Buy Gabriel India; target of Rs 1664: Motilal Oswal

What happened

Motilal Oswal maintained its Buy rating on Gabriel India and kept its target price unchanged at Rs 1664. The report said revenue rose 23% year on year to INR 16.1b in 2QFY27, while EBITDA increased 12% year on year and the EBITDA margin fell to 8.8% from 9.6%.

Confirmed

Global impact / market context

Revenue growth led by two-wheeler and passenger-vehicle demand points to stronger sales, but the lower EBITDA margin means less operating profit was earned from each rupee of revenue. Higher input costs and delayed cost pass-through can pressure profits until selling prices catch up.

Analyst inference

Motilal Oswal says the margin decline reflected higher input costs linked to the West Asia crisis, delayed recovery of those costs through prices, and a denominator effect. Its unchanged target uses a 35-times price-to-earnings multiple, meaning the share price is compared with expected earnings per share.

Confirmed

What to watch

1. Track whether Gabriel India can pass higher input costs on to customers; faster recovery through prices could help restore the EBITDA margin from its reported 8.8%. Analyst inference
2. Check whether demand from two-wheelers and passenger vehicles continues to support revenue growth, since the report identified those segments as the drivers of the 23% increase. Analyst inference
3. Look for updates on group consolidation and selective acquisitions, which Motilal Oswal said could add to earnings over the medium term; these are possible opportunities, not confirmed outcomes. Proposed

Evidence

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