Goodyear India Ltd is Rated Strong Sell

Current Rating and Its Implications for Investors

The Strong Sell rating assigned to Goodyear India Ltd indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its sector peers. This recommendation is grounded in a detailed analysis of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal and risk profile.

Quality Assessment

As of 02 February 2026, Goodyear India Ltd maintains a good quality grade. This suggests that the company’s operational fundamentals and business model retain some strengths despite challenges. However, the long-term growth trajectory remains a concern. Over the past five years, operating profit has declined at an annualised rate of -7.89%, indicating persistent pressure on core earnings. Additionally, the company reported negative results in the latest half-year period ending September 2025, with profit after tax (PAT) shrinking by 33.33% to ₹27.18 crores. Return on capital employed (ROCE) for the half-year stands at a low 10.28%, while dividend per share (DPS) has dropped to ₹23.90, the lowest in recent years. These factors highlight operational difficulties that weigh on the company’s quality profile.

Valuation Considerations

Valuation is a critical factor in the current rating. Goodyear India Ltd is classified as very expensive based on its financial metrics as of today. The stock trades at a price-to-book (P/B) ratio of 3.2, which is significantly higher than the average valuations of its peers in the Tyres & Rubber Products sector. This premium valuation is not supported by the company’s earnings performance, which has deteriorated over the past year. The return on equity (ROE) is a modest 7.2%, reflecting limited profitability relative to shareholder equity. Investors should note that the stock’s elevated valuation, combined with declining profits, raises concerns about the sustainability of its current price levels.

Financial Trend Analysis

The financial trend for Goodyear India Ltd is currently negative. The latest data as of 02 February 2026 shows that the company’s profits have fallen by 28.9% over the past year. This decline is mirrored in the stock’s market performance, which has delivered a negative return of 17.66% over the same period. The stock’s underperformance extends beyond the last year, with losses of 19.93% over three months and 19.89% over six months. Furthermore, the company has underperformed the BSE500 index over the last three years, one year, and three months, signalling persistent challenges in generating shareholder value. These trends underscore the financial headwinds facing the company and justify a cautious investment stance.

Technical Outlook

From a technical perspective, Goodyear India Ltd is rated bearish. The stock’s price movements have shown consistent weakness, with a one-day decline of 0.37%, a one-week drop of 2.17%, and a one-month fall of 8.91%. The downward momentum is evident in the sustained negative returns across multiple time frames, reflecting investor sentiment that is currently unfavourable. Technical indicators suggest limited near-term recovery potential, reinforcing the rationale behind the Strong Sell rating.

Summary of Current Position

In summary, Goodyear India Ltd’s Strong Sell rating as of 16 December 2025 is supported by a combination of good but weakening quality, very expensive valuation, negative financial trends, and bearish technical signals. As of 02 February 2026, the company faces significant challenges in profitability and market performance, which are not adequately compensated by its current stock price. Investors should approach this stock with caution, considering the risks highlighted by the comprehensive analysis.

Investor Takeaway

For investors, the Strong Sell rating signals a need for prudence. The company’s current financial health and market valuation do not present an attractive risk-reward profile. While the quality grade remains good, the deteriorating financial trend and bearish technical outlook suggest that the stock may continue to face downward pressure. The very expensive valuation further limits upside potential, making it difficult to justify a buy or hold position at this time.

Sector and Market Context

Goodyear India Ltd operates within the Tyres & Rubber Products sector, which has seen mixed performance amid fluctuating raw material costs and competitive pressures. Compared to its sector peers, Goodyear’s valuation premium is not supported by commensurate earnings growth or returns. The broader market, represented by indices such as the BSE500, has outperformed this stock over multiple time frames, underscoring the relative weakness of Goodyear India Ltd’s share price performance.

Conclusion

In conclusion, the Strong Sell rating for Goodyear India Ltd reflects a comprehensive evaluation of its current fundamentals, valuation, financial trends, and technical indicators as of 02 February 2026. Investors should carefully consider these factors when making portfolio decisions, recognising the risks associated with holding this stock under prevailing conditions. Monitoring future updates and company developments will be essential to reassess the investment case as market dynamics evolve.

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