Zodiac Clothing has target of Rs 225-240: Tater

Zodiac Clothing Company has target of Rs 225-240 in next six months, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Zodiac Clothing Company is a short-term investment pick which can stabilize at higher levels from current prices. Zodiac should be played from medium-term perspective with a target of Rs 225-240. This target is reasonable from next six months perspective."

He further added, "If you see the company’s balance sheet, the company owns almost 2 million shares, roughly around 18 lakh shares of Shoppers Stop itself which values around Rs 75 crore, plus few other investments that totals around Rs 85 crore odd at current market price, plus the mutual funds. So if you see this and knockout that from debt as well as the market cap, the net value for shareholder is approximately Rs 300 crore, which we feel given the brand equity of the company at very reasonable price compared to what Provogue is or even some large players are."

"Given the deals that had happened into retail as a sector we feel the stock should at least deserve one time plus market cap to sales ratio on adjusted basis. That means here is a chance of at least 30% upside from current levels given that the company would do close to Rs 450 crore odd in terms of sales for this year and they have been very smart in terms of positioning."

"They have taken strong decisions of even closing down their stores into areas where they have not been profitable. So if you see the entire spread even on their area of catering they cater to lower segment of the middle class to the upper segment from the range of Rs 750-5,000 for the shirts and if this thing actually plays out well we feel this could be one stock which has got tremendous upside potential from next 2-3 years perspective also. So a stock limited downside and potential upside this is definitely a bet where we feel amount should be allocated for."

Disclosure: I have no personal holdings in the above stock.