At a Glance
Innovative Tyres makes bias tyres and tubes and exports to 40+ countries. But from FY19 onwards, the company’s revenues collapsed, net worth turned negative, and the balance sheet looks like a stunt double for Swan Defence. Yet the stock jumped from ₹6 to ₹88 in a year. Coincidence? Or operator ka magic?
1. 🧻 WTF Do They Even Do?
- Founded in 1995, headquartered in Gujarat
- Makes bias tyres (not radials) for trucks, agri vehicles, bikes & 3-wheelers
- Major business comes from exports to 40+ countries
- Does job work for other tyre brands
Basically, it’s not MRF. It’s the guy who might make tyres for MRF and bill them quietly.
But here’s the twist:
- Revenue fell from ₹172 Cr in FY19 → ₹1.6 Cr in FY23 → ₹33 Cr TTM (recovery?)
- Yet shareholding changed drastically in 2024 👀
2. 💀 Financials – Punctured Past, Flat Future?
| Year | Sales | Net Profit | OPM | ROCE |
|---|---|---|---|---|
| FY19 | ₹172 Cr | ₹0.99 Cr | 4.3% | 2% |
| FY22 | ₹51 Cr | –₹58.9 Cr | –98% | –74.9% |
| FY23 | ₹1.6 Cr | –₹52.9 Cr | –3295% | –305.8% |
| FY24 | ₹14.2 Cr | ₹34.5 Cr (Other Income) | –53% | –26.6% |
| TTM | ₹33.7 Cr | –₹9.23 Cr | –39% | N/A |
That FY24 ₹34 Cr “profit” is purely one-time other income (maybe land sale or writeback), not operating turnaround.
3. 💣 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| Market Cap | ₹88 Cr |
| Book Value | –₹9.2 (NEGATIVE!) |
| ROCE | –26.6% |
| ROE | Not applicable (since net worth is negative) |
| OPM | –39% |
| P/E | Not meaningful (loss-making) |
🧮 Fair Value Range (if revival succeeds):
Let’s be generous:
- Assume ₹5 Cr PAT in 2 years (wishful)
- P/E of 15 → ₹75 Cr MCap
- FV = ₹75 Cr / ~10 Cr shares = ₹7.5
Stock is currently ₹88.
You’re paying 11x more than optimistic fair value for a tyre company that basically stopped rolling.
4. 🧨 What’s Cooking – Labor Notices, Director Exits & Shareholder Circus
Recent events:
- June 2025: Received labor law breach notices, then magically resolved
- June 2025: Independent Director quit
- Promoter stake suddenly jumped from 14% to 94.5% in 6 months
- Total shareholder count surged to 2,000+ – retail got in?
Seems like the company:
- Might’ve done a preferential allotment
- Or acquired backdoor investors
- Or maybe a shell flip is coming?
No one knows. No press releases, no real investor calls.
5. ⚖️ Balance Sheet – Inverted Tyre, Upside Down
| Metric | FY24 |
|---|---|
| Equity | ₹18 Cr |
| Reserves | –₹18 Cr |
| Borrowings | ₹35 Cr |
| Debt/Equity | Not meaningful (net worth ~0) |
| Total Assets | ₹42 Cr |
Basically, liabilities = assets.
No cushion.
No promoter infusion visible.
This is balance-sheet acrobatics 101.
6. 💸 Cash Flow – Flatter Than CEAT’s Old Tyre
| Year | CFO |
|---|---|
| FY24 | –₹7.42 Cr |
| FY23 | ₹0.46 Cr |
| FY22 | –₹2.95 Cr |
So despite other income theatrics, the core cash business is still bleeding.
7. 📉 Ratios – Show Me the Horror Show
| Metric | Value |
|---|---|
| OPM | –39% (TTM) |
| ROCE | –26.6% |
| Debt/Equity | N/A |
| EPS | –₹9.1 (TTM) |
| CMP/Book Value | NA (BV is negative) |
Only thing rising here is the stock price.
8. 📈 P&L Breakdown – Magic or Mirage?
FY24 Net Profit: ₹34.5 Cr
→ ₹46 Cr of “Other Income”
→ Operating Loss: –₹7.5 Cr
→ Net Operating Margin: –53%
If you remove other income, the company is still making losses.
Which begs the question: why ₹88/share?
9. 🤼 Peer Comparison – MRF Laughs Silently
| Company | CMP | OPM | ROCE | ROE |
|---|---|---|---|---|
| MRF | ₹1.45L | 14.5% | 13.6% | 10.6% |
| BKT | ₹2,550 | 23.5% | 18% | 17.2% |
| Apollo | ₹463 | 13.7% | 11.3% | 8.7% |
| CEAT | ₹3,682 | 11.1% | 15% | 11.7% |
| Innovative | ₹88 | –39% | –26.6% | NA |
Basically, Innovative doesn’t belong in this group. It’s like a cycle tube trying to run a Formula 1 race.
10. 🧠 Misc – That Suspicious Promoter Change
- Promoter holding: 14% → 94.5% in 2024
- Public holding down to 5.45%
- Shareholder count doubled in a year
- Directors and auditors quitting
This isn’t just red flags. This is Lal Quila on fire.
🧠 EduInvesting Verdict™
“Innovative Tyres may not roll on the roads, but its stock is doing donuts in the SME circuit.”
This is not a turnaround story.
This is an operator-led illusion with a potential exit plan.
- No fundamentals
- No credible earnings
- No clarity on new promoter
- And Book Value is negative
🎯 Fair Value Range: ₹4–₹10 (even that is speculative)
At ₹88?
You’re not buying a tyre company.
You’re buying a rumour with 100% air pressure and 0% grip.
Tags: Innovative Tyres, SME Stock, Penny Stock Rally, Tyre Companies India, Operator Driven Stocks, NSE SME, Stock Manipulation Risk, Red Flag Stocks
✍️ Written by Prashant | 📅 July 3, 2025
