Buy Goodyear India; target Rs 456: Sunidhi Securities

Sunidhi Securities' report on Goodyear India (GIL)

"Goodyear India (GIL) is the market leader in the segment catering to Punjab Tractors, TAFE, Escorts, International Tractors (ITL) and Eicher among others. During CY12, GIL also improved its replacement market share and this segment grew at 14 per cent y-o-y, much higher than that of the industry. GIL has been recognized as =self certified supplier‘ by one of the leading tractor manufacturers in India - TAFE (Tractors and Farm Equipment). GIL has also been recognized by the Hyundai Motors Company for being the best supplier for the year in tyre commodity. GIL also has a decent presence in the Off The Road (OTR) segment. It is the market leader in the segment catering to Punjab Tractors, TAFE, Escorts, International Tractors (ITL) and Eicher among others."

"The higher contribution from the replacement market will help GIL report superior EBITDA margin going forward. Timely onset of the monsoon and the Government‘s expected thrust on the agri-sector in a pre-election year should augur well for the company. GIL is the leader in the farm tyre segment. A good monsoon coupled with the Government‘s thrust on the agri-sector in a pre-election year should lead to decent volume growth for the company. GIL is expected to post an EPS of Rs 38 in CY13, which would further go up to Rs 41 in CY14. At the current market price of Rs 360, the share is traded at a forward P/E of 9.5x on CY13 earnings and 8.6x on CY14 earnings. We recommend BUY with a target price of Rs 456 at which the share will trade at a P/E of 12 on CY14E," says Sunidhi Securities research report.

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