Zodiac Clothing Company Ltd is Rated Strong Sell

Understanding the Current Rating

The Strong Sell rating assigned to Zodiac Clothing Company Ltd indicates a cautious stance for investors, suggesting that the stock is expected to underperform relative to the broader market and its peers. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal and risk profile.

Quality Assessment

As of 04 January 2026, Zodiac Clothing’s quality grade is classified as below average. The company has struggled with operational efficiency and profitability over the long term. Operating profit has declined at an annualised rate of -0.67% over the past five years, signalling weak growth momentum. Additionally, the company’s ability to service its debt remains poor, with an average EBIT to interest coverage ratio of -4.97, indicating that earnings before interest and taxes are insufficient to cover interest expenses. This weak fundamental strength raises concerns about the company’s financial stability and operational resilience.

Valuation Considerations

The valuation grade for Zodiac Clothing is deemed risky. The stock currently trades at levels that are unfavourable compared to its historical averages, reflecting investor apprehension. Despite a 14.1% increase in profits over the past year, the stock has delivered a negative return of -36.07% during the same period. This divergence suggests that market sentiment remains cautious, possibly due to concerns over sustainability of earnings growth and broader sector challenges. Investors should be wary of the elevated risk implied by the current valuation metrics.

Financial Trend Analysis

The financial trend for Zodiac Clothing is very negative as of the current date. The company has reported operating losses and negative earnings in recent quarters. Specifically, the latest quarterly PAT stood at a loss of ₹11.82 crores, representing a 28.7% decline compared to the average of the previous four quarters. The debt-equity ratio has risen to 0.62 times, the highest in recent periods, signalling increased leverage and financial risk. Furthermore, the operating profit to interest coverage ratio for the latest quarter is at a low of -2.45 times, underscoring the company’s difficulty in meeting interest obligations from operating earnings. These trends highlight ongoing financial stress and weak profitability.

Technical Outlook

From a technical perspective, Zodiac Clothing’s stock exhibits a bearish trend. The stock price has declined consistently over multiple time frames: -0.73% in the last day, -2.35% over the past week, and -14.51% in the last three months. Over six months, the decline deepens to -23.18%, and the one-year return is a significant negative -36.07%. Despite a modest positive return of 1.41% year-to-date, the overall technical indicators suggest sustained downward momentum. The stock has underperformed the BSE500 index over the last three years, one year, and three months, reinforcing the bearish technical sentiment.

Implications for Investors

For investors, the Strong Sell rating on Zodiac Clothing Company Ltd signals caution. The combination of weak quality metrics, risky valuation, deteriorating financial trends, and bearish technical signals suggests that the stock may continue to face headwinds in the near to medium term. Investors should carefully consider these factors before initiating or maintaining positions in the stock, as the risk of further declines appears elevated.

Sector and Market Context

Zodiac Clothing operates within the Garments & Apparels sector, a space that has faced considerable challenges due to shifting consumer preferences, supply chain disruptions, and competitive pressures. The company’s microcap status further adds to its vulnerability, as smaller market capitalisation stocks often experience higher volatility and liquidity constraints. Compared to broader market indices and sector peers, Zodiac Clothing’s performance has lagged significantly, underscoring the need for investors to weigh sectoral headwinds alongside company-specific risks.

Summary of Key Metrics as of 04 January 2026

To summarise the key data points that underpin the current rating:

• Mojo Score: 1.0 (Strong Sell grade)


• Operating profit growth (5-year CAGR): -0.67%


• EBIT to Interest coverage (average): -4.97 times


• Latest quarterly PAT: -₹11.82 crores, down 28.7%


• Debt-Equity ratio (HY): 0.62 times


• Stock returns over 1 year: -36.07%


• Recent price movement: -0.73% (1 day), -14.51% (3 months)

These figures collectively illustrate the challenges facing Zodiac Clothing and justify the current Strong Sell rating from a risk-return perspective.

Looking Ahead

Investors should monitor upcoming quarterly results and any strategic initiatives by Zodiac Clothing that could improve operational efficiency or financial health. Until there is clear evidence of a turnaround in fundamentals and technical momentum, the stock remains a high-risk proposition. Diversification and risk management remain paramount for portfolios with exposure to this microcap garment sector player.

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