Why is Goodyear India Ltd falling/rising?

Recent Price Movements and Market Performance

On 28 January, Goodyear India Ltd’s share price closed at ₹796.50, down by ₹5.7 or 0.71%. The stock hit a new 52-week low of ₹776.55 during the trading session, marking a significant technical setback. Intraday activity showed the weighted average price skewed towards the lower end, indicating selling pressure. Furthermore, the stock underperformed its sector by 0.55% on the day, signalling relative weakness within its industry group.

Technically, the stock is trading below all major moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – which typically signals a bearish trend and dampens short-term investor confidence. Despite a notable rise in delivery volume on 25 October, which surged by over 566% compared to the five-day average, this increased participation has not translated into sustained price support.

Long-Term Underperformance Against Benchmarks

Over multiple time horizons, Goodyear India Ltd has consistently lagged behind key market indices. In the past week, the stock declined by 1.82%, while the Sensex gained 0.53%. Over one month, the stock fell 6.35%, nearly double the Sensex’s 3.17% decline. Year-to-date, the stock is down 6.15%, compared to the Sensex’s 3.37% fall. More strikingly, over the last year, the stock has lost 15.06% in value, whereas the Sensex has risen by 8.49%. This trend extends further back, with the stock underperforming the benchmark by over 24% in three years and 14.56% in five years, while the Sensex has delivered robust gains of 38.79% and 75.67% respectively.

This persistent underperformance highlights structural challenges facing the company and has likely contributed to investor wariness.

Financial and Valuation Concerns

Despite a commendable management efficiency reflected in a return on equity (ROE) of 16.15%, Goodyear India Ltd’s financial health reveals troubling signs. The company’s 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 underscore this weakness, with profit after tax (PAT) declining by 33.33% to ₹27.18 crores. Additionally, the return on capital employed (ROCE) is at a low 10.28%, and the dividend per share (DPS) has dropped to ₹23.90, the lowest in recent periods.

Valuation metrics further dampen the outlook. The stock trades at a price-to-book value of 3.2, which is considered expensive relative to its peers and historical averages. This premium valuation is difficult to justify given the company’s shrinking profits, which have fallen by 28.9% over the past year. The combination of declining earnings and a lofty valuation has likely deterred value-conscious investors.

Investor Sentiment and Outlook

The stock’s consistent underperformance against the BSE500 index over the last three years, coupled with negative returns and declining profitability, has eroded investor confidence. 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 growth and valuation. The recent price action, including the breach of a 52-week low and trading below all key moving averages, reflects a bearish market consensus.

In summary, Goodyear India Ltd’s share price decline is primarily driven by weak financial results, poor long-term growth prospects, expensive valuation metrics, and sustained underperformance relative to broader market indices. Investors appear cautious amid these headwinds, resulting in subdued demand and downward pressure on the stock price.

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