Gabriel India

Gabriel India

Gabriel India

Investors with a two-to-three-year perspective can buy the shares of Gabriel India, a manufacturer of ride control products for the auto industry. From a 52-week-high of Rs 74 in mid-November, broader market volatility has pulled the price down to Rs 53, providing an attractive entry point for investors. At this price, the stock trades at a PE of 13 times its annualised per share earnings for the April-September 2010 period. The company's market leadership position and diversified clientele in the backdrop of a strong demand for automobiles give good visibility to earnings growth over the near to medium term. Gabriel India manufactures shock absorbers, struts and front forks. About 45 per cent of its revenues comes from two and three-wheelers and 30 per cent from the passenger car segment. Commercial vehicles, supplies to replacement markets and exports make up the rest. The company is a tier I supplier to leading OEMs (original equipment manufacturers) such as Maruti, Tata Motors, Ford, Toyota, M&M, Ashok Leyland, Honda, Bajaj and TVS.

Gabriel India

Gabriel India faces strong long-term resistance in the range between Rs 38 and Rs 44. The stock reversed from this zone in December 1994 and then in April 2006.

This zone arrested the stock's rally this January as well and it reversed lower from the peak of Rs 43.9. The correction from this peak was however quite mild and the stock is taking support at the 38.2 per cent retracement of its rally from the March 2009 trough.

A short-term uptrend is in progress since February 26 in this stock. The strong 8 per cent surge on Monday accompanied by record volumes implies that the third leg of this uptrend could have started. The stock managed a strong close above its 50-day moving average as well as its short-term trend line on Monday.

The 10-day rate of change oscillator has moved in to the positive zone and the 14-day relative strength index that has moved to 58 denoting short-term strength. Investors with short-term trading perspective can buy the stock with the target of Rs 37 and Rs 38.6. Stop-loss can be placed at Rs 33.8.

via BL

Emkay - Morning Notes, 2 Wheeler Update, Garware Offshore, Gabriel India, Great Offshore

Emkay - Morning Notes, 2 Wheeler Update, Garware Offshore, Gabriel India, Great Offshore