Goodyear India :: Angel Broking Diwali Top Picks (Diwali Muharat)

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 Goodyear India (GIL) is a market leader in the tractor tyre industry, with a market
share of ~22% in the front tyre segment and ~34% in the rear tyre segment.
 Raw Material cost accounts for ~71% of net sales of which, rubber constitutes
~62%. Natural Rubber (NR) prices have been declining in the recent past largely
due to global surplus in NR. Domestic rubber prices have declined from average
levels of `171/kg in CY2013 to `121/kg currently. Additionally, styrene butadiene
rubber (SBR), which is also used for manufacturing tyres, is showing signs of weakness
owing to weak demand from China.
 GIL is a debt free-cash rich company with a RoIC of 64.9%. We expect the company's
RoIC to surge to ~148% in CY2015. The company's cash and equivalents
are expected to be at `545cr by CY2015-end, which are ~36% of the
current market cap.
 The stock is currently trading at a PE of 10.2x for CY2015E. WWWe have a Buy e have a Buy
recommendation on the stock with a target P/E of 12x for CY2015E, and arrive at , and arrive at
a target price of a target price of ```756. 756.