Goodyear India Ltd - Really Good
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2832
Printed Date: 21/Apr/2025 at 1:28am
Topic: Goodyear India Ltd - Really Good
Posted By: manish_okhade
Subject: Goodyear India Ltd - Really Good
Date Posted: 19/Jun/2010 at 11:56am
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Synthesis:
Tyre sector was in doom last year but shot up recently. FY09-10 results are good for entire tyre sector then comes the misery, raw material Rubber prices are soaring and to combat it tyre manufacturers are planning to raise the prices, investors are not sure on valuations and future outlook. In all this hum-drum few bets are evolving, GoodYear seems to be one of that.
Domestic outlook for tyre segment is better for following reasons:
1) New sales for vehicle is picking up as evident from annual results of reputed NBFCs and logistic rentals are northwards.
2) Infrastructure in India will probably take another millenium to be of good standard so demand for replacement will remain robust due to fast wear and tear.
3) Vehicle companies (BMW, VW, Maruti etc) are figting a war in introducing new brands in India. Fuel efficiency is a major diffrentiators for burgeaoning middle class. Good quality tyre is an inportant component for increasing fuel efficiency.
GTL is 80 year old company in India and 1st one to introduce flat tyes.Now lets look at comparative analysis of the GoodYear:
GTL is debt free and increasing the cash flow decently.
Profit has grown from 32 Cr to 73 cr in Dec 09 (Year ending). Profit from Mar 10 qtr is grown from 11 Cr to 14 Cr so its looks on growth trajectory.
Parent shareholding is fixed at 74%. Parent in US is in trouble hence would be paying extra attention to child to sustain consolidated BS.
In the passenger car segment, Goodyear supplies tyres to many of the leading Original Equipment Manufacturers in India. These include Maruti, Telco, Mahindra & Mahindra, Ford, Fiat and many more. Goodyear India has been a pioneer in introducing tubeless radial tyres in the passenger car segment.
In the farm segment, Goodyear tyres are supplied to all the major Tractor manufacturers like PTL, ITL, TAFE, Eicher and Escorts. Similarly, for buses and trucks, vehicles rolling out of the assembly line of the leading OEMs like TELCO, Ashok Leyland, and Swaraj Mazda are often seen with Goodyear tyres. Goodyear commands a major market share in the Off The Road (OTR) segment by being a major supplier to Coal India Limited, Escorts, L&T, TISCO and major steel plants of the country. Launch of branded retail “shop-in-shop” concept – a part of the company’s strategic initiative in organized tyre retailing, aimed at strengthening its presence in the large tyre replacement market in the country. These outlets will offer customers an unmatched tyre purchase experience.
Goodyear India rolls out the Excellence series – a new collection of luxury passenger car tyres. Designed with the ultimate '3 -Zone Technology', and ECO-Sil Silica Tread Compound Technology, the tyre provides superior comfort and precise handling on both wet and dry conditions for premium car drivers. Valuation: Div yield is 3% and growth would be now onwards 12-25% as per my guessstimates. Its slightly expensive in absolute but relatively cheaper as compared to peers so recommnded to buy on dips. |
Replies:
Posted By: Vivek Sukhani
Date Posted: 20/Jun/2010 at 1:48pm
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Are you sure that the passenger car tyres( be it radial or cross-ply) comes from goodyear India's stable???? or is it from the other W.O.S of Goodyear Tire? ------------- Jai Guru!!! |
Posted By: manish_okhade
Date Posted: 20/Jun/2010 at 2:40pm
Yes, thats what they mentioned on their website. Btw whats this W.OS of Goodyear?
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Posted By: Vivek Sukhani
Date Posted: 20/Jun/2010 at 3:27pm
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Wholly owned subsidiary ------------- Jai Guru!!! |
Posted By: manish_okhade
Date Posted: 20/Jun/2010 at 3:43pm
| Ok, i didnt see any WOS mentioned anywhere. Btw whats your view on GIL? |
Posted By: Vivek Sukhani
Date Posted: 20/Jun/2010 at 6:22pm
However, I surely expect the DPS to move up to 10 coins in about 3 years time, should the economy doesnt throw any major shocks. But even if that happens, at least I am sure, that this wont crumble under its own weight....something to which a JK tyre is vulnerable to. ------------- Jai Guru!!! |
Posted By: SK1076
Date Posted: 11/Jul/2010 at 3:11pm
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BKT seems to be very impressive, operating in niche segment & majorly focussing on exports to European & African markets.Good track record. 1. Growing at 30.47% CAGR for last 11 years 2. Net profits have also grown at the same pace. 3. ROCE has on average remained in the range of 20-25% for last 5 years. 4. Consistent healthy margins with increased exports |
Posted By: hit2710
Date Posted: 11/Jul/2010 at 8:10pm
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Open offer of the parent for delisting failed in Feb 2010 when it was offered at 340 per share. This could be a trigger going forward with the parent raising the price level for open offer. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: manish_okhade
Date Posted: 11/Jul/2010 at 8:17pm
Any guess why it failed? CMP looks less than offer price, if reson is known then it supports that stock is cheap.
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Posted By: vinvestor2010
Date Posted: 11/Jul/2010 at 9:02pm
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Hi Manishji I think the open offer was around 190 , the stock peaked at 340 and is currently at 250. |
Posted By: hit2710
Date Posted: 11/Jul/2010 at 9:24pm
dont know why the delisting offer failed but it was at 340 discovered by reverse book building. http://www.bseindia.com/stockinfo/anndet.aspx?newsid=f31bb98d-190f-4ab6-9a92-6285a04d25db¶m1=1 - link ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: nikhil090
Date Posted: 11/Jul/2010 at 12:43pm
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Discovered price was 340 but management did not accepted this price. They wanted to pay the original amount and hence it failed. Roughly same thing has happened with Astrazeneca also. |
Posted By: Vivek Sukhani
Date Posted: 11/Jul/2010 at 8:26am
This kind of response also took place for Elantas Beck..... ------------- Jai Guru!!! |
Posted By: nikhil090
Date Posted: 11/Jul/2010 at 11:05am
| Yes My mistake. I assumed that non-acceptance of the discovered price was the reason of failure of open offer. |
Posted By: hit2710
Date Posted: 11/Jul/2010 at 11:08am
Does this indicate a possibility of another open offer in near future? ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: nikhil090
Date Posted: 11/Jul/2010 at 11:13am
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Since management is bullish, there can be another offer. But when is the question? Since delisting has failed, they should go ahead and buyback their shares so that next delisting effort can be successful.
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Posted By: manish_okhade
Date Posted: 11/Jul/2010 at 11:24am
| GIL already holds 74%, as per new SEBI rule 25% public holding is mandatory. So only possibility is delisitng, it could happen only when GIL has enough cash to buy remaing 25%. Parent is still in trouble in USA so delisiting in near term looks not possible. |
Posted By: Vivek Sukhani
Date Posted: 11/Jul/2010 at 11:26am
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RBB with a big public float is always risky. Most of the investors dont yet understand how does RBB works and hence the probability of RBB failing to get the minimum quantity increases.
Goodyear wont do the buyback in any hurry. But now the stock price is unliley to fall back to sub-70 levels in the worst of crisis. ------------- Jai Guru!!! |
Posted By: excel_monkey
Date Posted: 11/Nov/2010 at 8:02pm
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why have tyre companies have not performed like auto ancillaries?
most of the tyre market is replacement market it is a branded market though with lower pricing pricing power hence the valuations for tyre sector should be somewhere between auto ancillary and FMCG sector |
Posted By: srisaurabh2000
Date Posted: 11/Nov/2010 at 8:49pm
| The issue has been rubber prices which have been hitting new highs. This is due to less rubber production this year in Kerala. |
Posted By: excel_monkey
Date Posted: 11/Nov/2010 at 9:35pm
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The same is the case with likes of Castrol when the crude price goes up
why is Castrol able to pass the raw material price increase to consumers where as tyre companies have not been able to
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Posted By: kushal.masand
Date Posted: 17/Nov/2010 at 12:26pm
| the company hasnt shown any huge rerurns in the last year....... |
Posted By: srisaurabh2000
Date Posted: 17/Nov/2010 at 12:34pm
There are multiple issues here:
Price cannot be increased by tyre players correspondingly because China does import to India and other places. And hence sales will directly get affected specially for trucks which are price sensitive. Though my understanding is that in this quarter some players might increase prices but that also might not be enough.
Interestingly Chinese Govt to control rubber prices has actually gone and brought rubber plantations in places like Africa so that their tyre industry does not suffer.
India also has more import duty on rubber than tyres which is also unfavorable for the industry.
Also my thought is that radial tyre demand is less in India where probably quality might play over price is much less in demand in India. This also probably hampers though I'm not sure on this one.
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Posted By: excel_monkey
Date Posted: 17/Nov/2010 at 12:41pm
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I don't see much of imported tyres in the market
as well the same should also stand true for engine lubricants market I think some day the tyre market would turn very profitable
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Posted By: srisaurabh2000
Date Posted: 17/Nov/2010 at 1:41am
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Check this:
http://www.financialexpress.com/news/tyre-industry-against-all-odds/499379/ - http://www.financialexpress.com/news/tyre-industry-against-all-odds/499379/
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Posted By: excel_monkey
Date Posted: 17/Nov/2010 at 1:51am
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Thanks
very informative I think we should buy Harrisons Malyalam insted 
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Posted By: jaximus
Date Posted: 24/Jan/2011 at 10:12pm
| Any thoughts about this stock? I believe its a good buy - but not sure if the price is right yet. Would appreciate views from the veterans here... |