Saturday, August 31, 2013

GOODYEAR INDIA - ONE TYRE FOR YOUR PORTFOLIO ..









At least some of you may raise your eyebrows for recommending a stock related with automobile sector at this juncture.Yes,automobile and related sectors in India are passing through a tough time but I believe it is a special case and there is some strong rationale for recommending this stock.Goodyear India is a 74 % subsidiary of world’s largest tyre company US based ‘ The Goodyear Tire & Rubber Company ‘. Company having two manufacturing facilities in India located at Ballabgarh and Aurangabad. In addition to this, company sourcing part of its requirements from Goodyear South Asia Tyres Private Limited  Aurangabad.About 65% of Goodyear India’s turnover coming from the tractor segment and it is the market leader in this category for the past many years.All major tractor producers including Mahindra,TAFE,Eicher,Escorts ..etc  are the customers of Goodyear. Apart from tractor segment ,company having commentable presence in passenger segment and a preferred supplier of many foreign companies operating in India like Volkswagen, GM, Toyota , Ford..etc. Now company  very aggressively expanding into replacement  market too by establishing  marketing network throughout India.

                                                                                Even at this over all tough time for tyre industry what is special for Goodyear is a possible chance of  good growth in  its major segment .ie,tractor  tyres.Due to very good monsoon and better  price for products, farmers are expected to benefit substantially in coming years which will directly impact tractor sales going forward.If we analyse the data of tractor sales for the past few months it is evident that there is good spike in it for all major players. Being a supplier to OEM’s in this segment this will directly help Goodyear for better sales. Another positive factor is the softening in the price of its major raw material – natural rubber.In last FY ,company depends import to meets its requirement due to higher price in local market.But this year natural rubber price came down and it is expected to range bound at current level .This situation will surely help the company to  source natural rubber from local market itself and improve its margins. Another factor is the increasing presence of foreign players in Indian Automobile sector .Many multinational auto companies are coming to India and launching their latest models here.Most of these overseas companies having strong business relations with the parent company of Goodyear .The Indian unit succeeded to continue their good relations with this auto majors here in India too.In recent times Goodyear India emerged as the preferred supplier for many  such OEM’s . Parent company’s most modern technology and support of good R&D helping Goodyear India to launch many new products .Actually Goodyear is the pioneer in tubeless tyre technology in India .Company is in advanced stage to launch radial tyres in farming sector.
                                          All these factors helped the company to outperform the entire tyre Industry in the latest June quarter.Company reported a whopping 80% increase in net profit to Rs.26 Cr .Its year ending is in December and company is expecting to  report an EPS of Rs.35-40. It is a debt free company with a clean balance sheet  consisting cash and cash equivalents of Rs.238 Cr .Company is an uninterrupted dividend payer for the past many years which paid 70% each in last four years.This MNC super brand is eligible to be included even in your core portfolio at CMP of Rs.300/- ( Stock listed in BSE only with scrip code - 500168)


Link to company website HERE

Link to last Annual Report HERE  


Disc: I have vested interest in Goodyear India.

35 comments :

  1. Sir
    What is the reason of constant fall in price of agro tech ltd. I am holding for long term.

    Regards
    Soumashis

    ReplyDelete
    Replies
    1. Constant fall happening not only in Agrotech it is applicable to each and every stocks in the past few months.

      Delete
  2. Dear sir
    Is tata chemicals also eligible to be included in core portfolio at current price.
    Thnx in advance.
    Subhro

    ReplyDelete
    Replies
    1. Not a bad stock,but it is importing huge quantity of Potash from overseas

      Delete
  3. Should i give my mail ID personally to have your current views on Rossel India ???

    S. Mehul

    ReplyDelete
    Replies

    1. Dear Mehul

      The different businesses -especially hospitality and defence related- having good potential.One negative happened in recent times which may imapct stock price is the inclusion in Period Call Auction.This factor may negatively affect investors interest and valuation till it come out from PCA.

      Delete
    2. Thank u sir, sorry for sending same query more than once. But i personally believe PCA shall not have much impact in longer term if business model of the company is promossing.

      Thanks & regards
      S. Mehul

      Delete
  4. Dear sir, you did not mention any reason behind fall of Zicom security.
    M holding it from 80 levels n coyld not able to figure out any reason. Pls help

    ReplyDelete
    Replies
    1. Don't think only Zicom is falling.One specific negative for this company at present may be the fall in rupee value .Zicom importing products from overseas and assembling in India which may affect its margin.

      Delete
  5. Sir ur advice on KSB Pumps plz...

    ReplyDelete
  6. Dear Sir,

    I want to pick one growth company from Infra segment.
    Is NBCC is right one?
    If not, then pls let me know correct one.

    Regards

    ReplyDelete
    Replies
    1. Considering the correction in stock price Engineers India may be a better pick at CMP than NBCC

      Delete
  7. Sir,

    Your advice on ROTO Pumps, new facility coming up by end of this year, 25% dividend, low equity base, high concentration on exports of the total sales turover, still due to PCA it is not buying investor interest. I wish to know your call on the same.

    Best Regards

    Keshav

    ReplyDelete
    Replies
    1. Company is growing steadily and business prospects is not bad ,but we can't say when investor's attitude towards PCA will change.

      Delete
  8. sir
    please tell some stocks that good bonus payinp year on year like infosys and wipro.

    ReplyDelete
    Replies
    1. It is a misunderstanding that frequently bonus giving companies will create wealth.That alone will not save the purpose .Opto circuit is a company which gave 5 bonus issues in last 8 years ,but now it turned as a big wealth destroyer. Company's business growth is more important than bonus

      Delete
  9. hi,
    Can you please comment on Bharti Infratel .

    Thanks,
    Sankar

    ReplyDelete
  10. Dear Sir,
    Your valuable suggestion on the stock 'Lovable Lingerie'
    Regards.
    MVReddy

    ReplyDelete
    Replies
    1. Nalanda India Equity Fund's interest in this stock may keep it hot.

      Delete
  11. Whats happening to the dark horse orient bell ... I am losing money everyday in the cost .. Realty space is at its worst phase n plus other markets ... India is in the worst phase of turmoil n it will take so many years to get back.
    God help India ...

    ReplyDelete
  12. If one have no faith in something no meaning in remain invested in it ,be it Orient or India.

    ReplyDelete
  13. Dear Valuepick,

    Your views on PC jwellers and Credir Analysis and Research

    ReplyDelete
  14. Dear Valuepick, Can u plz throw more light on how depreciating rupee can help ashapura ? And is all of its revenues from exports ? Also with Q1 EPS at Rs 6.27, an annualized eps at Rs 25, its trading at only 39 ! Why such a discount ? Dont u think its a multibagger in the making ? What are the triggers for the same ?

    Regards

    ReplyDelete
    Replies
    1. Ashapura is a biggest beneficiary of Rupee depreciation.I think the major reason for low discounting is the uncertainty related with court case v/s shipping companies. Anyway ,company already settled case with one shipping company and the rest is also expected to settle amicably. Since the company having mines with huge reserves with full permission for mining and run by an investor friendly management , If it happens it will surely become a multi multi bagger.

      Delete
    2. Sir, just a follow up question: what if the court case goes against the company? Then what type of liabilities are expected to arise?

      Delete
    3. Company is arguing that the claim raised by shipping cos are highly exaggerated.It is a point to note that one company already settled the case out of court.This point itself is big positive for the company and strengthening company's arguement .I think there is fair chance for Ashapura in this matter.Claim is for USD.127 Million

      Delete
  15. Dear Sir, Can you please explain the movement in Gokaldas Exports? And its last quarter results. Bit confusd whether i should try to buy now or wait? I had put up this question two times before. Waiting for your reply....

    ReplyDelete
    Replies
    1. Gokaldas recommended @ Rs.29 about two months back.Stock already appreciated 50 % .Not recommending a BUY at Current price.

      Delete
  16. Dear sir,

    Is this the right time to add yes bank at current cmp, kindly reply sir...

    ReplyDelete
  17. Dear valuepick, Have u gone through the annual report of Marksans Pharma ? What do u make of the cos management of debt, FCCBs and the return to positive networth ? Doesn't it look like a multibagger in the making now ?

    ReplyDelete
  18. hi sir, thanks fo your valuable pick , wanted to ask if you can put some light on wokhardt,marksans pharma and also on sequent scientific since i wanted to park my money in one of them wanted to know which is the best bet for long term in this 3 stocks,

    ReplyDelete
  19. Dear Sire,
    What is your view on TVS Srichakra?Company started eyeing export from last year.But steady decline is happening on this for the past 2+yrs.

    Regards,
    Yuvaraj.

    ReplyDelete

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