Current Rating and Its Significance
MarketsMOJO's 'Sell' rating for Goodyear India Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new positions at this time. This recommendation is based on a comprehensive evaluation of the company's quality, valuation, financial trend, and technical outlook. The rating was adjusted on 16 February 2026, reflecting a shift in the assessment of these factors, but the detailed analysis below uses the most recent data available as of 28 February 2026.
Quality Assessment
As of 28 February 2026, Goodyear India Ltd maintains a good quality grade. This reflects the company's operational strengths and business fundamentals. Despite challenges in growth, the company has demonstrated resilience in its core tyre manufacturing operations. However, the long-term growth outlook remains subdued, with operating profit having declined at an annualised rate of -11.86% over the past five years. This contraction in operating profit growth signals structural issues that may limit the company's ability to expand earnings sustainably.
Valuation Considerations
The stock is currently classified as expensive based on valuation metrics. With a Price to Book (P/B) ratio of 3.2, Goodyear India Ltd trades at a premium relative to its historical averages and peer group valuations. This elevated valuation is notable given the company's modest return on equity (ROE) of 9.9%. While the stock price has declined by 6.65% over the past year, profits have increased by 23.1%, resulting in a Price/Earnings to Growth (PEG) ratio of 1.4. This suggests that the market is pricing in growth expectations that may be optimistic given the company's recent financial trends.
Financial Trend Analysis
Financially, the company holds a positive grade, reflecting recent improvements in profitability despite broader challenges. The latest data shows a mixed performance, with the stock delivering negative returns over multiple time frames: -1.16% in one day, -0.51% over one month, and -6.65% over the past year. The year-to-date return stands at -5.96%, and the six-month return is down by 18.57%. These figures highlight ongoing market pressures and investor caution. Moreover, Goodyear India Ltd has consistently underperformed the BSE500 benchmark over the last three years, underscoring relative weakness in comparison to the broader market.
Technical Outlook
The technical grade for Goodyear India Ltd is bearish. This reflects downward momentum in the stock price and negative market sentiment. The recent price declines and underperformance against benchmarks suggest that technical indicators are signalling caution. Investors relying on chart-based analysis may interpret this as a sign to avoid initiating new positions until a clearer reversal pattern emerges.
Summary of Current Position
In summary, Goodyear India Ltd's 'Sell' rating is grounded in a combination of factors: good operational quality but poor long-term profit growth, expensive valuation metrics relative to earnings and book value, a positive yet challenged financial trend, and a bearish technical outlook. For investors, this rating implies that the stock may face headwinds in the near term and that risk-adjusted returns could be unfavourable compared to other opportunities in the Tyres & Rubber Products sector or broader market.
Investment Implications
Investors should consider the implications of the 'Sell' rating carefully. While the company shows pockets of financial strength, the premium valuation and negative price trends suggest limited upside potential. Those holding the stock may want to reassess their positions in light of the current market environment and the company's performance metrics as of 28 February 2026. New investors might prefer to wait for more attractive entry points or clearer signs of operational turnaround before committing capital.
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Sector and Market Context
Within the Tyres & Rubber Products sector, Goodyear India Ltd operates in a competitive environment marked by fluctuating raw material costs and evolving demand patterns. The company's small-cap status adds an additional layer of volatility and liquidity considerations for investors. Compared to sector peers, Goodyear India Ltd's valuation premium and subdued growth metrics may warrant a more cautious approach, especially given the broader market's mixed performance.
Looking Ahead
Going forward, investors should monitor key indicators such as operating profit trends, margin stability, and any shifts in market sentiment or technical signals. Improvements in these areas could prompt a reassessment of the stock's rating. Conversely, continued underperformance or valuation pressures may reinforce the current 'Sell' stance. Staying informed with up-to-date financial disclosures and market developments will be essential for making well-informed investment decisions.
Conclusion
Goodyear India Ltd's current 'Sell' rating by MarketsMOJO reflects a balanced analysis of quality, valuation, financial trends, and technical factors as of 28 February 2026. While the company retains operational strengths, the combination of expensive valuation, negative price momentum, and underwhelming long-term profit growth suggests limited appeal for investors seeking capital appreciation in the near term. This rating serves as a prudent guide for market participants evaluating their exposure to this stock within the tyre manufacturing sector.
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