Understanding the Current Rating
The Strong Sell rating assigned to Zodiac Clothing Company Ltd indicates a cautious stance for investors, suggesting that the stock currently exhibits significant risks and challenges. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s investment potential and risk profile.
Quality Assessment
As of 28 February 2026, Zodiac Clothing Company Ltd’s quality grade is classified as below average. The company has struggled with operating losses, which undermines its long-term fundamental strength. Over the past five years, net sales have grown at an annual rate of 8.64%, while operating profit has increased at a modest 3.42% annually. This growth rate is relatively weak compared to industry peers, reflecting challenges in scaling profitability.
Moreover, the company’s ability to service its debt remains a concern. The average EBIT to interest ratio stands at a negative -4.88, signalling that earnings before interest and taxes are insufficient to cover interest expenses. This weak coverage ratio highlights financial stress and raises questions about the sustainability of current operations without restructuring or capital infusion.
Valuation Considerations
The valuation grade for Zodiac Clothing Company Ltd is marked as risky. The stock currently trades at valuations that are less favourable compared to its historical averages, reflecting investor apprehension. Despite a 30.7% rise in profits over the past year, the stock has delivered a negative return of -19.99% during the same period, indicating a disconnect between earnings growth and market sentiment.
This disparity suggests that investors are pricing in potential downside risks, possibly due to concerns over the company’s operational challenges and financial health. The negative EBITDA further compounds valuation risks, as it points to ongoing cash flow difficulties that could impact future earnings stability.
Financial Trend Analysis
The financial trend for Zodiac Clothing Company Ltd is currently flat, reflecting stagnation rather than growth or deterioration. The latest data as of 28 February 2026 shows that the company reported flat results in the December 2025 quarter. Interest expenses for the nine months ended December 2025 increased by 27.27% to ₹7.70 crores, while the debt-to-equity ratio reached a high of 0.62 times in the half-year period, indicating increased leverage.
These figures suggest that while the company is not experiencing a sharp decline, it is also not demonstrating significant improvement in its financial health. The elevated interest costs and rising leverage could constrain future profitability and limit financial flexibility.
Technical Outlook
From a technical perspective, Zodiac Clothing Company Ltd is rated bearish. The stock has underperformed the benchmark BSE500 index consistently over the last three years, with returns lagging in each annual period. Specifically, the stock’s returns over various time frames as of 28 February 2026 are as follows: a 1-day decline of -2.77%, a 1-week drop of -2.14%, a 3-month fall of -9.96%, a 6-month decrease of -18.06%, a year-to-date loss of -4.72%, and a 1-year negative return of -19.99%.
This persistent underperformance reflects weak investor confidence and a lack of positive momentum in the stock price. The bearish technical grade suggests that short- to medium-term price trends are unfavourable, which may deter risk-averse investors from entering or holding positions in the stock.
Here’s How the Stock Looks TODAY
As of 28 February 2026, Zodiac Clothing Company Ltd remains a microcap player in the Garments & Apparels sector, facing multiple headwinds. The company’s operating losses and weak debt servicing capacity highlight fundamental challenges. Despite modest sales growth, profitability remains subdued, and financial leverage has increased, raising concerns about balance sheet strength.
The stock’s valuation appears risky given the negative EBITDA and the disconnect between profit growth and share price performance. Technical indicators reinforce a bearish outlook, with the stock consistently underperforming the broader market indices over recent years.
For investors, the Strong Sell rating signals that caution is warranted. The current fundamentals suggest that the stock may continue to face pressure unless there is a marked improvement in operational efficiency, debt management, and market sentiment.
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Implications for Investors
The Strong Sell rating from MarketsMOJO serves as a clear indication that Zodiac Clothing Company Ltd currently exhibits significant investment risks. Investors should carefully consider the company’s below-average quality, risky valuation, flat financial trends, and bearish technical outlook before making any investment decisions.
While the company has demonstrated some profit growth, the broader financial and market context suggests that the stock may not be suitable for those seeking stable or growth-oriented investments at this time. Investors with a higher risk tolerance might monitor the stock for any signs of operational turnaround or improved financial health, but a cautious approach is advisable.
In summary, the current rating reflects a comprehensive assessment of Zodiac Clothing Company Ltd’s challenges and risks as of 28 February 2026, providing investors with a grounded perspective on the stock’s outlook.
Company Profile and Market Context
Zodiac Clothing Company Ltd operates within the Garments & Apparels sector and is classified as a microcap stock. The company’s market capitalisation and sector positioning contribute to its risk profile, especially given the competitive and cyclical nature of the apparel industry. Investors should weigh these sector-specific factors alongside the company’s financial and technical metrics when evaluating the stock.
Summary of Key Metrics as of 28 February 2026
- Mojo Score: 12.0 (Strong Sell)
- Quality Grade: Below Average
- Valuation Grade: Risky
- Financial Grade: Flat
- Technical Grade: Bearish
- Stock Returns: 1D -2.77%, 1W -2.14%, 1M +0.90%, 3M -9.96%, 6M -18.06%, YTD -4.72%, 1Y -19.99%
- Debt-Equity Ratio (HY): 0.62 times
- Interest Expense (9M): ₹7.70 crores, up 27.27%
These figures collectively underpin the current Strong Sell rating and highlight the areas investors should scrutinise closely.
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