Key Events This Week
16 Feb: Downgrade to Strong Sell announced
17 Feb: Q3 FY26 results reveal profit growth despite revenue decline
20 Feb: Stock closes the week at Rs.102.50, down 4.87%
16 February: Downgrade to Strong Sell Signals Elevated Risks
On 16 February, Active Clothing Co Ltd’s stock opened the week at Rs.107.75 and closed at Rs.110.45, gaining 2.51% intraday. This positive price movement, however, was overshadowed by the announcement of a downgrade to a 'Strong Sell' rating by MarketsMOJO on 13 February. The downgrade reflected a comprehensive reassessment revealing deteriorating technical indicators and persistent fundamental weaknesses.
The company’s long-term fundamentals remain weak, with an average Return on Capital Employed (ROCE) of 8.93%, below industry standards, and a high Debt to EBITDA ratio of 4.42 times, indicating significant financial risk. Interest expenses peaked at ₹3.12 crores in Q3 FY26, straining cash flows. Despite a valuation discount with an Enterprise Value to Capital Employed ratio of 1.4 and a low PEG ratio of 0.2, these positives were insufficient to offset the risks.
Technically, the stock showed bearish momentum with weekly MACD and Bollinger Bands signalling downward trends, daily moving averages firmly bearish, and Dow Theory indicators mildly bearish. This combination suggested sustained selling pressure and limited near-term recovery prospects.
17 February: Q3 FY26 Results Show Profit Growth Amid Revenue Contraction
Following the downgrade, the company reported its Q3 FY26 results on 17 February. The stock closed at Rs.106.00, down 4.03% from the previous day’s close of Rs.110.45, reflecting investor caution despite the earnings announcement.
The quarterly results revealed a mixed picture: while revenue contracted, profitability improved, highlighting operational efficiencies. This divergence underscores the complexity of the company’s current position, where earnings growth contrasts with top-line challenges. The stock’s 52-week range of Rs.82.55 to Rs.161.00 illustrates significant volatility, with recent trends pointing to a loss of momentum.
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18 February: Continued Decline Amid Low Volume
On 18 February, the stock price marginally declined by 0.24% to close at Rs.105.75 on thin volume of 1,379 shares. The Sensex continued its upward trajectory, gaining 0.43% to close at 37,062.35. This divergence highlighted the stock’s ongoing underperformance relative to the broader market, reflecting lingering investor scepticism despite the recent earnings report.
19 February: Market Volatility Impacts Stock Price
The stock declined further by 0.95% to Rs.104.75 on 19 February, with volume picking up to 11,365 shares. The Sensex, however, fell sharply by 1.45% to 36,523.88, indicating broader market volatility. Active Clothing’s relative resilience amid the market downturn was limited, as the stock continued its downward trend, pressured by the earlier downgrade and cautious sentiment.
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20 February: Week Closes with Further Losses
The week ended on 20 February with the stock closing at Rs.102.50, down 2.15% from the previous day’s close. Volume was moderate at 8,852 shares. The Sensex gained 0.41% to 36,674.32, underscoring the stock’s continued underperformance. The cumulative weekly decline of 4.87% contrasted sharply with the Sensex’s 0.39% gain, reflecting the impact of the downgrade and mixed earnings on investor sentiment.
| Date | Stock Price | Day Change | Sensex | Day Change |
|---|---|---|---|---|
| 2026-02-16 | Rs.110.45 | +2.51% | 36,787.89 | +0.70% |
| 2026-02-17 | Rs.106.00 | -4.03% | 36,904.38 | +0.32% |
| 2026-02-18 | Rs.105.75 | -0.24% | 37,062.35 | +0.43% |
| 2026-02-19 | Rs.104.75 | -0.95% | 36,523.88 | -1.45% |
| 2026-02-20 | Rs.102.50 | -2.15% | 36,674.32 | +0.41% |
Key Takeaways
Fundamental and Technical Weakness: The downgrade to 'Strong Sell' was driven by weak long-term fundamentals, including a modest ROCE of 8.93% and high leverage with a Debt to EBITDA ratio of 4.42 times. Technical indicators consistently signalled bearish momentum throughout the week.
Valuation Discount vs Risks: Despite attractive valuation metrics such as a low PEG ratio of 0.2 and an Enterprise Value to Capital Employed ratio of 1.4, these were insufficient to counterbalance the fundamental and technical concerns.
Mixed Quarterly Results: Q3 FY26 earnings showed profitability growth despite revenue contraction, indicating operational efficiencies but also highlighting challenges in top-line growth.
Stock Underperformance: The stock declined 4.87% over the week, significantly underperforming the Sensex’s 0.39% gain, reflecting investor caution amid the downgrade and earnings report.
Conclusion
Active Clothing Co Ltd’s week was dominated by a significant downgrade to a 'Strong Sell' rating, reflecting deteriorating fundamentals and bearish technical signals. Although the company demonstrated profit growth in its latest quarterly results, revenue contraction and financial risks remain pressing concerns. The stock’s 4.87% weekly decline against a modest Sensex gain underscores the challenges facing the company in regaining investor confidence. Overall, the week’s developments suggest a cautious outlook for Active Clothing, with risks currently outweighing valuation appeal.
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