Goodyear India Ltd Downgraded to Sell Amid Weak Technicals and Valuation Concerns

Technical Trends Turn Bearish

The primary catalyst for the downgrade stems from a marked deterioration in technical parameters. The technical trend has shifted from mildly bearish to outright bearish, signalling increased selling pressure. Key technical indicators paint a cautious picture: the Moving Average Convergence Divergence (MACD) is bearish on both weekly and monthly charts, while Bollinger Bands indicate bearish momentum weekly and mildly bearish monthly. Daily moving averages also confirm a bearish stance, reinforcing the negative technical outlook.

Other technical tools provide a mixed but predominantly negative signal. The Relative Strength Index (RSI) remains neutral with no clear signal on weekly or monthly timeframes, while the Know Sure Thing (KST) indicator is bearish weekly but mildly bullish monthly. Dow Theory readings are mildly bullish weekly but mildly bearish monthly, reflecting some short-term indecision but longer-term caution. Overall, the technical landscape suggests that the stock is under pressure, with limited immediate upside.

Price action corroborates this view. The stock closed at ₹823.35 on 17 Feb 2026, down 1.58% from the previous close of ₹836.60. It remains well below its 52-week high of ₹1,071.00 and closer to its 52-week low of ₹764.00, underscoring the recent weakness in price momentum.

Valuation Remains Expensive Despite Mixed Financial Performance

From a valuation standpoint, Goodyear India is trading at a premium relative to its peers and historical averages. The Price to Book (P/B) ratio stands at 3.3, which is considered expensive given the company’s moderate return on equity (ROE) of 9.9%. This elevated valuation is a concern, especially in light of the company’s subdued long-term growth prospects.

While the company’s profits have risen by 23.1% over the past year, the stock price has declined by 6.12% during the same period, indicating a disconnect between earnings growth and market valuation. The Price/Earnings to Growth (PEG) ratio of 1.5 further suggests that the stock is not undervalued relative to its earnings growth rate, limiting the upside potential for investors seeking value.

Moreover, Goodyear India’s market capitalisation grade is rated 3, reflecting a mid-tier market cap status that may not attract significant institutional interest compared to larger peers. This valuation premium, combined with the lack of strong price appreciation, has contributed to the cautious stance among analysts and investors.

Financial Trend: Positive Quarterly Performance but Weak Long-Term Growth

Financially, the company reported a positive performance in Q3 FY25-26, with the highest quarterly PBDIT recorded at ₹42.17 crores and an operating profit to net sales ratio of 6.95%, the highest in recent quarters. Profit before tax excluding other income also reached a peak of ₹28.74 crores, signalling operational efficiency in the short term.

However, the long-term financial trend remains a concern. Operating profit has declined at an annualised rate of -11.86% over the past five years, indicating challenges in sustaining growth. This sluggish growth trajectory is reflected in the stock’s consistent underperformance against the benchmark indices. Over the last three years, Goodyear India has generated a cumulative return of -21.36%, significantly lagging the Sensex’s 35.81% gain and the BSE500’s positive returns.

Despite this, the company exhibits strong management efficiency, with a high ROE of 16.15% and a low average debt-to-equity ratio of zero, indicating a clean balance sheet and prudent capital management. Promoters remain the majority shareholders, providing stability in ownership and strategic direction.

Comparative Returns Highlight Underperformance

When analysing returns relative to the broader market, Goodyear India’s performance is underwhelming. The stock’s one-year return of -6.12% contrasts sharply with the Sensex’s 9.66% gain. Over five and ten-year horizons, the disparity widens further, with the stock delivering -14.50% and +74.25% respectively, while the Sensex surged 59.83% and 259.08% over the same periods.

This persistent underperformance raises questions about the company’s ability to generate shareholder value in the medium to long term, especially when benchmark indices and sector peers have outpaced it considerably.

Technical and Fundamental Outlook Suggest Caution

In summary, the downgrade to a Sell rating for Goodyear India Ltd is driven by a confluence of factors. The technical indicators have deteriorated, signalling bearish momentum and limited near-term upside. Valuation metrics remain elevated despite mixed financial results, with the stock trading at a premium to peers without commensurate growth.

Long-term financial trends reveal a decline in operating profit over five years and consistent underperformance relative to benchmark indices. While the company benefits from strong management efficiency and a clean balance sheet, these positives are insufficient to offset the broader concerns.

Investors should weigh these factors carefully, considering the stock’s current technical weakness, expensive valuation, and subdued growth prospects before making investment decisions.

Market Context and Sector Positioning

Operating within the Tyres & Rubber Products sector, Goodyear India faces competitive pressures and cyclical demand fluctuations. The sector has seen varied performance, with some companies benefiting from rising commodity prices and infrastructure growth, while others struggle with margin pressures and raw material cost volatility.

Goodyear India’s premium valuation relative to peers suggests that the market may be pricing in expectations of a turnaround or superior operational performance. However, the current data and technical signals indicate that such expectations may be premature, warranting a cautious stance.

Conclusion

The recent downgrade of Goodyear India Ltd’s investment rating to Sell by MarketsMOJO reflects a comprehensive reassessment of its technical, valuation, financial, and market positioning parameters. With a Mojo Score of 44.0 and a bearish technical outlook, the stock faces headwinds that could limit near-term gains.

Investors should monitor upcoming quarterly results and sector developments closely, but for now, the balance of evidence suggests that Goodyear India is better suited for a cautious or defensive allocation rather than an aggressive buy.

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