Goodyear India Ltd. share price target

Goodyear India (GIL) is a leading domestic tyre player with manufacturing presence in farm equipment i.e. tractor and CV segments. It also serves the PV segment, albeit through trading route (manufacturing to trading mix as of FY19 was at 67:33). We expect the domestic tractor industry to outperform wider automotive space over FY20-22E as 1) it does not suffer from similar demand-side shocks on account of relatively stable rural incomes pursuant to remunerative crop prices, expectations of a normal monsoon in 2020, government focus on doubling farm incomes and...

Goodyear India (GIL) is a leading tyre player domestically manufacturing tyres for the farm equipment (tractor) and CV space. GIL is also present across the PV category but does not manufacture the same. The manufacturing to trading mix was at 67:33 as of FY19. With healthy 8% growth in tractor volumes in FY19, GIL reported a healthy performance in FY19, with revenue from operations rising 14.9% YoY to | 1,912 crore. However, EBITDA fell 18.4% YoY to | 164 crore, with attendant margins coming off sharply by 351 bps YoY to 8.6%. Consequent PAT for FY19 was...

Mixed Performance on the Back of Inventory Changes: Goodyear India in Q3FY17 reported mixed performance with marginal YoY growth of 4.7% in topline and sizable jump in net profits by 27.5%. Inventory changes ledto this significant growth in the profit margins and the bottomline of the company. The topline grew YoY by 4.7% to Rs. 4040 mn, the operating profit margins increased by 274 bps YoY by 14.6% and the bottomline grew by 27.5% to Rs. 332 mn on YoY basis.

BUY Goodyear India Ltd at CMP Rs. 764 and add on dips to Rs. 688 - 700 for the sequential Targets of Rs. 860 - 916

Expectation of normal monsoon to energize stagnant tractor demand: Goodyear India (GIL) is a leader in the farm tyre segment in India with it having strong tieups with OEMs as well as a dominant presence in the replacement market. Farm tyres account for ~50% of the company's overall revenues; however, the segment has been under pressure o..