The stock’s current trading levels are below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating sustained weakness in price momentum. This contrasts with the broader market, where the Sensex has recorded gains of 0.52% today, reaching a fresh 52-week high at 85,632.68 points. The Sensex’s positive performance is supported by mega-cap stocks and a bullish alignment of its 50-day moving average above the 200-day moving average.
Over the past year, Z F Steering Gear (India) has underperformed significantly, with a total return of -45.34%, while the Sensex has delivered a positive return of 10.38%. The stock’s 52-week high was Rs.1,635, highlighting the extent of the decline from its peak levels.
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Several financial indicators shed light on the factors contributing to the stock’s subdued performance. The company’s Return on Capital Employed (ROCE) stands at 3.76%, reflecting limited profitability relative to the total capital invested. This figure is notably low for the auto components sector, where efficient capital utilisation is critical.
Operating profit has shown a negative compound annual growth rate of -28.65% over the last five years, signalling challenges in sustaining earnings growth. Furthermore, the company has reported negative results for five consecutive quarters, with the latest quarterly Profit Before Tax (excluding other income) at Rs. -0.85 crore, representing a decline of 211.5% compared to the previous four-quarter average. The net profit after tax for the quarter was Rs. -0.39 crore, down by 112.3% relative to the same period.
Interest expenses for the nine-month period have risen by 52.68% to Rs.6.26 crore, which may be a factor in the pressure on profitability. Despite these challenges, the company maintains a relatively low Debt to EBITDA ratio of 1.27 times, indicating a manageable debt servicing capacity.
Valuation metrics suggest the stock is trading at a discount compared to its peers, with an Enterprise Value to Capital Employed ratio of 1.5 and a ROCE of 1.7, which may reflect market caution given the company’s recent financial trends. Over the past year, profits have declined by 66.3%, further underscoring the earnings pressure faced by the company.
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In terms of market participation, domestic mutual funds hold no stake in Z F Steering Gear (India), which may reflect a cautious stance given the company’s recent financial performance and valuation. This is notable given the capacity of mutual funds to conduct detailed research and their typical interest in companies with stable or improving fundamentals.
While the broader auto components sector has experienced varied performance, Z F Steering Gear (India) has lagged behind, with its stock price and profitability metrics indicating ongoing pressures. The stock’s recent trading behaviour, including the four-day consecutive decline and positioning below all major moving averages, highlights the current market sentiment.
Overall, the stock’s fall to Rs.819.1 marks a significant point in its price history, reflecting a combination of subdued earnings, rising interest costs, and valuation adjustments. The contrast with the broader market’s positive momentum, particularly the Sensex’s new 52-week high, emphasises the divergence in performance between this stock and the wider indices.
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