Gabriel India came off the early high of Rs 108.90 on Wednesday after recording some solid gains over the past few sessions.
By 10:10 IST, the scrip of the auto ancillary company slipped 0.14% (from Tuesday's close) to Rs 104. A total of 4,150 Gabriel India shares changed hands on BSE so far. In contrast, the scrip has been moving from strength to strength over the previous 11 sessions (between 25 April and 13 May 2003), leaping up 68% to Rs 114.90 from Rs 68.50.
The scrip has been boosted of late by the excellent prospects for the industry and a favourable outlook for itself. The company is expected to register solid growth in the current financial year. In any case, reports have said that the auto ancillary sector will see a growth of 40-45% over the next few years.
In fact, it is expected that global original equipment manufacturers have plans to increase procurement from India, giving the auto ancillary sector fresh hope. Global OEMs are expected to procure components worth $15 billion from India by 2010.
Only on Monday, Gabriel India said Q4 ended 31 March 2003 net profit rose 48% to Rs 2.31 crore compared to Rs 1.56 crore in the corresponding period of the previous year. Net sales increased by 15.5% to Rs 100.62 crore from Rs 87.10 crore in MQ 2002. While for FY 2002-03, the company reported a massive 196% rise in net profit to Rs 11.73 crore on a 22% increase in net sales to Rs 375.35 crore (Rs 3.75 billion).
The company announced a 50% dividend for FY 2002-03.
The improved performance has been possible due to the company's strong presence in the OEM segment and due to the overall growth in the automobiles segment (a major buyer of auto ancillaries) particularly motorcycles and new generation cars. The company is expected to maintain a similar tempo in the current financial year (ending 31 March 2004) as well.
GIL's business prospects primarily depend on the domestic two-wheeler and three-wheeler segments, that account for 46% of total revenues - 26% coming from the passenger car segment and 20% from commercial vehicles comprising HCVs and LCVs. The balance 8% comes from the engine bearing segment. In the two-wheeler segment, GIL is a 100% vendor to TVS Motor for its 110cc Victor motorcycle and is an equally large vendor to Bajaj Auto, Yamaha Motors, LML and Royal Enfield. In the three-wheeler segment GIL supplies to both Bajaj Auto and Piaggio for their entire product range.
In the passenger car/MUV segment, GIL is a 100% vendor to Ford India, Telco, Hyundai, Fiat, Toyota, Mahindra and is the second biggest vendor to Maruti Udyog after Munjal Showa Limited. In the commercial vehicles category, GIL is a 100% vendor to Eicher Motors, Swaraj Mazda, Hindustan Motors, Bajaj Tempo, with Ashok Leyland and Telco.
Within this customer mix, Gabriel gets around 80% of its revenues from the OEM segment, 16% comes from the after-market segment and the remaining 4% is accounted for by exports.
There's also talk that the company could get new orders from a few two-wheeler companies and that some export orders are in the pipeline.
Gabriel is also expected to benefit from the sustained launches of motorcycles by two-wheeler players. Two-wheeler manufacturers need to maintain market share through continued new launches. Other segments like the three-wheeler and the passenger car segment are expected to help Gabriel record good growth in future, too.
Gabriel has six facilities manufacturing ride control products (shocks, struts and front forks). The Nashik, Hosur and Noida plants cater to the two-and three-wheeler market segment, the Chakan facility caters to the new generation passenger car segment, the Mulund facility in Mumbai caters to the requirements of the older passenger car models and the Indian Railways. The Gurgaon plant specifically caters to Maruti's requirements and the Dewas plant takes care of the commercial vehicles market demand.
As on 31 March 2003, promoters held 40.4% stake in the company, the public, institutions and foreign bodies held 22.89%, 12.25% and 21.27%, respectively.
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