During Saturday’s trading session, the shares of India’s leading manufacturer of cotton & blended yarn, knitted fabrics, and greige & finished woven fabrics surged nearly 6 percent to Rs. 435 on BS
Incorporated in 1992, Nitin Spinners Limited is engaged in the business of manufacturing of cotton and blended yarn, knitted fabrics and woven fabrics.
Stock Performance
With a market cap of Rs. 2,244 crores, the shares of Nitin Spinners Limited were trading in the red at Rs. 399.15, up by nearly 3 percent, as against its previous closing price of Rs. 411.65.
The stock has delivered positive returns of nearly 14 percent in one year, while around 3.3 percent of negative returns in the last six months. Moreover, the shares of Nitin Spinners have given negative returns of about 10 percent in the last one month.
Capex Update
The management has announced an investment of Rs. 1,100 crores for its expansion project, focusing on spinning, weaving, and woven fabrics. The funding will be sourced through a combination of term debt and internal accruals. The expansion is expected to be completed within the next 24 months.
Currently, the company’s spinning capacity stands at ~4.81 lakh spindles, operating at over 95% capacity utilization. The proposed expansion will add about 66,096 spindles, with a production capacity of 22,400 MTPA.
In woven fabrics, the existing capacity is around 40 million meters per annum (MMPA), with a more than 85% utilization rate. The proposed expansion will add ~35 million meters per annum to this capacity.
Additionally, the existing renewable power capacity is 18.8 MW (AC), with a proposed increase of 11.2 MW (AC).
This capacity enhancement aims to cater to growing demand, diversify the product portfolio, introduce niche products, and achieve a competitive cost advantage through economies of scale. The company also plans to boost renewable power capacity to reduce power costs.
The project will be eligible for various benefits under the Rajasthan Investment Promotion Scheme (RIPS) 2024, including interest subsidy, capital subsidy, and electricity duty exemptions.
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Key Rationale
Product Portfolio Diversification: the company is introducing premi specialty yarns, yarn-dyed fabrics, and special finish fabrics, targeting n market opportunities.
Production Efficiency & Integration: The company’s integrated operatio will enable complete in-house sourcing of yarn for fabric production, with ~60% of the additional yarn produced being used internally.
Margin Expansion: By shifting towards value-added products and focusing on the high-end fashion fabric segment, the company expects to achieve sustainable margins, with an anticipated uptick upon project completion.
Financials
For Q3 FY25, Nitin Spinners reported total revenue from operations of Rs. 838.8 crores, registering an increase of around 2 percent QoQ from Rs. 822.5 crores in Q2 FY25, as well as a rise of about 11.7 percent YoY from Rs. 750.4 crores in Q3 FY24.
The company’s net profit for Q3 FY25 grew to Rs. 44.8 crore representing a significant rise of around 6.2 percent QoQ from Rs. 42 crores in Q2 FY25, and a year-on-year increase of nearly 41 percent from Rs. 31.7 crores in Q3 FY24.
Further, EBITDA for Q3 FY25 increased to Rs. 117.2 crores, representing a robust 14 percent YoY growth compared to Rs. 102.7 crores in Q3 FY24. The EBITDA margin improved by 28 bps to 13.97 percent, up from 13.69 percent, over the same period.
Written by Shivani Singh
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