Nitin Spinners - Soft Raw Material Prices, Better Capacity Utilisation To Drive Profitability: Systematix

Systematix Research Report

We met with the management of Nitin Spinners Ltd. to gauge the company’s business outlook. The company is a leading textile company in India, which specialises in manufacturing cotton and blended yarn, knitted fabrics, greige and finished woven fabrics.

The company was established in 1992 and is headquartered in Bhilwara (Rajasthan). Nitin Spinners has an installed capacity of 435,000 spindles and 35,864 rotors, produces 110,000 tonnes of yarn, 11,000 tonnes of knitted fabrics and 40 million meters of finished woven fabric.

The company has carved a niche for itself in India’s textile industry. Management believes capacity expansions across segments would fuel the company’s revenue growth.

Nitin Spinners is focusing on debottlenecking its existing manufacturing facilities to increase production base and is enhancing the share of value-added products in its portfolio to improve profitability.

The company serves both local and international markets and is present in more than 50 countries. Exports constituted 58% of the company’s revenue (9M FY24). Management’s upbeat outlook stems from soft cotton prices (fallen below international levels), pick up in exports (improving yarn demand), and higher VAP contribution.

The company's strategic focus would revolve around optimizing capacity utilisation, enhancing product mix, exploring newer geographies, and focusing on debottlenecking manufacturing facilities to increase production base and cost efficiency.

We do not have a rating on the stock, which currently trades at 9.5 times FY25E earnings per share of Rs 40.7 (Bloomberg consensus).

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