Motilal Oswal has upheld its 'Buy' rating for Gabriel India, setting a target price of ₹1,664. The brokerage points to strong volume growth in the two-wheeler and passenger vehicle segments as a core driver. While revenue grew by 23%, investors are monitoring profitability, as profit margins experienced pressure due to rising input costs and geopolitical volatility.
Motilal Oswal Financial Services has maintained its 'Buy' rating on Gabriel India, setting a price target of ₹1,664. The brokerage’s outlook is driven by the company’s ongoing transformation into a diversified mobility platform, supported by steady demand in its core two-wheeler and passenger vehicle segments.
In the second quarter of fiscal year 2027, Gabriel India reported revenue of ₹16.1 billion, representing a 23% increase compared to the same period last year. This revenue growth aligned with market expectations, reflecting solid demand. However, operational profitability faced challenges. The company reported an EBITDA of ₹1.4 billion, with profit margins contracting to 8.8% from 9.6% in the corresponding quarter of the previous year.
Analysts have attributed this margin compression to the ongoing crisis in West Asia, which has spiked input costs for raw materials. Additionally, the company experienced a temporary lag in its ability to pass these higher costs on to customers, which is a common challenge in the automotive component manufacturing sector. Despite these short-term difficulties, the brokerage maintains a positive view, anticipating that margins will likely improve in the coming quarters as cost pass-through mechanisms catch up.
Strategic Expansion and Portfolio Diversification
Gabriel India is actively shifting its business model beyond traditional shock absorbers. The company has been pursuing inorganic growth through significant acquisitions, including stakes in HL Mando Anand India and HL Klemove India. Furthermore, on October 6, 2026, the company’s board approved a new joint venture with Faurecia Automotive Seating India. These moves are intended to broaden the company's product portfolio and strengthen its competitive position in the mobility space. For income-focused investors, the company also declared an interim dividend of ₹2.15 per equity share.
Risks and Monitorables
While the expansion strategy is aggressive, it brings inherent risks that investors should track. Integrating new businesses and joint ventures comes with execution challenges that can impact cash flow and management focus. Additionally, the automotive component industry is cyclical; any slowdown in passenger or commercial vehicle production volumes could directly affect the company’s top-line growth. The company’s increased reliance on debt, particularly through unsecured instruments used to finance these acquisitions, is another area that market participants may watch for any potential strain on the balance sheet. Looking ahead, investors will be monitoring the company's ability to stabilize its profit margins amid continued geopolitical uncertainty and the successful integration of its recent joint venture projects.