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Friday, May 1, 2009

Zodiac Clothing Company Ltd:-Future outlook and growth prospects

Scripscan:Zodiac Clothing Company Ltd
Traded in:Nse-bse

Story:Zodiac is one of the oldest men''s shirt makers in the country in the organised sector. It diversified into manufacturing and retailing of shirts, trousers, ties and men''s accessories. The company has been able to keep its raw material costs under control as its sourcing is widely spread across low-cost countries like Italy, Taiwan, and China. Its manufacturing facility at UAE continues to benefit from tax sops. The company has a strong design capability. Retailing through exclusive outlets at a few five-star hotels in Mumbai is an icing on the cake for the company.Zodiac is present in a niche segment of selling formal shirts. It also sells a fashion wear collection through its ZOD brand. A superior quality fabric has helped the company in increasing the average off-take of shirts. The company also holds a small strategic stake in Shoppers'' Stop. This was done at a very early stage and the investment is now worth over Rs 20 crore.Almost 65% of the revenue comes from exports.However, with the growing thrust on retail presence this would change towards a 60:40 ratio between exports and domestic sales. The impact of rupee appreciation has been negated by the increase in duty drawback. The applicability of service tax was also rationalised which helped Zodiac to contain its tax outflows. The company actively used various hedging instruments to safeguard against currency movement.The company has been growing at a steady pace. It has been able to increase the off-take in accessories, which is a high margin segment. Thus for investors looking for an exposure in the retail segment, Zodiac provides a slow and steady growth.A good safe bet at dips,buy for 2-3 years perspective.

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