Why is Goodyear India falling/rising?

Recent Price Movement and Market Context

On 20 November, Goodyear India’s share price closed at ₹891.75, registering a modest gain of ₹1.25 or 0.14%. This uptick marks a reversal after seven consecutive days of decline, signalling a potential short-term shift in investor sentiment. Notably, the stock outperformed its sector by 0.73% on the day, suggesting some renewed buying interest relative to peers.

However, this positive movement contrasts with the broader trend over recent weeks and months. The stock has declined by 4.86% in the past week and 10.46% over the last month, while the benchmark Sensex has advanced by 1.37% and 1.50% respectively during these periods. Year-to-date, Goodyear India’s stock is down 11.26%, whereas the Sensex has gained 9.59%. This divergence highlights the company’s ongoing struggle to keep pace with the broader market.

Technical Indicators and Trading Activity

Despite the recent price gain, Goodyear India remains below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning indicates the stock is still in a bearish phase from a momentum perspective. Nevertheless, rising investor participation is evident, with delivery volumes on 25 October surging by over 400% compared to the five-day average, reflecting heightened trading interest and liquidity sufficient for moderate trade sizes.

Fundamental Strengths and Weaknesses

On the positive side, Goodyear India boasts a high management efficiency, reflected in a return on equity (ROE) of 16.15%, which is a commendable figure indicating effective utilisation of shareholder funds. The company also maintains a conservative capital structure with an average debt-to-equity ratio of zero, reducing financial risk. Promoters hold the majority stake, which often aligns management interests with shareholders.

However, these strengths are overshadowed by significant fundamental challenges. Operating profit has contracted at an annualised rate of 7.89% over the past five years, signalling deteriorating core business performance. The latest half-year results ending September 2025 reveal a 33.33% decline in profit after tax (PAT) to ₹27.18 crores, alongside a low return on capital employed (ROCE) of 10.28%. Dividend per share (DPS) has also dropped to ₹23.90, the lowest in recent periods, which may dampen income-focused investor appeal.

Valuation and Relative Performance

Despite these headwinds, the stock trades at a premium valuation, with a price-to-book ratio of 3.6, considerably higher than peers’ historical averages. This elevated valuation is difficult to justify given the company’s subdued profitability, with ROE falling to 7.2% and profits declining by nearly 29% over the past year. The stock’s total return over the last 12 months has been negative 11.81%, underperforming the BSE500 index and broader market benchmarks consistently over one, three, and five-year horizons.

Conclusion: A Stock Showing Short-Term Resilience Amid Structural Concerns

In summary, Goodyear India’s recent price rise on 20 November reflects a short-term recovery following a prolonged decline, supported by increased investor participation and a slight outperformance relative to its sector. Nonetheless, the stock remains technically weak and fundamentally challenged, with poor long-term growth, declining profits, and a valuation that appears stretched given the company’s financial metrics.

Investors should weigh the modest recent gains against the backdrop of sustained underperformance and deteriorating earnings before considering exposure to this stock. The current price action may represent a technical bounce rather than a definitive turnaround in the company’s fortunes.

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