ICICI Direct has given Buy recommendation for Goodyear India with a target price of Rs. 1130 in its research report issued on Mar 18, 2021

ICICI Direct’s research report on Goodyear India

Goodyear India (GIL) has performed reasonably well, thus f130ar in 9MFY21 in spite of the Covid-19 disruption. On a YTD basis, net sales are down ~11% YoY (Q2FY21, Q3FY21 growth at 6.0%, 20.7% YoY, respectively). Margins, however, are higher by ~400 bps YoY to 12.2% (includes multi-year high readings of 15.3% and 14.5% in Q2FY21 and Q3FY21, respectively). Consequent 9MFY21 PAT is higher by 22.5% YoY to Rs 93 crore despite loss after tax of Rs 4.5 crore in Q1FY21. The company also declared an all-time high interim dividend of Rs 80/share in December 2020.

Outlook

We expect 12.1% PAT CAGR in FY21E-23E. Healthy demand prospects across segments along with MNC parentage and strong B/S and return ratio profile (FY20; zero debt company with Rs 546 crore cash on books & >20% RoIC) continue to provide valuation comfort. We maintain BUY, valuing it at Rs 1,130, 16x P/E on FY23E EPS of Rs 70.7 (previous target price Rs 910).

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