Gabriel India acquisitions broaden mobility platform and support earnings growth

Investment View and Valuation

Motilal Oswal Financial Services retains a BUY view on Gabriel India following a 1QFY27 operational beat and the company’s accelerating transition from a suspension-focused supplier into a diversified automotive mobility platform. The revised target price is Rs 1,664, based on approximately 40 times FY28E EPS, compared with a CMP of Rs 1,425.

The broker views Gabriel India as the ANAND Group’s principal growth and business-consolidation vehicle, supported by restructuring, joint ventures and acquisitions across braking, steering, suspension and advanced driver-assistance systems (ADAS).

1QFY27 Operational Performance

Gabriel India reported 1QFY27 revenue of Rs 14,257 million, up 15.5 per cent year on year and broadly in line with Motilal Oswal’s estimate. Growth was led by strong demand in the two-wheeler and passenger-vehicle segments. Revenue for the quarter includes Anchemco and Myutec.

EBITDA rose 5 per cent year on year to Rs 1,242 million, 15 per cent above the broker’s estimate. EBITDA margin declined to 8.7 per cent from 9.6 per cent in 1QFY26, reflecting higher input costs associated with the West Asia crisis. Adjusted PAT, including the restructured entities Dana, Henkel, Anchemco and Myutec, was Rs 1,009 million, up 2 per cent year on year and 6 per cent above Motilal Oswal’s estimate.

Earnings Outlook

Motilal Oswal expects healthy demand across Gabriel India’s key Indian segments and sequential margin improvement as input-cost increases are gradually passed through to customers. The broker forecasts the following financial performance:

The broker has reduced FY27E adjusted PAT and EPS by 15.7 per cent, reflecting dilution, but raised FY28E adjusted PAT by 24.3 per cent and EPS by 15 per cent, primarily due to acquisitions. Motilal Oswal estimates FY26-FY28E EPS CAGR of 16 per cent; FY26 figures are restated for restructuring.

HL Mando ANAND India Acquisition

A central catalyst is Gabriel India’s agreed acquisition of 48.1 million shares, representing 28.99 per cent of HL Mando ANAND India, for Rs 22,300 million. Consideration comprises Rs 3,500 million in cash and Rs 18,800 million through share issuance at Rs 1,305.89 per share.

The transaction would increase Gabriel India’s shares outstanding from 177 million to 191 million, implying 8 per cent dilution. HMAI, which manufactures passenger-vehicle steering, braking and suspension systems, reported FY26 revenue of Rs 58,800 million, an EBITDA margin of 10.9 per cent and PAT of Rs 3,600 million.

Strategic Rationale and ADAS Opportunity

Management characterises HMAI as complementary because it enables integrated braking, steering and ADAS offerings to original equipment manufacturers. HMAI’s customers include M&M, Tata Motors, Maruti Suzuki and Korean original equipment manufacturers. Approximately 40 per cent of its business comes from non-Korean customers, while exports account for 7-8 per cent.

Management plans to fund the HL Klemove acquisition through internal accruals and debt. It sees ADAS content per vehicle of Rs 20,000-60,000, regulatory adoption tailwinds and high entry barriers as supporting the opportunity.

Key Execution Considerations

• Successful integration of the acquisitions.
• Share dilution and debt funding requirements.
• Timely pass-through of input-cost increases to customers.
• Delivery of the anticipated ADAS opportunity and broader business-consolidation benefits.