View Full Version : Goodyear India Limited (BSE:500168)

08-14-2015, 05:44 PM
Goodyear India Limited is an India-based manufacturer of automotive bias tires, such as farm tires and medium commercial truck tires, tubes and flaps. It also offers products, which include radial passenger and Off the Road (OTR) bias tires manufactured by Goodyear South Asia Tyres Private Limited (GSATPL). The Company markets its products under the brand name Goodyear. It manufactures tyres under three categories: performance, passenger and sports utility vehicle/4X4. It offers Goodyear Eagle F1 Directional 5 and Goodyear Eagle F1 GSD3 under the performance category; Goodyear Assurance Fuel Max, Goodyear DuraPlus, Goodyear Eagle EfficientGrip, Goodyear Assurance, Goodyear Excellence, Goodyear Ducaro Hi-Miler, Goodyear GT3 and Goodyear GPS2 under the passenger category, and Goodyear Wrangler HP AW, Goodyear EfficientGrip SUV, Goodyear Wrangler AT/ SA, Goodyear Wrangler D-Sport, Goodyear Wrangler F1 and Goodyear Wrangler RT/S in the sports utility vehicle/4X4 category.

Official Website: www.goodyear.co.in

08-14-2015, 05:46 PM
Goodyear India (GIL) is shifting from the calendar year reporting followed until now, to financial year reporting. Hence FY2016 will consist of five quarters. Goodyear India Ltd (GIL) has reported a good set of numbers for 2QFY2016. Its top-line witnessed a marginal decline of 0.2% yoy to Rs432cr, which is in-line with our estimate of Rs428cr. The raw material cost declined by 636bp yoy to 64.3% of sales while employee and other expenses increased by 101bp yoy and 206bp yoy to 6.4% and 15.6% of sales, respectively. As a result, the EBITDA margin expanded by 329bp yoy to 13.6%. On the back of lower raw material cost, the net profit for the quarter increased by 25.5% yoy to Rs36cr. Expansion drive to lead to recovery in top-line: GIL has laid out plans to significantly grow its presence in the passenger car segment in India, over the next five years. The company aspires to be one of the top players in the mid to premium, and SUV segments, for passenger cars. It is also evaluating entry into newer segments; in order to reach its goal, the company is weighing organic as well as in-organic growth options, to expand in India. Strong balance sheet with high RoIC: GIL is a debt free-cash rich company with RoIC estimated at 81.6% for FY2017. The company’s cash and equivalents are expected to be at Rs555cr by FY2017-end, which would amount to ~41% of the current market cap. More importantly, GIL is one of the cheapest MNCs available to invest in, in the similar market cap range. Outlook and valuation: We expect the company’s top-line to be at Rs1,953cr and Rs1,766cr in FY2016E and FY2017E respectively. Raw material cost is expected to remain stable over FY2016E-17E resulting in EBITDA margin of 12.4% in FY2016E and 12.0% in FY2017E. Consequently, we estimate the net profit to be at Rs137cr in FY2017E. At the current market price, the stock is trading at a PE of 10.0x its FY2017E earnings. On a TTM basis, GIL is one of the cheapest MNCs available as it trades at a PE of 16.0x while other MNCs (having market cap of Rs1,000cr-Rs5,000cr) trade above the 20.0x mark (median of 36.7x). We maintain our Accumulate rating on the stock and assign a target price of Rs655 based on a target PE of 11x for FY2017E.

Source: http://www.angelbroking.com/