Current Rating and Its Implications for Investors
The Strong Sell rating assigned to Scoobee Day Garments India Ltd indicates a cautious stance for investors. It suggests that the stock is expected to underperform the broader market and may carry significant risks in the near to medium term. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Understanding these factors helps investors grasp why the stock currently holds this position and what it means for portfolio decisions.
Quality Assessment: Below Average Fundamentals
As of 06 January 2026, Scoobee Day Garments exhibits below average quality metrics. The company’s long-term fundamental strength is weak, primarily due to its high debt burden. The debt-to-equity ratio stands at a concerning 14.92 times, signalling significant leverage risks. Despite a moderate net sales growth rate of 19.13% annually over the past five years, operating profit growth has stagnated at 0%, reflecting challenges in converting revenue growth into profitability.
Recent quarterly results further underscore quality concerns. Operating cash flow for the year is negative at ₹4.19 crores, while profit before tax excluding other income has plunged by over 3600% compared to the previous four-quarter average. Net profit after tax has also declined sharply, falling by 787.1% in the latest quarter. These figures highlight operational difficulties and cash flow constraints that weigh heavily on the company’s quality grade.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Valuation: Fair but Not Compelling
The valuation grade for Scoobee Day Garments India Ltd is currently fair. While the stock does not appear excessively overvalued relative to its sector or historical averages, the valuation does not offer a compelling margin of safety given the company’s operational and financial challenges. Investors should note that fair valuation in the context of weak fundamentals and deteriorating financial trends does not translate into an attractive investment opportunity.
Financial Trend: Flat and Concerning
The financial trend for the company is flat, indicating a lack of meaningful improvement or growth momentum. The latest data as of 06 January 2026 shows that the company’s profitability and cash flow metrics have not improved significantly, with some indicators worsening sharply. The operating cash flow remains negative, and losses have deepened in recent quarters. This stagnation in financial performance undermines confidence in the company’s ability to generate sustainable returns for shareholders.
Technicals: Bearish Momentum
From a technical perspective, Scoobee Day Garments is exhibiting bearish signals. The stock price has declined consistently over multiple time frames: down 2.2% in the last day, 4.74% over the past week, and 39.2% over the last year. This downward trend reflects weak investor sentiment and selling pressure. The technical grade being bearish suggests that short-term price action is unfavourable, reinforcing the cautionary stance of the Strong Sell rating.
Stock Returns and Market Performance
As of 06 January 2026, the stock has delivered disappointing returns across all measured periods. The one-year return stands at -39.20%, significantly underperforming the broader BSE500 index. The six-month return is also deeply negative at -30.50%, with the three-month and one-month returns at -12.47% and -6.54% respectively. Year-to-date, the stock has declined by 7.13%. This persistent underperformance highlights the challenges faced by the company and the risks borne by investors holding the stock.
Long-Term Growth and Debt Concerns
The company’s long-term growth prospects appear limited. Despite a reasonable sales growth rate, the inability to translate this into operating profit growth and the heavy debt load raise concerns about sustainability. The average debt-to-equity ratio remains elevated, and the company’s weak long-term fundamental strength is a key factor behind the Strong Sell rating. High leverage increases financial risk, especially in a challenging operating environment.
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What This Means for Investors
Investors should interpret the Strong Sell rating as a signal to exercise caution with Scoobee Day Garments India Ltd. The combination of below average quality, fair valuation without a margin of safety, flat financial trends, and bearish technical indicators suggests that the stock carries elevated risk and limited upside potential at present. Those holding the stock may consider reassessing their exposure, while prospective investors might prefer to wait for clearer signs of operational improvement and financial stability before committing capital.
Summary
In summary, Scoobee Day Garments India Ltd’s current Strong Sell rating by MarketsMOJO reflects a comprehensive evaluation of its weak fundamentals, challenging financial trends, and negative technical momentum. The rating was last updated on 02 September 2025, but the analysis here is based on the latest data as of 06 January 2026. The stock’s significant underperformance and high leverage remain key concerns for investors seeking stable returns in the garments and apparels sector.
Investors are advised to monitor the company’s financial health closely and consider the risks before making investment decisions.
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