Why is Goodyear India falling/rising?

Recent Price Movement and Market Context

On 15 Dec, Goodyear India’s shares fell after two consecutive days of gains, touching an intraday low of ₹835.5, which is approximately 4.5% above its 52-week low of ₹806. The stock underperformed its sector by 1.82% on the day and is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical weakness signals a lack of upward momentum and investor confidence in the near term.

Liquidity remains adequate, with delivery volumes spiking notably on 25 Oct, indicating some investor interest, but this has not translated into sustained price strength. The stock’s performance over various time frames starkly contrasts with benchmark indices. Over the past week, it declined by 0.79% while the Sensex rose marginally by 0.13%. More significantly, the stock has underperformed the Sensex by wide margins over one month (-8.71% vs +0.77%), year-to-date (-16.00% vs +9.05%), one year (-17.94% vs +3.75%), three years (-26.35% vs +37.89%), and five years (-16.71% vs +84.19%). This consistent underperformance highlights structural issues weighing on investor sentiment.

Financial Performance and Valuation Concerns

Despite a high management efficiency reflected in a return on equity (ROE) of 16.15%, Goodyear India’s long-term growth metrics paint a less favourable picture. Operating profit has declined at an annualised rate of 7.89% over the last five years, signalling deteriorating profitability. The company reported negative results in the latest half-year period ending September 2025, with profit after tax (PAT) falling by 33.33% to ₹27.18 crores. Additionally, the return on capital employed (ROCE) stood at a low 10.28%, and the dividend per share (DPS) was at a modest ₹23.90, indicating limited returns to shareholders.

Valuation metrics further dampen enthusiasm. The stock trades at a price-to-book value of 3.4, which is considered expensive relative to its peers and historical averages. This premium valuation is difficult to justify given the company’s declining profits, which have dropped by 28.9% over the past year. The combination of falling earnings and a high valuation multiple has likely contributed to the stock’s negative returns and investor caution.

Consistent Underperformance Against Benchmarks

Goodyear India’s stock has consistently lagged behind broader market indices and sector benchmarks. Over the last three years, it has underperformed the BSE500 index in each annual period, reflecting persistent challenges in maintaining competitive growth and profitability. This trend is underscored by the stock’s negative returns of nearly 18% over the past year, contrasting with positive returns from the Sensex and other indices. Such sustained underperformance often leads to diminished investor interest and selling pressure, which is evident in the recent price declines.

Investor Sentiment and Outlook

Investor sentiment towards Goodyear India appears cautious due to the company’s weak financial results, expensive valuation, and consistent underperformance relative to benchmarks. While the company benefits from a low debt-to-equity ratio and promoter majority ownership, these positives have not been sufficient to offset concerns about profitability and growth. The stock’s proximity to its 52-week low and its failure to sustain gains after brief rallies suggest that market participants remain wary of its near-term prospects.

In summary, Goodyear India’s share price decline on 15 Dec and over recent periods is primarily driven by disappointing financial performance, including shrinking profits and low returns on capital, combined with a valuation premium that the market finds hard to justify. The persistent underperformance against the Sensex and sector peers further compounds investor reluctance, resulting in continued selling pressure.

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