Gabriel India’s 8x rally: Can the stock keep rising from here? – Stock Insights News

Gabriel India has stunned investors with a 8x stock surge in just two years.

The rally hasn’t come out of thin air.

Backed by double-digit revenue growth, margin expansion and a string of diversification moves, from sunroofs to solar dampers, the company has managed to reposition itself far beyond its suspension roots.

With the latest restructuring deal adding fresh heft to the portfolio, the spotlight is now on whether Gabriel’s business performance can keep pace with the soaring valuation.

From shock absorbers to multiproduct ambitions

For decades, Gabriel India was a familiar name in suspension systems, supplying shock absorbers, front forks and struts to nearly every major two-wheeler and passenger vehicle maker in India.

That dominance gave it stability, but also made it heavily dependent on the cyclical two-wheeler industry.

In the past three years, the company has widened its playbook. The tie-up with Netherlands-based Inalfa Roof Systems marked its entry into sunroofs, a high-value component segment riding the utility vehicle boom.

It acquired assets from Marelli Motherson Auto Suspension, adding gas springs and strengthening its position in value-added parts. It is also using its engineering expertise to build solar dampers, a component that improves the efficiency of solar trackers. This move plugs Gabriel directly into the global renewable energy theme.

The company’s foray into e-bike suspension systems in Europe further signals that Gabriel is no longer content being just an Indian ride control supplier. It is pushing into adjacent segments where growth visibility is stronger and margins healthier.

The shift shows up in the numbers. Over the past three years, sales have compounded at 16%, while net profit has surged at a much faster 33% compound annual growth rate (CAGR). Returns have strengthened too, with return on capital employed (ROCE) rising from 18% in FY22 to 26% in FY25.

And Gabriel isn’t pausing here.

It is now betting on a major restructuring move that folds multiple group ventures into its portfolio, giving it scale, diversification, and a sharper edge in the auto components space.

The big restructuring move

In July, Gabriel announced a composite scheme of arrangement that takes in several group companies into its fold. These include:

• Dana Anand: axles and drive shafts, Rs 2,700 crore business, 16% earnings before interest, tax, depreciation and amortisation (EBITDA) margin.
• Henkel Anand: body in white (BIW) and noise, vibration and harshness (NVH) products, Rs 900 crore business, 26% margin, 60% return on equity (ROE).
• Anand CY Myutec: synchroniser rings and aluminium forgings, Rs 200+ crore revenue, 22% ROCE.
• Anchemco: brake fluids, radiator coolants, diesel exhaust fluids (DEF) / AdBlue, adhesives, Rs 330 crore revenue.

The mechanics involve merging Anchemco into ANAND Investments Private Limited (AIPL, the group’s investment arm) and then demerging AIPL’s stake in these ventures into Gabriel. In return, Gabriel will issue 1,158 shares for every 1,000 shares of AIPL. Post-deal, promoter stake rises to 63.5% from 55% earlier.

Valuation has been set at an EV/EBITDA multiple of about 8x FY25, which looks fair given the quality of the businesses. Management claims the transaction will be earnings accretive by Rs 7 per share, and that it allows Gabriel to scale up without additional debt. Investors clearly like what they see—the stock jumped 42% in the week following the announcement.

Strong operational performance in FY25

The market’s enthusiasm is grounded in improving fundamentals. 

In FY25, Gabriel’s consolidated revenue was at Rs 4,063 crore, up 19.4%. EBITDA grew at around 34% as margins expanded to 9.6% from 8.9% the previous year.

ROE touched a strong 22.4%. 

Segment-wise, two-wheelers still dominate with a 63% share, but Gabriel has widened its base. Passenger vehicle sales grew 4.7%, commercial vehicles remained resilient despite industry weakness, and the company strengthened its leadership in railways by supplying dampers for over 20,000 electric multiple unit (EMU) / mainline electric multiple unit (MEMU) coaches. It is the only qualified Indian supplier for Vande Bharat coaches.

The sunroof business, operated through Inalfa Gabriel Sunroof Systems, posted Rs 420 crore in its first full year and is doubling capacity to meet rising demand. Aftermarket revenue reached Rs 450 crore, up 7.3%, with deeper reach into smaller towns. Export sales touched Rs 110 crore, supported by supplies to DAF, Isuzu, and other global original equipment manufacturers (OEMs).

New growth engines

Three business lines stand out as future drivers:

• Sunroofs: A booming Rs 420 crore vertical, with capacity being doubled by end-2025. Utility vehicles now account for 65% of Gabriel’s passenger vehicle sales, giving this business significant tailwinds in Q4 FY25.
• Solar dampers: Orders already secured from two export customers and one domestic OEM. Management expects this to be a Rs 200 crore-plus business within two years, riding the global solar tracker boom.
• Railways: With leadership in dampers and exclusive supplier status for Vande Bharat, Gabriel is well placed as rail modernisation gathers pace.

Other adjacencies such as e-bike suspension, adhesives, fluids and aluminium forgings, further broaden its optionality. Together, these moves reduce concentration risk and make Gabriel a more rounded auto component player.

Why investors are excited

The rally comes on the back of a simple narrative: Gabriel is no longer a one-trick pony. It is growing into a diversified, technology-driven mobility solutions provider with multiple growth engines in place.

Its digitalisation story strengthens the pitch. The Gabriel Europe Engineering Centre (GEEC) in Belgium is developing next-gen damping technologies, while 87 patents have been filed (32 granted).

All this aligns with the ANAND Group’s larger ambition of Rs 50,000 crore revenue by 2030, with Gabriel as the spearhead.

Risks to look out for

Yet, the optimism around the stock comes with risks.

1. Valuation: The stock traded at over 86x price-to-earnings (PE) even before the recent surge. At current levels, the risk-reward skews unfavourably for fresh investors.
2. Auto cycle: Two-wheelers, Gabriel’s largest segment, remain tied to rural demand and affordability. Any slowdown could hit volumes.
3. Raw material costs: Rare metals and other inputs for electric vehicle (EV) components are volatile, threatening margins.
4. Integration challenges: Folding in four diverse businesses; from chemicals to forgings; won’t be seamless. There is a good chance that extracting synergies can longer than anticipated.

What next for investors?

Gabriel’s stock has already surged eight times in just three years, a rally that few companies in the auto ancillary space have managed. Such gains naturally raise questions on sustainability, especially with the valuation multiple already well above historical levels.

At the same time, the business story remains rich. Diversification into sunroofs, solar dampers, and adhesives, combined with a bigger role in railways and exports, offers long-term growth avenues. The upcoming restructuring could further accelerate this shift, making Gabriel a more diversified and resilient auto component company.

The tension, therefore, lies between stretched valuations in the near term and the structural opportunity unfolding over the long term.

In conclusion

Gabriel India has gone far from being a suspension specialist. It is now a multiproduct, multi-segment mobility solutions company.

The company’s growth engines across sunroofs, solar dampers, railways and e-bikes are beginning to fire.

But the stock market has already factored in much of this transformation. 

The next phase will be less about re-rating and more about proving that Gabriel can deliver consistent earnings growth while integrating new businesses and navigating the challenges of the auto cycle.

For now, the company’s journey makes it one of the more interesting names to watch in the auto component space.

Disclaimer

Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. 

The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. 

Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.

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