Stock Price Movement and Market Context
The stock of Z F Steering Gear (India) Ltd has declined by 4.03% over the last three consecutive trading days, culminating in the new 52-week low of Rs.721. This level is substantially below its 52-week high of Rs.1,424.95, indicating a near 49.4% drop from its peak price within the past year. Despite the stock’s recent underperformance, it marginally outperformed its sector today by 1.21%, though it remains below all key moving averages – including the 5-day, 20-day, 50-day, 100-day, and 200-day averages – signalling a persistent bearish trend.
The broader market environment has also been challenging. The Sensex opened flat but declined by 525.47 points, or 0.72%, closing at 82,969.02. The index is currently 3.84% below its 52-week high of 86,159.02 and has experienced a three-week consecutive fall, losing 3.26% over this period. While the Sensex trades below its 50-day moving average, the 50DMA remains above the 200DMA, suggesting some underlying resilience in the market despite short-term weakness.
Financial Performance and Profitability Concerns
Z F Steering Gear’s financial performance over the past year has been notably weak. The company has reported negative results for five consecutive quarters, with quarterly profit after tax (PAT) falling by 112.3% compared to the previous four-quarter average, registering a loss of Rs.0.39 crore in the latest quarter. Profit before tax (PBT) excluding other income also deteriorated sharply, declining by 211.5% to a loss of Rs.0.85 crore. Interest expenses for the nine-month period have increased by 52.68%, reaching Rs.6.26 crore, further pressuring profitability.
The company’s operating profit has contracted at an annualised rate of 28.65% over the last five years, reflecting a sustained decline in core earnings. Return on Capital Employed (ROCE) remains low at 3.76%, indicating limited efficiency in generating profits from the capital invested. This figure is considerably below industry averages and highlights challenges in achieving profitable growth.
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Shareholding and Promoter Confidence
Promoter stake in Z F Steering Gear has decreased by 4.14% over the previous quarter, now standing at 62.79%. This reduction in promoter holding may reflect a cautious stance on the company’s near-term prospects. Such changes in shareholding patterns often attract attention as indicators of internal confidence levels.
Valuation and Debt Metrics
Despite the challenges, the company maintains a relatively low Debt to EBITDA ratio of 1.27 times, suggesting a manageable debt burden relative to earnings before interest, tax, depreciation, and amortisation. The enterprise value to capital employed ratio stands at 1.3, indicating a fair valuation compared to peers. However, the stock is trading at a discount relative to historical valuations of comparable companies in the Auto Components & Equipments sector.
Over the past year, Z F Steering Gear’s stock has generated a negative return of 47.41%, significantly underperforming the Sensex, which posted an 8.33% gain over the same period. The BSE500 index also outperformed the stock with a 7.47% return, underscoring the stock’s relative weakness within the broader market.
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Mojo Score and Market Sentiment
Z F Steering Gear currently holds a Mojo Score of 26.0, categorised as a Strong Sell, an upgrade from its previous Sell rating as of 8 December 2025. The company’s market capitalisation grade is 4, reflecting its micro-cap status within the Auto Components & Equipments sector. This rating aligns with the stock’s recent price performance and financial metrics, signalling caution in the current market environment.
Summary of Key Financial Indicators
The company’s declining profitability is evident in its negative quarterly earnings and shrinking operating profits. Interest costs have risen sharply, further compressing margins. The low ROCE of 3.76% and negative growth in operating profit over five years at an annualised rate of -28.65% highlight persistent challenges in generating returns for shareholders. The reduction in promoter stake adds to the cautious outlook surrounding the stock.
While the company’s debt servicing capability remains adequate, as indicated by a Debt to EBITDA ratio of 1.27, the overall financial health and market performance have deteriorated significantly over the past year. The stock’s valuation discount relative to peers reflects these concerns and the subdued investor sentiment.
Conclusion
Z F Steering Gear (India) Ltd’s fall to a 52-week low of Rs.721 underscores a period of sustained weakness in both price and fundamentals. The stock’s underperformance relative to the Sensex and sector peers, combined with deteriorating profitability and reduced promoter confidence, paints a challenging picture. The company’s financial ratios and market metrics suggest that the stock is currently navigating a difficult phase within the Auto Components & Equipments sector.
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