Z F Steering Gear (India) Falls to 52-Week Low of Rs.845.5 Amidst Continued Downtrend

On the day the new low was hit, the stock showed a slight intraday recovery, touching a high of Rs.871.95, which represents a 2.46% increase from its opening levels. Despite this, the overall trend remains negative as the stock closed with a day change of -0.15%. Over the last two sessions, Z F Steering Gear (India) has delivered a cumulative return of -2.94%, indicating persistent selling pressure.

The stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning suggests a sustained bearish trend over both short and long-term horizons. In contrast, the broader market index, Sensex, has shown resilience, trading above its 50-day moving average and maintaining a level just 0.5% below its own 52-week high of 85,290.06 points.

Over the past year, Z F Steering Gear (India) has underperformed significantly compared to the Sensex and the broader BSE500 index. The stock has recorded a negative return of -45.87%, while the Sensex and BSE500 have delivered positive returns of 9.73% and 8.57% respectively. This divergence highlights the stock’s relative weakness within the market and its sector.

Financially, the company’s performance has reflected subdued profitability and growth metrics. The average Return on Capital Employed (ROCE) stands at 3.76%, indicating limited profitability relative to the capital invested. Operating profit has shown a negative compound annual growth rate of -28.65% over the last five years, signalling contraction in core earnings.

Recent quarterly results have also been unfavourable, with the company reporting negative earnings for five consecutive quarters. The Profit Before Tax excluding other income (PBT less OI) for the latest quarter was Rs. -0.85 crore, representing a decline of over 211% compared to the previous four-quarter average. Similarly, the Profit After Tax (PAT) for the quarter was Rs. -0.39 crore, down by 112.3% relative to the prior four-quarter average.

Interest expenses for the nine-month period stood at Rs. 6.26 crore, reflecting a growth rate of 52.68%. Despite these pressures, the company maintains a relatively low Debt to EBITDA ratio of 1.27 times, suggesting a manageable debt servicing capacity.

Valuation metrics indicate that Z F Steering Gear (India) is trading at a discount relative to its peers. The company’s ROCE of 1.7 and an Enterprise Value to Capital Employed ratio of 1.5 suggest a fair valuation in the context of its sector. However, the stock’s price remains significantly below its 52-week high of Rs.1,635, underscoring the extent of the recent decline.

Domestic mutual funds currently hold no stake in the company, which may reflect a cautious stance given the stock’s recent performance and financial indicators. The limited institutional presence contrasts with the company’s market capitalisation and sector positioning.

In summary, Z F Steering Gear (India) has experienced a notable decline culminating in a fresh 52-week low of Rs.845.5. The stock’s performance over the past year and recent quarters highlights challenges in profitability and growth, while valuation metrics suggest the stock is trading at a discount compared to peers. The broader market environment remains positive, with the Sensex maintaining levels near its 52-week high, emphasising the stock’s relative underperformance within the Auto Components & Equipments sector.

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