Gabriel India shares hit upper circuit of 20% in early market deals, here's why

Gabriel India shares hit upper circuit on Tuesday after the firm announced an ambitious scheme involving the amalgamation of Anchemco India Pvt. Ltd. into Asia Investments Pvt. Ltd. (AIPL) and the subsequent demerger of automotive undertakings into Gabriel India. Gabriel India will issue 1,158 shares for every 1,000 shares held by AIPL promoters. The deal is calculated at a multiple of eight times the FY2025 Enterprise Value to EBITDA and aims to enhance the company's scale without financial leverage or cash outlay.

Subsequently, Gabriel India shares rose 20% to Rs 842.90 in early deals today against the previous close of Rs 702.45 on BSE. 

The move is contingent on approvals from multiple stakeholders, including the company's board, creditors, stock exchanges, the National Company Law Tribunal (NCLT), and shareholders, with completion projected within the next 10 to 12 months.

The strategic rationale behind this consolidation includes transformation, expansion, and simplification of the group structure. Gabriel India aims to address investor concerns over product diversification and mergers and acquisitions strategy while targeting a revenue milestone of ₹50,000 crore by 2030.

The appointed date for Anchemco’s merger into AIPL is set for April 1, 2025, with the demerger completion anticipated by April 1, 2026. This scheme of arrangement is a pivotal part of Gabriel’s plan to optimise its domestic and international footprint and streamline operations. The investor presentation underscores the increased scale and presence without additional debt.

Gabriel has been scouting for acquisitions through similar schemes in entities where its promoters hold stakes, reinforcing its growth and market positioning strategy. The company's commitment to simplifying its structure and enhancing its operational capabilities appears to resonate well with its strategic goals and investor expectations.

This strategic move strengthens Gabriel as a multi-product diversified auto components leader and given it is a listed company with a larger portfolio of pan-Industry products-- beyond suspension parts and shocks-- makes it the key thrust engine for ANAND to reach its Rs 50,000 crore revenue goal by 2030.

This will further accelerate its expansion into new segments, geographies, the aftermarket product range, and railways product range (where is already there for suspensions/shocks).