Goodyear India Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth and Underperformance in Market

Goodyear India, a smallcap company in the tyre industry, has recently been downgraded to a 'Sell' by MarketsMOJO on March 11, 2024. This decision was based on the company's poor long-term growth, with net sales growing at an annual rate of 7.26% and operating profit at 4.71% over the last 5 years. Additionally, the company declared negative results in December 2023 after two consecutive positive quarters, with a significant decrease in PAT(Q) at Rs 21.86 crore and NET SALES(Q) at Rs 591.40 crore.
Furthermore, Goodyear India has underperformed the market in the last year, with a return of only 15.10% compared to the market's (BSE 500) return of 37.37%. However, the company does have high management efficiency, with a ROE of 16.71%, and a low debt to equity ratio of 0 times on average.

The technical trend for Goodyear India is currently sideways, indicating no clear price momentum. The stock's technical trend has deteriorated since March 11, 2024, and has generated a negative return of -1.66% since then.

Despite these negative factors, the company does have an attractive valuation with a ROE of 21.3 and a price to book value of 4.6. However, the stock is currently trading at a premium compared to its average historical valuations. Additionally, while the stock has generated a return of 15.10% in the past year, its profits have only risen by 24.4%, resulting in a PEG ratio of 0.9. Furthermore, the company offers a high dividend yield of 4.3% at its current price.

It is worth noting that the majority shareholders of Goodyear India are the promoters of the company. Overall, while Goodyear India may have some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO suggests that investors should approach this stock with caution.