NITINSPIN - Nitin Spinners Ltd. Share Price

Management provided a positive outlook for Nitin Spinners, emphasizing strong performance despite challenging market conditions. For FY '25, the company achieved a revenue of INR 3,305.65 crores, marking a 14% increase from the previous year, along with a notable 33% jump in profit after tax (PAT) to INR 175.43 crores. The earnings per share (EPS) increased to INR 31.20 from INR 23.29 year-on-year. A significant rise in exports was reported, reaching INR 2,111 crores, up 24% from FY '24.

Key forward-looking points from management include:

1. Capital Expenditure Plans: Approval for a capex plan of approximately INR 1,100 crores focused on enhancing capacities in yarn and fabrics, aimed at value addition and cost efficiencies.
2. Domestic and Export Market Potential: Management highlighted a recovery in India's textile exports, particularly in key markets like the U.S., driven by favorable tariff structures and potential increases in demand from free trade agreements.
3. Industry Landscape: The textile sector is currently experiencing a steady demand resurgence, even amidst geopolitical tensions and regulatory challenges.
4. Efficiency Improvements: The company will focus on cost efficiency, product mix optimization, and value addition measures to enhance profitability margins, with expectations to increase margins by about 100"“150 basis points as new capacities come online.
5. Market Strategy: Nitin Spinners is exploring opportunities to boost presence in the U.K. market, where the textile import size is around $17-18 billion, while currently holding a modest market share of approximately 1%.

Overall, management maintains a cautiously optimistic outlook, emphasizing their robust operational performance and capitalizing on emerging demand dynamics in the industry.

Here are the major questions and their respective answers from the Q&A section of the Nitin Spinners Limited earnings call held on May 14, 2025:

1. Question: "Could you elaborate further on the export demand recovery and the margin further expand in FY '26? How do you see the volume growth panning out in FY '26 given our capacity?"
   Answer: "Regarding volume growth, we have some small modernizations planned, leading to only slight volume increases. Our capex will only kick in significantly in FY '27, so we don't expect major growth this year. On demand, sellers are reducing inventory due to lower cotton prices. Thus, stock levels are reasonable, and some are below desired levels."

2. Question: "What will be the peak revenue potential of the capex?"
   Answer: "At current pricing, we expect to add approximately INR 1,000 crores to our top line from this capex. Since we're focusing on value addition, we anticipate improving margins by 100 to 150 basis points."

3. Question: "Can you quantify the opportunity emerging from the China plus one strategy and the U.K. FTA?"
   Answer: "The U.K. textile import market is approximately $17 billion. Currently, India's exports to the U.K. are around $1.6 billion. With the favorable duty structure from the FTA, we could potentially double our market presence, aiming for an additional $1.5 billion to $2 billion in exports."

4. Question: "What percentage of your revenue is from Turkey, and how will it be impacted if India does not trade with Turkey?"
   Answer: "Turkey constitutes less than 1% of our total revenues, so any changes in trade there won't severely impact us. They are more of a competitor in the international market than a significant trade partner."

5. Question: "What was the cotton yarn spread for this quarter?"
   Answer: "The cotton yarn spread for the quarter was approximately INR 105 per kg."

6. Question: "What has been the trend in cotton yarn prices over the last year?"
   Answer: "The cotton yarn price trends for the last year have been consistent, with average spreads around INR 100 to INR 105 across quarters."

7. Question: "What's your guidance on volume growth for FY '26?"
   Answer: "We anticipate minimal volume growth in FY '26 due to the lack of significant new capacity. We're focused on optimizing utilization, which could yield slight improvements."

8. Question: "Can you speak on your cotton procurement levels?"
   Answer: "About 15% to 16% of our cotton procurement is imported, with the remainder sourced locally. Changes in import duties can reduce costs if implemented."

9. Question: "What proportion of your total exports goes to Bangladesh, and how is the situation with ports affecting this?"
   Answer: "Around 27% to 28% of our exports go to Bangladesh. There's no port shutdown; delays are affecting logistics but costs slightly decreased, with no major changes in our export capabilities."

10. Question: "How are you viewing cotton price trends domestically and internationally?"
    Answer: "Internationally, we see good crop estimates, and we don't expect major price increases in cotton until the end of this calendar year. Domestic prices align with government minimum support prices, limiting fluctuations."