CARE Ratings Ltd. (CARE) has assigned the Long Term rating of CARE BB+; Positive (Double B Plus; Outlook: Positive) for Rs. 54 Crore Line of Credit of Zodiac Clothing Company Ltd.
The reasons provided by CARE for assigning the rating is reproduced below:
The ratings assigned to the bank facilities of Zodiac Clothing Limited (ZCCL) continue to derive strength from the long track record and established brand presence of the company in the men's wear segment supported by wide geographical presence. The ratings take note of comfortable capital structure and adequate liquidity profile of the company. Additionally, the ratings also factor in promoter's experience in the apparel segment and the financial support extended to the company.
The rating strengths, however, are tempered by the significant decline in scale of operations over the years leading to net losses and elongated working capital cycle. The operations in FY21 and Q1FY22 continue to be significantly impacted by COVID-19 related restrictions. With intense competition from both organised and unorganised players in the industry, the company has limited pricing flexibility.
Going forward, CARE expects, with uptick in exports and various cost rationalisation measures, PBILDT margins to expand along with the scale of operations. The same continues to remain key rating monitorable.
Shares of Zodiac Clothing Company Limited was last trading in BSE at Rs. 116.15 as compared to the previous close of Rs. 117.05. The total number of shares traded during the day was 1744 in over 107 trades.
The stock hit an intraday high of Rs. 119.65 and intraday low of 115.00. The net turnover during the day was Rs. 205599.00.