GABRIEL INDIA LIMITED

AJINKYA YADAV – 19020348002 – MBA FINANCE (EXECUTIVE) 2019-22

 GABRIEL INDIA SNAPSHOT
Corporate Profile
• GIL Plants
Incorporated in 1961
Parwanoo GIL Satellite Locations
• Pioneer of Ride Control Products in India with state-of- Manesar Khandsa
the-art integrated operations
• Strong R&D focus, employing 60 specialists, highest in the
industry
Sanand Dewas
• Experienced, professional management team and Board
of Directors Nashik
• Pune Aurangabad
Marquee clientele across all vehicle segments
• Market Leadership in Aftermarket
• Impetus on Sustainability and Environment: 1,984 MT Malur
Hosur S3
Reduction in Carbon Footprint over last 6 years; 19.5% of Hosur
power from renewable sources in FY19 from 0% in FY14
• Consistent dividend track record since ’98 Key Metrics
Financial Strength ( FY20)
Revenue PAT ROCE Net
500+ 25 664
New Product Additions Countries of Presence Distributors
Cash

INR 18,700 Mn INR 847 Mn 18% INR 1326 Mn

7+4(satellite plants) 75 3,684
Manufacturing Plants Patents Filed Employees
 FINANCIAL HIGHLIGHTS Q3 – FY21
Q3 FY21
Revenue EBITDA PBT

Rs.392 Mn Rs. 327 Mn

Rs. 5,365 Mn
7.3% 6.1%

Q2 FY21 Rs 4,599 Mn Q2 FY21 Rs 362 Mn / 7.9% Q2 FY21 Rs 287 Mn / 6.2%

Q3 FY20 Rs 4,555 Mn Q3 FY20 Rs 322 Mn / 7.1% Q3 FY20 Rs 239 Mn / 5.2%

 FINANCIAL HIGHLIGHTS P1 TO P9 – FY21

Revenue EBITDA PBT

Rs. 11,192 Mn Rs. 583 Mn (5.2%) Rs. 372 Mn (3.3%)
as compared to Rs. 14,453 Mn as compared to Rs. 1,047 Mn in as compared to Rs. 779 Mn
in FY20 (Y-o-Y -22.6%) FY20 (Y-o-Y -44.3%) in FY20 (Y-o-Y -52.2%)

Balance Sheet Cash Flow Capex

Net Cash position of Rs. 2,830 Mn Cash Flow from operations to the Capex incurred during the period
tune of Rs. 2,043 Mn as compared Rs. 383 Mn
to Rs. 1,106 Mn in FY20 CapEx/Sales – 3.42%
 SEGMENT MIX

- Major revenue contributor is the 2 wheeler and 3

wheeler market followed by passenger car market.
2% 1% 1% 1% 1% 1% 2%
1%
12% 10% 9%
11% 13% 13% 12% 9% - Commercial vehicle market revenue is around
33% 31% 24%
20% 19% 20% 22% 22% 10%

- Trading is minimal around 1-2 %

67% 70% 70% 65% 67%
61%
54% 55%

FY17 FY18
FY20 Q2 FY 20 Q2 FY 21 Q3 FY 20 Q3 FY 21
FY19 PC CVR 2W/3W Trading
 CHANNEL MIX

- Major revenue contributor business with the

OEM’s. Long Term with strategic partnership from
4% 4% 4% 2% 3% 3% 2% 4%
13% 13% 13%
product development stages
11% 11% 13% 12% 14%

- After market comprises 13% of the revenue

83% 85% 85% 85% 85% 83% 85% 83% - Export not a sizable revenue contributor and is
around 3-4 %

FY17 FY18 FY19 FY20 Q2 FY20 Q2 FY21 Q3 FY20 Q3 FY21

Export OE
Replacment
 YTD SEGMENT PERFORMANCE
Segment % Of Total Sales Market Share
2W & 3W 68% 25%
PV 21% 18%
CV + Rail + After Market 9% 75%

STRONG IN-HOUSE R&D & TECHNOLOGY PARTNERSHIPS

Key Initiatives
• In-house facility for customers for ride tuning of vehicles
• Advanced damper technology for the enhanced
user experience
• CO2 footprint reduction through product light weighting and use of green technologies
• Virtual analysis for structural durability assessment of components
• Implementation of product life cycle management (PLM) to increase the reuse of existing components & to
improve productivity
• NVH measurement and reduction techniques to address noise issues in the new generation vehicles
 2W & 3W SEGMENT
Performance
• Growth was primarily driven by efforts in terms of improving market share with key customers, higher efforts in
terms of developing new products and on account of strong acceptance of end products in the market
New Program
• TVS Motors – N360, N282, N289 RR
• Bajaj Auto – R107, CNG
Challenge
• As per SIAM data, the 2W sales grew by 31% YoY and 3W
declined by 34% YoY respectively in Q3 FY21
• Within the 2W segment, Scooters, improved by 3%, & Motorcycles and Mopeds registered impressive growth by 23%
and 36% respectively in Q3 FY21
Future Development
• Electric Vehicles
• 2W - OLA Electric, Okinawa, Ather, TVS
• 3W – Bajaj, M&M, TI
Top 3 Customers
• TVS Motors, Yamaha, Bajaj Auto
 PV SEGMENT
Performance
• Growth impacted by discontinuation of Maruti Omni due to safety norms and replacement of Wagon R with
newer model where GIL is not the supplier
New Program
• Maruti Suzuki: Y0M
Challenge
• As per SIAM data, the sale of Passenger Vehicles grew by
26% in Q3 FY21 over the same period last year
• Within Passenger Vehicles, the sales for Passenger Cars, Utility Vehicle & Vans grew by 23% YoY and improved by 28%
respectively in Q3 FY21

Future Development
• M&M (3), VW (2), PSA (1), TML (1)

Top 3 Customers
• Maruti Suzuki, Volkswagen, Mahindra & Mahindra
 CV & RAILWAY SEGMENT
Performance
• Moderate growth coming back slowly reflecting in better production volumes by OEMs

New Program
• WABCO- Air suspension, MTBD- ICV 16T & Force Motors – T1 3350

Challenge
• As per SIAM data, the overall commercial vehicles segment registered a growth of 14% Q3 FY21 as compared to Q3
FY20
• Medium & Heavy Commercial Vehicles (M&HCVs) sales grew by 15% YoY and Light Commercial Vehicles (LCVs) grew by
12% YoY in Q3 FY21
Future Development
• Ashok Leyland – MBP, Partner; Force Motors – T1N
Top 3 Customers
• Tata Motors, Mahindra & Mahindra, Maruti Suzuki

Financial Worthiness
• Debt reduction
• Break even point (BEP)
reduction
• Simplification of parts
• Automation
GROWTH STRATEGY
Customer Focus Aftermarket Technology & Innovation
• Enhancing customer • Product development • Improvement in quality
delight and deepening • Expanding reach • R & D focus
relationships
• Exports focus • Sustainable manufacturing
• Collaboration and
product • Innovation culture
co-development
 INDIA 2W MARKET

 Hero Moto Corp & Honda Motorcycle & Scooters India were the top 2 players in the
2 wheelers segment with market share of 35.77% & 27.02% in FY-20, also
respectively posting a growth of 12% & 38% in August 2020.
 Ola Electric is on track of its plan to 2W EV’s, which will be reconfigured version of
Netherlands based Etergo BV’s App Scooter. Ola is planning to roll out 10 Million
electric scooters in 2022.
 More than 78 percent of motor vehicles on the road are two-wheelers, their popularity
is driven by low price, high fuel mileage, and an ability to drive efficiently through
dense traffic.
 INDIA 3W MARKET

 Bajaj Auto was the leader in the three wheelers passenger category with 64% market
share followed by Piaggio vehicles which stood at 20%.
 Piaggio Vehicles dominated the 3W load category with 42% market share followed by
Bajaj which stood at 27%
 Electrification of 3W is the most convenient looking at the daily km’s covered by 3W
vehicles.
 Equity Valuation
WACC 11.26%
PV of cash flows (In Crores) ₹ 902.73
PV of Terminal value (In Crores) ₹ 1,170.91
Enterprise Value (In Crores) ₹ 2,073.63
Less: Net Debt (In Crores) ₹ 56.21
Add: Investments (In Crores) ₹ 35.18
Equity Value (In Crores) ₹ 2,165.03
# of shares 14,36,43,940
Value/share (INR) ₹ 150.72

GABRIEL INDIA DCF CONCLUSION

TERMINAL GROWTH RATE @ 6%
CMP - ₹ 110.30
VALUE/SHARE AS PER DCF - ₹ 150.72
RELATIVE VALUATION IN DCF EXCEL SHEET
GABRIEL INDIA COMPARABLE ANALYSIS
MACRO OUTLOOK
 M&A OUTLOOK IN INDIAN AUTOMOTIVE INDUSTRY
 The slowdown since 2018, the evolution of mobility technologies tailed by the pandemic has disrupted
the M&A and JV scenario in the Indian Automotive industry. Fresh perspective and an outlook is
focused on to technology play around - Autonomous, Connected, Shared and Electric mobility
(ACSE). The underlying tone is obviously is to achieve sustainable growth, which will lead to
sustainable consumption and investment cycle. M&A options have gone beyond about showing value
to the shareholders and push for inorganic growth.
 Recent collaboration between Ford Motor and Mahindra & Mahindra. And Hyundai Motor Group
acquiring, stakes in Ola signals a transitional phase in the auto sector. The transformational phase will
create further M&A opportunities in the auto ancillary segment, as there will be increased demand for
vehicles around these new technologies, which needs deep pockets to Innovate, Design, Manufacture
& Retail.
Under present circumstances, exploration of M&A avenues to strengthen their value proposition, is,
unquestionably, a much-desired endeavour. After all, M&A wave is always driven by the aim to take
the business to the next level and fill the gaps in areas such as product, market, technology
 M&A OUTLOOK IN INDIAN AUTOMOTIVE INDUSTRY
 The automobile industry is driven by technological advancement and the ever-changing demands of
the consumers. It raises the complexity of the automotive environment and tightens the competition.
M&A acts as a strategic instrument to grow and expand the business; hence its importance has been
escalated in the automobile industry. Merger and Acquisition is a potent instrument to accommodate
new market requirements and generate profit from them. However, each M&A transaction can also
result in a considerable risk that can have a severe impact on the company’s growth.
 The automotive players aim to safeguard their business using the strategic technique of Mergers and
Acquisitions. Companies conduct M&A transactions after proper due diligence. Some automobile
entities choose to merge with their competitors to fulfil the gaps in the technology portfolio.
 For many years Mergers and Acquisitions plays an essential part in the development of the automobile
industry. The automotive industry is one of the most active and substantial markets for M&A in terms
of number and volume of transactions. It is mainly due to a massive consolidation for manufacturers
and suppliers during the last decades, prompted by the tightening of competition from globalization.
 WHAT CALLS FOR M&A ?
 Cost efficiency : Manufacturers avail the benefit from the economies of scale. The world biggest
automobile manufacturers rely on M&A. Thereby; they invest in production facilities in the emerging
markets to minimize production costs. Such emerging markets include China, Latin America, Malaysia
and Southeast Asia.
 Establishing Global Alliances : Many international automotive firms like Valeo SA, Johnson Controls
Inc., GKN Driveline and Magna International Inc., want to enlarge their presence in India. The Indian
automobile industry is the hub for multinational automobile players.
 Reinforce Core Competency: A significant aspect of the automotive industry is the rapid up-gradation
of technology. Therefore, companies deploy M&A to strengthen their operations as per the latest
technology; else, they can get eliminated from the stage of the international market.
 Geographic Outlook :  Indian automotive companies preserve their share of cross-border Mergers and
Acquisitions. It is the fastest-growing automobile market that drives massive foreign investments by
several renowned automakers & suppliers. The increasing global competition enforces domestic
manufacturers to pursue M&A as a strategic tool to boost in-house production.
 CONCLUSION

 The current changes in the automotive environment and the global shift in the technology are
the biggest issues Indian automakers. One can determine that Mergers and Acquisitions is
the best option for the automobile industry to survive in the cutting throat competition.
 M&A renders a big share to the automotive industry by facilitating cost saving through the
economies of scale. One critical factor in achieving success in M&A and increase the
outcome is through standardization of the process. Considering future prospects, one can
expect a rapid increase in M&A activity, particularly on the supplier’s side of the automobile
markets.
 The automotive industry is one of the richest industries in India. However, it has to fraught
with challenges and issues. By overcoming these challenges, the Indian automotive
industry shall become one of the biggest automotive distributors in the global market. 
 VALUATION IS AN IMPORTANT
ASPECT IN M&A BUT MANY TIMES
FOCUS IS ONLY ON THE NUMBERS
AND THE SUBTLE QUALITATIVE
ASPECTS AND OUTCOMES OF FUTURE
ARE NEGLECTED.
HENCE A TRUE VALUATION HAS TO THANK YOU
FACTOR BOTH THE NUMBERS AS
WELL AS THE FUTURISTIC
INTANGIBLES WHICH GET REDUCED
TO NUMBERS (CONSENSUS
FORECAST)