, Tata Motors, M&M
2 & 3 Wheelers
Commercial Vehicles
Passenger Vehicles
Location: Sanand, Gujarat

Commenced: 2010
Products: Shock Absorbers and Struts
Customers: Tata Motors
Location: Dewas, MP
Commenced: 1992
Products: Shock Absorbers
Customers: Tata Motors, M&M, AL, Bharat
Benz, VECV, Daimler, Force Motors,
Wheels India, AMW, MAN, Ride Control
Location: Ambad, Nashik

Commenced: 1990
Products: Shock Absorbers and Front
Forks
Customers: Bajaj, Yamaha, Piaggio, M&M,
HMSI
Location: Chakan, Maharashtra
Commenced: 1997
Products: Shock Absorbers and Front Forks
Customers: Tata Motors, Hyundai, Toyota, Renault, GM,
Volkswagen, Railways
Satellite Manufacturing Plant

Location: Malur, Karnataka
Commenced: 2013
Products: Shock Absorbers
Customers: HMSI
Location: Hosur, Tamil Nadu
Commenced: 1997
Products: Shock Absorbers and Front
Forks
Customers: TVS, Suzuki, HMSI,
Yamaha, Royal Enfield Motors
Gabriel India Ltd
CMP
Only shock absorber manufacturer present across all segments
Rs.80
Market share reduced due to exclusive arrangements (Munjal Showa supplies to Hero Motocorp and Mando supplies to Hyundai)
Market Share Two Wheelers
Market Share - PV
Market Share - CV
20%
25%
30%
40%
70%
80%
35%
Gabriel
Gabriel
Munjal Showa
Others (Major share for Endurance)
Others - Tenneco, Magneti Marelli, Munjal Showa &

Mando
Gabriel
Escorts
Share of two wheelers increased as volumes in CV sector declined

Revenue breakup for Gabriel
100%
85%
70%
14%
15%
10%
31%
29%
30%
55%
57%
60%
FY12
FY13
FY14
55%
40%
25%
10%
-5%
Two / Three Wheelers
Passenger Cars
Commercial Vehicles
In the two/three wheeler segment, Munjal Showa being related to Hero

group of companies, caters almost to the entire shock absorber
demand of Hero Motocorp. Gabriel caters to ~20% of Bajajs
requirement (balance supplied by Endurance) , ~40% of HMSIs
requirement and a majority of TVS requirement. The realization for
premium models is expected to be twice that of economy segment.
Gabriel enjoys a high market share in the scooter market with 100%
supply to Honda Activa. Gabriel has been chosen as the preferred
vendor at Bangalore as well as the upcoming plant at Gujarat.
The passenger car segment is highly competitive wherein Gabriel has
maintained a market share of 30%. Hyundai is exclusively supplied by
Mando Corporation and Tenneco (Monroe) is the segment leader with
higher supplies to Maruti.
Gabriel enjoys a high market share of 80% in the commercial vehicle
segment and the only other competitor is Escorts.
Gabriel India Ltd
CMP
Better utilization in commercial vehicle segment to aid in margin expansion
Rs.80
Revival in CV sector expected to be steep
Segment
No. of facilities
Two/ three Wheelers
Capacity Utilization
4 plants
Passenger Cars
Vehicles in `000
Current capacity utilization of CV plant very low
85%
3 plants
65%
900
800
700
600
500
400
300
200
100
0
30%
20%
10%
0%
-10%
-20%
-30%
FY12
Commercial Vehicles
1 plant
LCV pass.
MHCV goods
55%
Source: Spark Capital Research
FY13
FY14
MHCV pass.
yoy%
FY15
FY16
LCV goods
Profitability has moved in line with growth in CV sector; expected to improve in FY15 and FY16
50.0%
10.5%
40.0%
10.0%
30.0%
9.5%
9.0%
20.0%
8.5%
10.0%
8.0%
0.0%
-10.0%
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
7.5%
7.0%
-20.0%
6.5%
-30.0%
6.0%
Commercial Vehicles yoy %
The company has separate plants for

each of its segments. The utilization at
the 2 & 3 wheeler plants is around
80%, for passenger cars is around
65% and commercial vehicles is
around 50%. The profitability for the
company moves in line with the CV
cycle to a large extent. As the
utilization in the CV plants improve, the
EBITDA margin for the company is
expected to expand.
EBITDA Margin % (RHS)
Gabriel India Ltd
CMP
Market leader in replacement market; expansion of product portfolio to boost revenue
Rs.80
Replacement cycle low for 2&3 wheelers; customer awareness on

the need for replacement in cars remains low
Market Share in the organized
aftermarket segment
Others
45%
Gabriel
55%
Replacement Cycle
Two Wheelers 3 years

Three Wheelers 2 to 3 years
Passenger Cars 5 to 6 years
Commercial Vehicles 4 to 5
years
Gabriel dealership
network
1
14
8
Products
A shock absorber must be replaced upon leakage of oil contained

inside them. The life of a shock absorber under normal circumstances
is 80,000-1,00,000 kms. Although, the useful life reduces significantly
under uneven road conditions.
Risks involved with not replacing the system: 1) Reduced breaking
efficiency 2) Increased risk of skidding under wet road conditions
3) Less control while cornering 4) Increased wear of tyres and
other suspension components 5) Uneven headlight oscillation 6)
Passenger discomfort
Reconditioning/repair of shock absorbers can delay replacement by
10,000-20,000 kms. This segment is being catered by the unorganized
market.
Gabriel enjoys 55% of the organized replacement market. Its products
are available at about 5000 retailers.
The company is now looking to capitalize on its network by
trading other products such as bush kits and coolant under the
Gabriel brand.
13
4
6
10
Gabriel India Ltd
CMP
Exports to grow both in OEM and aftermarket segments
Rs.80
Growth in exports (for the Industry) has remained steep
Share of exports has remained low
5%
92%
86%
87%
86%
FY11
FY12
FY13
FY14
OEM % to total
Aftermarket % to total
2000
1800
1600
1400
1200
1000
800
600
400
200
0
11%
10%
9%
Rs. mn
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Export % to total
5721
4357
3216
1939
FY11
USA
FY12
CHINA
FY13
GERMANY
FY14
POLAND
TOTAL EXPORTS
Source: Export import database, Spark Capital Research
Trend in exports for Gabriel

Lost customers in
Iran due to political
turbulence
600
500
140%
Gabriel was primarily exporting to the CV OEM segment . In FY13, the

company lost a major customer in Iran due to political turbulence
prevalent there
120%
100%
400
Rs. mn
Export of shock absorbers from India
80%
The company has now entered the aftermarket segment in Latin

America, USA and Africa
60%
300
40%
200
20%
In FY14, the company hired senior management exclusively for the

exports segment.
0%
100
-20%
-40%
FY08
FY09
FY10
FY11
Exports
FY12
FY13
yoy%
FY14
The management is focused on leveraging Gabriels relationship with

global OEMs in India, cost advantage with manufacturing facilities in
India and, its technological tie up with KYB and Koni (expected) to
secure OEM orders in the CV segment in North America and Asia
Source: Bloomberg, Spark Capital Research
10
Gabriel India Ltd
CMP
Strong focus on R&D
Rs.80
Gabriel has higher spend on R&D.
..which has helped lower royalty payments
140
1.0%
0.9%
0.8%
0.7%
0.6%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
120
100
80
60
40
20
0
Gabriel India
R&D (Rs.mn)
450
400
350
300
250
200
150
100
50
0
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Gabriel India
Munjal Showa
Munjal Showa
Royalty
% of net sales
% to net sales (RHS)
Technology tie-up for Gabriel India
KYB-Yamaha
KYB - Largest production volume of automotive shock absorbers
Facilities in 32 locations in 21 countries
Sales exceeding $4bn in CY14
Although, Munjal Showas localization rate is better, gross margin

for Gabriel remains higher
25%
29.0%
20%
28.0%
27.0%
15%
26.0%
Koni group
Gabriel is expected to tie up with Koni for designing and
manufacturing high-end shock absorbers aimed at HCVs and
premium buses (Source: Media articles)
Established in 1857
Focused solely on high performing suspension technology for Cars,
Racing, Specialty Trucks, Busses, Trailers, Locomotives and Railway
Rolling Stock
10%
25.0%
5%
24.0%
0%
23.0%
FY11
FY12
FY13
FY14
Gabriel Imported RM %
Munjal Showa Imported RM %
Munjal Showa - Gross Margin
Gabriel - Gross Margin
11
Gabriel India Ltd
CMP
Costs under control
Rs.80
Revenue growth to a large extent aligned with 2&3 wheeler sectors
and so is the blended realization per unit
50.0%
25.0%
35%
40.0%
20.0%
30%
30.0%
15.0%
20.0%
10.0%
10.0%
5.0%
25%
FY14
FY13
FY12
FY11
FY10
FY09
FY08
FY07
FY06
FY05
FY04
FY03
-10.0%
15%
10%
5%
0.0%
FY02
0.0%
20%
-20.0%
-5.0%
FY07
FY08
FY09
FY10
2+3 Wheelers
FY13
FY14
0%
-10%
Blended realization yoy%
Source: SIAM, Company, Spark Capital Research
FY12
-5%
-10.0%
Gabriel Revenue
FY11
Growth in 2+3 wheeler yoy% (RHS)
Other expenditure contained to a large extent through efficiency

improvement programs
2.5%
The 2 & 3 wheeler segment together contributes about 60% of the total
revenue for Gabriel. Therefore, the revenue as well as the blended
realization for the company moves in tandem with the volume growth in
the 2&3 wheeler segment.
2.0%
1.5%
1.0%
0.5%
0.0%
FY11
Professional charges
FY12
Warranty Costs
FY13
FY14
Freight
Power cost increased in FY 13 on the back of increased usage of

diesel generator systems ; although, the same has reduced in FY 14
on the back of energy management efforts taken at Parwanoo plant.
However, warranty costs as a % of sales for the company has more
than doubled since FY 12.
Power cost

12
Gabriel India Ltd
CMP
Peer Comparison
Rs.80
Endurance Complete
Solutions
Background
Established in 1985 for

manufacturing aluminum die
casting; unlisted company;
19 plants across India, Italy
& Germany
Munjal Showa Limited

Established in 1985 by
Showa cor. of Japan and
Munjal Showa Ltd of Hero
group; three plants in India
Escorts Limited
Escorts group is a leading
manufacturer of agrimachinery, construction
handling equipment and
auto components.
Gabriel India
Established in 1961, part of
Anand group which includes
19 companies with plants
across 51 locations
Group manufactures Engine
systems, suspension, safety
systems, chassis, power
train, climate control and
external components.
Diversified product portfolio

consisting of suspension,
transmission, brakes and
casting. Suspension division
accounts for 30% of
revenue.
Manufactures front forks

and front & rear suspension
Customers
Suspension systems
manufactured only for two
and three wheelers
Customers include all major
two wheeler OEMs
Suspension systems
manufactured for two/three
wheelers and passenger
vehicles
Customers include HMCL,
Honda and Maruti
Suspension systems
wheelers, passenger
vehicles and commercial
vehicles
auto OEMs
Suspension systems
wheelers, passenger
vehicles and commercial
vehicles
auto OEMs
Performance
Suspension Division
Production 12.53 mn
Sales in FY14 Rs. 12,345
mn
Production 34.59 mn
mn
Suspension Division
Production capacity 3.5mn
mn
Production 22.22 mn
mn
Product Portfolio
Auto products division

include shock absorbers,
front forks, struts, dampers
and steering components
Gabriel India manufactures

front forks, suspension
systems, dampeners and
struts
Source: Spark Capital Research
13
Gabriel India Ltd
CMP
Peer Comparison
Rs.80
Higher revenue growth for Gabriel
Profitability for Gabriel to be driven by higher operating leverage
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
40%
35%
30%
25%
20%
15%
10%
5%
0%
FY11
FY12
FY13
FY14
Revenue - Gabriel
Revenue - Munjal Showa
Gabriel yoy %
Munjal Showa yoy %
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
FY11
FY12
FY13
Gabriel
FY14
Munjal Showa
Return metrics to expected to improve in FY15 & FY16 for Gabriel
Fwd PE premium/discount for Gabriel over Munjal Showa
35.0%
200%
30.0%
150%
25.0%
100%
20.0%
50%
15.0%
10.0%
0%
5.0%
-50%
0.0%
-100%
Jun-14
Jan-14
Aug-13
Oct-12
Mar-13
May-12
Jul-11
Dec-11
Feb-11
Apr-10
Sep-10
Jun-09
Nov-09
Jan-09
Aug-08
Oct-07
Mar-08
FY14
May-07
FY13
-150%
Jul-06
RoAE
Dec-06
FY12
Munjal Showa
Feb-06
RoACE
Gabriel
Sep-05
Munjal Showa
Apr-05
Gabriel
14
Gabriel India Ltd
CMP
Valuation Summary
Rs.80
CMP
MCAP
Revenue (Rs. mn)
Rs.
Rs. mn
Gabriel India
80
11,496 12,866 15,209 18,421 21,804
Munjal Showa
204
8,159
FY14
EBITDA (Rs. mn)
FY15E FY16E FY17E
15,986 17,543 19,641
FY14
EBITDA Margin %
PAT
FY15E FY16E FY17E
FY14
904
1,186
1,621
1,919
7.0%
7.8%
8.8%
8.8%
426
631
933
1,128
1,058
1,237
1,440
6.6%
7.1%
7.3%
697
716
858
EPS
RoE
FY15E FY16E FY17E
FY14
P/E
FY15E FY16E FY17E
EV/EBITDA
FY14
FY15E
FY16E
FY17E
FY14
FY15E
FY16E
FY17E
FY14
FY15E
FY16E
FY17E
FY14
FY15E
FY16E
FY17E
Gabriel India
3.0
4.4
6.5
7.9
15.1%
19.8%
24.3%
24.1%
27.0
18.2
12.4
10.1
13.4
10.2
7.5
6.3
Munjal Showa
17.4
17.9
21.5
21.2%
18.7%
19.3%
11.7
11.4
9.5
7.9
6.9
6.2
Consensus estimates for Munjal Showa
Fwd PE Munjal Showa
100
90
80
70
60
50
40
30
20
10
0
13.0x
10.0x
8.0x
5.0x
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
3.0x
200
180
160
140
120
100
80
60
40
20
0
8.0x
6.0x
5.0x
3.0x
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
Fwd PE - Gabriel
15
Gabriel India Ltd
CMP
Standalone Financial Summary
Rs.80
Abridged Financial Statem ents (Standalone)

Rs. m n
Key m etrics
FY14
FY15E
FY16E
FY17E
FY14
Profit & Loss
FY15E
FY16E
FY17E
Grow th ratios
Revenues
12,866
15,209
18,421
21,804
Revenues
6.7%
18.2%
21.1%
18.4%
Manufacturing & Other Expenses
11,962
14,023
16,800
19,886
EBITDA
9.7%
31.2%
36.6%
18.4%
EBITDA
904
1,186
1,621
1,919
11.4%
48.9%
47.3%
20.9%
Depreciation
271
318
349
390
EBIT
633
869
1,273
1,528
EBITDA
7.0%
7.8%
8.8%
8.8%
90
82
90
90
EBIT
4.9%
5.7%
6.9%
7.0%
Profit Before Tax
557
845
1,244
1,504
PAT
3.3%
4.2%
5.1%
5.2%
Tax
132
211
311
376
Net Profit
426
633
933
1,128
Debt to equity (x)
0.2
0.2
0.2
0.1
Current ratio (x)
1.3
1.5
1.6
1.7
Debtor days (Sales)
39
39
38
38
Inventory days (Sales)
33
34
34
34
42
41
39
39
RoACE
13.6%
16.8%
20.8%
21.1%
RoAE
Net Interest Exp / (inc)
Balance Sheet (Rs. m n)

Shareholders Equity
PAT
Margins
Leverage & WC ratios
2,852
3,338
4,125
5,080
660
704
802
690
Sources of funds
3,607
4,138
5,023
5,866
Creditor Days (Sales)
Net block
2,672
2,754
3,006
3,366
Perform ance & turnover ratios
Loan funds
Investments
Capital WIP
125
125
125
125
15.7%
20.5%
25.0%
24.5%
Current assets, loans & advances
3,082
3,754
4,648
5,493
Total asset turnover (x)
2.2
2.4
2.6
2.6
Current liabilities & provisions
2,271
2,496
2,756
3,117
Fixed asset turnover (x)
2.7
3.0
3.3
3.5
80
80
80
80
Net Current Assets

Application of funds
810
1,258
1,892
2,375
Valuation m etrics
3,607
4,138
5,023
5,866
Current price (Rs.)
143.7
143.7
143.7
143.7
765
541
717
1,055
Market capitalisation (Rs. mn)
11,496
11,496
11,496
11,496
(456)
(400)
(600)
(750)
Enterprise value (Rs. mn)
12,107
12,113
12,143
12,010
13.4
10.2
7.5
6.3
3.0
4.4
6.5
7.9
27.0
18.1
12.3
10.2
1.1%
1.1%
1.1%
1.3%
Cash Flow s (Rs. m n)

Cash flow s from operations
Capex
Free Cash Flow
Shares outstanding (mn)
309
141
117
305
Cash flow s from investm ents
(444)
(400)
(600)
(750)
Adj. Per-share earnings (Rs.)
Cash flow s from financing
(316)
(102)
(48)
(285)
Price-earnings m ultiple (x)
39
87
156
176
Cash balance at the end of the year
EV/EBIDTA (x)
Dividend yield (%)
16
Gabriel India Ltd
CMP
Rs.80
Absolute Rating Interpretation

Buy
Stock expected to provide positive returns of >15% over a 1-year horizon
Add
Stock expected to provide positive returns of >5% <15% over a 1-year horizon
Reduce
Stock expected to provide returns of <5% -10% over a 1-year horizon
Sell
Stock expected to fall >10% over a 1-year horizon
Spark Disclaimer
Spark Capital Advisors (India) Private Limited (Spark Capital) and its affiliates are engaged in investment banking, investment advisory and institutional equities. Spark Capital is registered with
SEBI as a Stock Broker and Category 1 Merchant Banker.
This document does not constitute or form part of any offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This document is
provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial
advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document.
Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. This document is being supplied to you solely for
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availability or use would be contrary to law, regulation or which would subject Spark Capital and/or its affiliates to any registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this document may come are required to inform
themselves of and to observe such applicable restrictions. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an
offer or solicitation would be illegal.
Spark Capital makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this document. Spark Capital , its
affiliates, and the employees of Spark Capital and its affiliates may, from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities
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This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through an independent analysis by Spark Capital. While we would
endeavour to update the information herein on a reasonable basis, Spark Capital and its affiliates are under no obligation to update the information. Also, there may be regulatory, compliance or
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incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:
Gabriel India Ltd
CMP
Rs.80
Analyst Certification of Independence

The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the research
analysts compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.
Additional Disclaimer for US Institutional Investors
This research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 under the Securities
Exchange Act of 1934, as amended) only by Decker & Co, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange Act of 1934, as amended). Decker &
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or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Decker & Co, LLC and Spark Capital Advisors (India) Private Limited are
permitted to provide research material concerning investment to you under relevant legislation and regulations;
Disclosure of interest statement
Yes/No
Analyst ownership of the stock
No
Group/directors ownership of the stock
No
Broking relationship with the company covered
No
Investment banking relationship with the company covered
No
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Gabriel India LTD: Multiple Levers For Growth

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Gabriel India Ltd

Multiple levers for growth

Sep 23, 2014

3m Avg. Daily Vol

Latest shareholding (%)

Adj. PAT (Rs.

Adj. EPS (Rs.)