Here’s how:
Press and hold theShiftkey and draw a circle with theEllipsetool.
To draw a perfect circle outwards from the center, pressOption+Shifton a Mac orAlt+Shifton Windows.
Select theTexttool drop-down menu and choose theType on a Path Tool.

Open theTypepanel and selectParagraph(Window>punch in>Paragraph).
Alternatively, click theAlign Centerbutton in the Panel Options.
This step sets the justification to center.

poke the top center of the circle.
A flashing input cursor appears.
When you enter the text, it’s center-aligned as you throw in.

With theTypepanel open, click theCharactertab.
Choose a font and size, then enter the text for the top of the circle.
The text runs along the top of the circle.

The stroke on the shape is used as the baseline for the text.
Switch to theDirect Selectiontool, click once on the circle, then copy it to the clipboard.
To paste the object in front of the current object, selectEdit>Paste in Front.

Before flipping the text, open theLayerspanel and turn off the visibility of the bottom layer.
Switch to theType Tool, go for the text, and enter the new text.
ChooseRainbowfor theEffect, and forAlign to Path, chooseAscender.

The Ascender is the highest part of the lettering and places the text outside the circle.
Check theFlipbox, then checkPreviewso you’re able to see how it will look.
Spacing can also be adjusted here.

The Rainbow option doesn’t distort the text.
Click away from the text to deselect it and choose theSelection Toolin the toolbox.
You’ll see a handle at the top of the shape and two handles at the bottom.
If you roll the cursor over this handle, it switches to a Rotate cursor.
The two handles at the bottom are the ones you should use.
These handles rotate the object instead of moving the text.
When finished, turn on the visibility of the hidden layer.
FAQ
Use one of the shape tools orPen tooltodraw a shape.
Then, on thePropertiespanel, set theFilltoNoneand theStroke ColortoBlack.
Select theText tooland click where you want to start typing, then selectAlign Left.
Go toFile>Place> select image >Place.
opt for image to crop using theSelectiontool, then selectCrop Image>Object>Crop Image>Crop Image.
Drag the widget corners and edge handles to set the crop boundaries then selectApply.