Goodyear India - A Good Bet On Rural Prosperity: HDFC Securities

HDFC Securities Retail Research

Goodyear India Ltd. is a cash rich, debt-free company and has reported good financial numbers over past few years. The last few years have witnessed strong tractor sales in the domestic market.

Goodyear has recently witnessed market share gains due to rapid channel expansion and extraction, building synergies in the front end, innovation driving new product pipeline, leveraging the strength of Goodyear brand and building a best in-class team.

We have tweaked the FY24E estimates, introduced FY25E estimates and and upped the price target.

We expect Goodyear’s revenue/Ebitda/profit after tax to grow at 12/23/26% compound annual growth rate over FY23-FY25E, led by increased sales volume and moderation in material prices.

We expect return on net worth to increase from ~19% in FY23 to ~27% by FY25E.

We believe investors can buy the stock in the band of Rs 1370-1400 and add on dips in Rs 1230-1260 band (14.75 times FY25E earnings per share) for a base case fair of Rs 1519 (18 times FY25E EPS) and bull case fair of Rs 1624 (19.25 times FY25E EPS) over the next two-three quarters.

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