Active Clothing Co Reports Strong Q2 Performance Amid Debt Concerns and Evaluation Adjustments

Active Clothing Co, a microcap player in the textile industry, has recently undergone an adjustment in evaluation, reflecting a nuanced view of its financial standing. The company reported positive financial performance for the second quarter of FY24-25, showcasing significant metrics such as operating cash flow reaching Rs 20.77 crore and net sales hitting Rs 81.43 crore, both marking the highest figures recorded.
Despite these positive indicators, the evaluation adjustment highlights underlying concerns regarding the company's long-term fundamental strength. The operating profit growth over the past five years stands at 44.38%, yet the high debt-to-EBITDA ratio of 4.65 times raises questions about its capacity to manage debt effectively. Additionally, the average return on equity of 5.47% suggests limited profitability relative to shareholder funds.

While the stock is technically positioned in a mildly bullish range, with favorable MACD and KST technical factors, the overall assessment reflects a complex landscape for Active Clothing Co. The stock has consistently generated returns over the past three years, outperforming the BSE 500 index during this period.

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