Banco Products Vs Gabriel India: An Automobile is a very complex machine requiring hundreds, if not thousands of parts to be assembled to near perfection for the machine to function smoothly. An Automobile Manufacturer does not go through the headache of manufacturing these components & instead focuses on designing these machines. 

The demand for Automobiles in India is at one of its highest levels. The growth of these Automobiles has secretly led to the growth of its underlying industries. Keeping this in mind, we have decided to cover two such companies that manufacture components for automobiles.

Banco Products Vs Gabriel India Company Overview

Banco Products Vs Gabriel India have increased shareholders’ wealth by more than 210% and 130% in just a year. Today we will learn about what these companies manufacture and what exact market they cater to. Then we will financially analyze these companies & compare their profitability & returns against each other before concluding as to which might be a better stock to bet on. So, stick around till the end to find out.

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 Banco Products

banco products logo Image

Established in 1961, Banco Products is a pioneer in the business of Engine Cooling systems such as Charged Air Coolers, Fuel Coolers, Oil Coolers, and AC condensers. It also manufactures De-Aeration plastic tanks, Metal Layered Gaskets, and Elastomeric molded gaskets which are used for static sealing.

In the Automotive segment, Banco supplies Passenger cars, two-wheelers, three-wheelers, utility, and commercial vehicles. In the industrial segment, the Company supplies material handling Machines, railway traction locomotives, transformer coolers, and mobile compressors.

Due to its 5 decades of industry experience and proprietary design & FEA simulation software, the Company is a reputed supplier to OEMs like Tata, Cummins, CAT, SAME, and Mahindra among others. 

In the Aftermarket category, the Company supplies under the name BANCO and NRF. Banco acquired a 100% stake in Nederlandse Radiateuren Fabriek (NRF) in 2010. NRF is a leading manufacturer of automotive, industrial, railway, and marine heat transfer products in European countries.

Gabriel India

Gabriel india logo Image

Gabriel India Ltd is a flagship Auto Ancillary Company of the ANAND Group, which is in the Automotive and Hospitality sectors. The Company’s history dates back to the 1950s when founder Deep C. Anand began his career as a plant manager at a Mahindra plant in 1954. 

The Company was set up in collaboration with Maremont Corporation (now Gabriel Ride Control Products, USA). Gabriel India has 6 decades of experience in supplying suspension solutions to automobiles ranging from two-wheelers to Railways. 

Their customers range from Indian Railways to Ashok Leyland, Force Motors, Mahindra & Tata Motors in the commercial and private vehicle segment. The Company enjoys Partnerships with International Brands such as KYB Corporation, Yamaha, and Koni which provide it with the technology or adequate supplies to manufacture its products. 

Gabriel India rules the domestic market with a dominant 40% market share, made possible by a network of 700+ dealers & 20,000+ retailers. Having Automotive OEMs as its clients, it enjoys the benefits of long-term contracts with these clients reducing the cost to acquire new customers.

Industry Overview

As per the Automobile Component Manufacturers Association (ACMA), India’s Component exports will reach USD 30 billion by 2026. It also estimates that the industry is likely to achieve a revenue of USD 200 billion by the same year. The industry is expected to grow by 20-23%, propelled by strong international demand and a resurgence in the local original OEM aftermarket segments.

The Component industries derive their benefits directly from the core Automotive sector, which is rapidly transitioning towards sustainability. The industry is being revolutionized, with various vehicle types like electric, hybrid-electric, and natural gas gaining prominence.

According to the Society of Indian Automotive Manufacturers (SIAM), the Indian automotive sector has emerged as the world’s third-largest market, surpassing Japan, with 4.25 million vehicles sold in 2022. The growth of the sector can be accredited to factors such as increasing disposable incomes, availability of credit and financing options, and a growing population.

Banco Products Vs Gabriel IndiaFinancials

Revenue & Net Profit

Banco Products reported a revenue of Rs. 2348 Cr in FY23, which increased by 20% from Rs. 1963 Cr in FY22. Gabriel performed even better scaling its revenue by over 27% from Rs. 2358 Cr in FY22 to Rs. 2989 Cr in FY23. However, due to the rather inconsistent performance by Gabriel India, Banco has performed at a higher rate.

Particulars / Fiscal Year201920202021202220234 Year CAGR
Banco Products - Revenue ₹1,577.15 ₹1,447.24 ₹1,541.60 ₹1,962.99 ₹2,347.50 10.45%
YoY Growth (%)-8%7%27%20%
Gabriel India - Revenue ₹2,085.70 ₹1,879.66 ₹1,719.14 ₹2,358.15 ₹2,989.12 9.41%
YoY Growth (%)-10%-9%37%27%

In terms of Net Profits, Banco products have done a phenomenal job of scaling profits from Rs. 152 Cr in FY22 to Rs. 236 Cr in FY23, a growth of 55%. Gabriel’s Net Profits have grown at a slightly slower rate of 48% from Rs. 90 Cr in FY22 to Rs. 132 Cr in FY23. 

Banco’s Net Profits have increased at a CAGR of 36% since FY19, while Gabriel’s profits increased by 8.65%. This shows that Banco has grown consistently while Gabriel’s profitability deteriorated in FY20 & FY21.

Particulars / Fiscal Year201920202021202220234 Year CAGR
Banco Products - Net Profit₹69.08 ₹76.57 ₹113.72 ₹152.42 ₹235.57 35.89%
YoY Growth (%)11%49%34%55%
Gabriel India - Net Profit₹94.98 ₹84.70 ₹60.27 ₹89.51 ₹132.35 8.65%
YoY Growth (%)-11%-29%49%48%

Profit Margins

Regarding Operating Margins, Banco Products reported margins of 15.61% while Gabriel’s was at 7.19% in FY23. Banco’s Operating Margins have consistently performed in the double-digit category while Gabriel has performed greater than 8.5% in FY19.

As For Net Profit Margins, the picture remains more or less the same, with Banco Products maintaining margins of 10.24% while Gabriel’s Net Profit Margins were a mere 4.45% in FY23.

Material Costs have been the biggest expense for Gabriel India, constituting 75% of its Net Revenue, while for Banco Products it’s just 66%. This could be attributed to a major cost for its lower operating margins.

Particulars / Fiscal Year201920202021202220235 Year Avg
Banco Products - Operating Margins11.21%8.59%11.62%13.88%15.61%12.18%
Gabriel India - Operating Margins8.56%7.37%6.05%6.26%7.19%7.09%
Banco Products - Net Profit Margins5.32%5.39%7.42%7.91%10.24%7.26%
Gabriel India - Net Profit Margins4.57%4.53%3.56%3.84%4.45%4.19%

Return Ratios

Return on Equity of Banco Products & Gabriel India was at 23.76% and 16.2% respectively. Due to increased profit margins, Banco Products has been consistently improving its Return on Equity from FY21.

Regarding Return on Capital Employed, Banco Products reported an ROCE of 24.17% compared to Gabriel India’s 20.34% in FY23. In the long term, both companies have similar ROCE averaging at around 19% in the past 5 years.

The reason why Banco’s ROCE is the same as that of Gabriel in 5 Years is the result that Banco comparatively has higher debt as compared to Gabriel. However, in FY23 Banco extended its lead in ROCE by expanding these returns by 235 bps.

Particulars / Fiscal Year201920202021202220235 Year Avg
Banco Products - RoE10.17%9.93%14.79%16.84%23.76%15.10%
Gabriel India - RoE16.10%13.00%8.66%11.50%16.20%13.09%
Banco Products - RoCE18.31%13.69%18.68%21.82%24.17%19.33%
Gabriel India - RoCE25.80%17.80%16.80%16.46%20.34%19.44%

Debt Analysis

Banco has a higher debt as compared to Gabriel maintaining a debt-to-equity ratio of 0.04x in FY23. Comparatively, Gabriel India is virtually debt-free with a debt to Equity of just 0.01x. 

With an Interest Coverage Ratio of 37x and 33x for Banco and Gabriel India respectively, both Companies have enough earnings to pay off their debt expenses.

Particulars / Fiscal Year201920202021202220235 Year Avg
Banco Products - Debt to Equity0.050.130.020.010.040.05
Gabriel India - Debt to Equity0.010.010.020.020.010.01
Banco Products - Interest Coverage36.7937.0042.4243.5825.7137.10
Gabriel India - Interest Coverage46.6126.309.9534.1546.6132.72

Future Plans of Banco Products

  1. The Company has already begun product development to manufacture cooling & gasket sealing segments for the domestic & international markets.
  2. Banco Products will continue to expand its presence in the export market. 
  3. The previous year, the Company set an all-time high of product launches for the export market. NRF had reported its highest sales growth the previous year & will continue to in the coming years.

Future Plans of Gabriel India

  1. Gabriel India aims to steal the spot as one of the Top 5 manufacturers of Shock Absorbers globally. It will do so by expanding its presence in the EV & SUV segment.
  2. The company plans to diversify its business into other segments. However, no further details have been given. The Management is still under consideration.
  3. It is also dabbling into AI & ML, to bring about digital transformation & robotics in their Product Lifecycle Management, Noise Vibration, Harshness measures & other such systems.

Key Metrics

We have now understood both the Companies’ business as well as taken a good comparative look at their financials. Now let us look at a few Key Metrics.

ParticularsBanco Products Gabriel India
CMP₹ 661.9₹ 348.2
Market Cap (Cr.)₹ 4,778.52 Cr₹ 5,625.1 Cr
EPS₹32.94 ₹9.21
Stock P/E (TTM)16.0737.56
RoE27.13%16.3%
Book Value₹157.55 ₹65.01
Price to Book Value4.366.12
Promoter Holding67.88%55.00%

Conclusion

Banco Products & Gabriel India, although both Companies are into manufacturing Auto Components they produce specific goods for their niches. Banco Products maintains strong grounds for financially outperforming its fellow peer Gabriel India.

Even in terms of Price to Earnings, Banco Products is trading at half the value of Gabriel India, with a PE of just 16x. However, as mentioned previously both Companies have already given multi-bagger returns in a single year. So only time will tell if the stocks still have some steam left.

Nevertheless, which stock would you pick for your portfolio? Is there a better Auto Component manufacturer than these? Let us know in the comments below.

Written by Nasir Hussain

By utilising the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investment.


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