📌 At a Glance

Goodyear India—India’s long‐time farm‐tyre specialist—has seen revenue oscillate from ~₹1,792 Cr (FY21) up to ~₹2,928 Cr (FY23), then back down to ~₹2,608 Cr (FY25). Operating margins slumped from ~12 % (FY21) to ~4 % (FY25), as raw‐material inflation, rising competition, and a mixed mix of crop/industrial cycles bit into profits. The share price (₹954 on June 6, 2025) reflects tepid confidence: yes, Goodyear still dominates farm tyres, but volume headwinds and margin erosion have left investors skidding.

1) About Goodyear India Ltd.

• Incorporated: 1964 (as a subsidiary of Goodyear Tire & Rubber Co.)
• Headquarters: Mumbai, India
• Core Segments:
  • Farm Tyres (OHT): Leading market share—tractors, harvesters, implements
  • Commercial Vehicle (CV) Tyres: Truck & bus radials and bias (industrial fleets, logistics)
  • Passenger Car & Two‐Wheeler (PV/2W) Tyres: Smaller contribution; mainly urban replacement
  • Tubes & Flaps: Complementary accessory business
• Manufacturing Footprint:
  • Plant 1 & 2 (Ballabgarh, Haryana)
  • Plant 3 (Chennai, Tamil Nadu)
  • R&D & Test Centers (Pune, technical partner with Goodyear global)
• Distribution: ~1,200+ rural agri‐outlets (“Goodyear Farm Zones”) and urban dealers

Niche Strength: Goodyear India claims ~25 % share of India’s farm‐tyre market—an oligopoly with MRF and Balkrishna on that frontline.

2) Key Managerial Personnel (FY25)

Board Insight: While Rahul Sharma steered Goodyear through multiple raw‐material shocks, rising competition, and COVID aftershocks, the management’s single‐minded focus on farm‐tyres kept cash‐flow positive—until FY25’s slump.

3) Financial Performance (FY21–FY25)

3.1 Annual Sales & Profit Snapshot

1. Revenue Trajectory
   • FY21→FY23: Surge from ₹1,792 Cr → ₹2,928 Cr (+63 % in two years) as post‐COVID agri‐demand, elevated crop prices, and rural pump‐priming drove tractor tyre replacements.
   • FY24: Sharp dip (–12.8 %) as farmers stretched tyre lifetimes, and commercial downtime hit CV orders.
   • FY25: Modest rebound (+2.2 %)—but volumes remained below FY23 peaks.
2. Margin Rollercoaster
   • FY21: Strong OPM ~12.1 % as pre‐COVID raw materials were still manageable.
   • FY22–FY23: OPM collapsed to ~7.1 % as natural rubber cost jumped 50 %, crude‐oil indices soared, and mix tilted toward lower‐margin CV & mid‐range farm SKUs.
   • FY24: OPM edged to ~6.7 %—a wash, driven by continuing input pressure and channel destocking.
   • FY25: OPM slumped to ~4.5 % after one‐time credit reversals and rising overheads.
3. Profit Pattern
   • FY22–FY23: PAT hovered near 4.2 % (₹103 Cr → ₹123 Cr) despite revenue growth—courtesy of cost absorption and rural demand.
   • FY24–FY25: PAT sank to ₹95 Cr (3.7 %) then ₹55 Cr (2.1 %) as heavy discounting in farm tyres, coupled with CAPEX‐driven depreciation, finally throttled bottom‐line.

Key Insight: Between FY21–FY23, Goodyear surfed the rural boom; but post‐FY23, the cyclical agri‐slowdown and fierce price competition knocked margins toward multi‐year lows.

3.2 Quarterly OPM & Revenue Trends (Q1 FY22 – Q4 FY25)

• Peak Margins in H1 FY22:
  • Tractor tyre demand peaked, OPM spiked near 9 %.
• H2 FY22 Collapse:
  • Q4 FY22 OPM fell to ~6.7 % as rubber prices broke ₹200 / kg.
• FY23 Plateau:
  • OPM steadied near 7 %–8 % (higher than peers, thanks to Goodyear’s premium agri positioning).
• FY25 Freefall:
  • Q1 FY25 OPM ~1 % (loss of ₹4.21 Cr) after dealer destocking.
  • Q4 FY25 OPM ~2.9 % (₹9.48 Cr), marking multi‐year lows.

Insight: Margins move in lockstep with commodity cycles. When natural-rubber costs peaked, Goodyear’s breakeven OPM was ~4 %—below that, you’re printing losses (as seen Q1 FY25).

4) Balance Sheet & Cash‐Flow Highlights (FY21–FY25)

1. Debt Profile:
   • Almost Zero Debt: Goodyear remains virtually debt‐free (negative net debt each year). Q4 FY25 net cash ~₹113 Cr.
   • Borrowings: Minor working‐capital loans only; fully repaid by FY23 until small ₹29 Cr drawn in FY25 (temporary).
2. Capex & Fixed Assets Growth:
   • FY21–FY23: Capex ramped from ₹16 Cr → ₹61 Cr (expanding Chennai plant, adding automated mixing line)
   • FY24–FY25: Capex down to ₹44 Cr → ₹36 Cr, as existing facilities operate near capacity.
3. Working‐Capital Efficiency (FY25):
   • Debtor Days: ~40 days
   • Inventory Days: ~54 days
   • Payables Days: ~88 days
   • Cash Conversion Cycle (CCC): ~6 days (comparatively low, but rising from –29 days in FY21).
4. Cash‐Flow Pattern:
   • FY22 Drop: CFO plummeted to ₹89 Cr (FY21: ₹294 Cr) as margins cratered, and receivables rose.
   • FY23–FY25 Stability: CFO hovered ~₹112–₹131 Cr, maintaining positive OCF but insufficient for large expansion without relying on internal accruals.

Key Insight: Goodyear’s cash‐flow is lean but consistent. Positive CROCI and net‐cash status give financial flexibility; however, OCF has halved from ₹294 Cr (FY21) to ~₹130 Cr (FY25), reflecting margin stress.

5) Segmental Overview (FY25 Estimate)

Goodyear India doesn’t publicly break out exact segment revenues by percentage. However, based on management commentary and rural/urban sales mix, we can roughly estimate FY25’s mix:

• Farm Tyres (~40 % of revenue): Goodyear’s bread‐and‐butter—volume down ~5 % YoY (rural slowdown).
• CV Tyres (~30 %): Remote fleets replaced tyres at a slower pace—vol. flat YoY.
• PV/2W (~20 %): Urban replacement weak; market share in PV ~8 %.
• Tubes & Flaps (~10 %): Steady, but low‐margin add‐on.

Insight: Unlike CEAT or MRF, Goodyear derives the largest chunk from farm tyres. When agri cycles tank (FY24), you feel the pinch faster than a diversified peer like CEAT.

6) Peer Comparison (FY25 EBITDA Margins & ROCE)

What Jumps Out:

• Margins: Goodyear’s ~4.5 % sits painfully below peers (10–23 %).
• ROCE: At ~13 %, Goodyear is respectable—but without margin expansion, it can’t justify a high P/E (39.9×).
• Net‐Cash: Unique among peers—Goodyear is “almost debt‐free,” giving it breathing space during downturns.

7) EduInvesting Take: What Worked & What Didn’t

1. Farm‐Tyre Fortitude (FY21–FY22):
   • Rural boom (high crop prices + tractor sales) catapulted FY21 revenue to ₹2,436 Cr (+35 % YoY).
   • OPM jumped to ~8.9 % in H1 FY22, as farmers replaced tyres proactively.
   • Goodyear’s “Go‐Farm” branding and premium price points let it capture ASPs ~15 % above commodity tyres.
2. Raw‐Material Rollercoaster (FY22–FY23):
   • Natural Rubber: ₹220 / kg peaks in mid-FY22 hammered margins. OPM sank to ~7 % despite higher rural volumes.
   • Crude & Carbon Black: Spiked freight & input costs; Goodyear absorbed costs—no instant price pass-through.
   • Volume Pop in FY23: Tractor/harvester tyre replacements peaked → revenue ₹2,928 Cr (+20 % YoY).
   • PAT Stabilization: PAT rose to ₹123 Cr, but margin still ~4.2 %.
3. Agri Slowdown & Dealer Destocking (FY24–FY25):
   • FY24: Agri equipment demand waned; revenue slid to ₹2,552 Cr.
   • FY25: Even mixed rural monsoons didn’t fully revive OHT volumes—revenue marginal at ₹2,608 Cr.
   • Margin Squeeze: OPM down to ~4.5 % in FY25 → PAT plummeted to ₹55 Cr.
   • CAPEX Drag: ₹ ~₹36 Cr capex in FY25 (mixing lines, environmental upgrades) weighed on depreciation.
4. Distribution & Brand Premium:
   • Aftermarket Network: Farm Zone outlets ~550 by FY25; but rural footfalls slowed.
   • Premium Pricing Erosion: Lower-priced Chinese & domestic competition (e.g., TVS Srichakra) forced selective discounting.
   • Customer Retention: Annual survey shows Goodyear’s farm users still value durability, but 20 % switched to cheaper alternatives in FY25.

The Bottom Line:

• Goodyear India’s story is cyclical—when agri‐boom hits, profits soar; when agri dips, margins crash.
• With low debt, the company can endure downturns, but without margin recovery (>7 %), the share price can’t sustainably rise above ₹1,000.

8) Risks & Red Flags

Warning: Even a mild rural demand shock can flip OPM below breakeven (~4 %); Q1 FY25’s loss of ₹4.21 Cr is testament to that vulnerability.

9) Dividend & Shareholding Snapshot

• Dividend History:
  • FY21: ₹23 / share (Payout 100 %)
  • FY22: ₹23 / share (Payout 50 %)
  • FY23: ₹17 / share (Payout 26 %)
  • FY24: ₹23 / share (Payout 100 %)
  • FY25: ₹23.90 / share (Payout 100 %)
• Shareholding (Mar 2025):
  • Promoter: 74 %
  • FIIs: 0.59 % (dipped from ~1.0 % in FY22)
  • DIIs: 8.08 % (steadily ↑ from ~6.85 % in FY21)
  • Public & Retail: 17.32 %

Takeaway: Dividend yield (~2.5 %) is attractive vs. peers; promoters clearly want to keep retail investors pacified. Top‐heavy promoter stake (74 %) means any strategic shift hinges on them.

10) Forward‐Looking Fair Value (FY27E)

• Assumptions:
  • FY27E Revenue: ₹2,800–₹3,000 Cr (+5–7 % CAGR)
  • FY27E OPM: 7 – 8 % (if rubber + crude stabilize)
  • FY27E PAT: ₹150–₹180 Cr
  • FY27E EPS: ₹65–₹75
  • Target PE: 18×–20× (reflecting cyclicality)

Fair Value Range: ₹1,170 – ₹1,500

• CMP: ₹954 (June 06, 2025)
• Upside Potential: +22 % – +57 % if OPM recovers toward 7–8 % by FY27.

11) The EduInvesting Verdict

Going Forward:

• Bull Case: A robust monsoon cycle, stable rubber prices, and a new small-diameter agri tyre line (launch slated FY26) can push OPM back toward 7 %, boosting PAT to ₹180 Cr. If that happens, ₹1,400–₹1,500 is fair.
• Bear Case: Continued farm slowdown, plus Chinese/lower‐cost competition, keep OPM < 5 %; PAT remains < ₹100 Cr, dragging FV toward ₹900–₹1,000.

Key Questions:

1. Will monsoon & MSP hikes induce another farm equipment cycle?
2. Can Goodyear drive rural premium back through “smart tyres” (embedded IoT sensors) and better dealer incentives?
3. Will backward integration (synthetic‐rubber blending) trim cost of goods by ~5 % in FY27?

Tags:

Goodyear India, Farm Tyres, FY25 Results, OPM Squeeze, Agri Cycle, Monsoon Impact, Zero Debt, Dividend Yield, Rural Demand, Cyclical Stocks

Author: Prashant Marathe
Date: 07 June 2025
Meta Description: Goodyear India 5-Year Recap: Revenue peaked at ₹2,928 Cr (FY23), OPM collapsed to 4.5 % (FY25). Learn why the farm‐tyre leader’s margins sank and whether ₹1,200+ is up or out.