Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Nitin Spinners Ltd (BOM:532698) achieved its highest ever revenue, with a 14% increase year-over-year, reaching INR 3,305.65 crores.
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The company reported a 24% increase in exports, achieving INR 2,111 crores, indicating strong international demand.
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EBITDA margin improved from 12.98% to 14.26%, showcasing better operational efficiency.
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The board recommended a 30% dividend on equity share capital, up from 25% last year, reflecting confidence in financial stability.
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The company is operating at high capacity utilization, with spinning at over 96% and weaving and finishing divisions at more than 90%.
Negative Points
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Domestic cotton prices are higher than international prices, affecting profit margins.
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The company does not expect significant volume growth in FY26 due to limited capacity expansion.
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There is uncertainty in the short-term export market due to non-tariff barriers and geopolitical tensions.
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The company's margins are currently lower than their target range of 16-20%, indicating room for improvement.
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The planned CapEx will not contribute to capacity until FY27, potentially limiting growth in the immediate future.
Q & A Highlights
Q: Can you elaborate on the export demand recovery and margin expectations for FY26? A: (CFO) We do not expect major volume growth in FY26 due to small modernizations. Inventory levels are reasonable, and margins are better than industry averages. We aim to improve margins through cost efficiency and product mix optimization. The CapEx plan should add INR 1,000 crores to revenue, with margins improving by 100-150 basis points due to value-added segments.
Q: How will the UK Free Trade Agreement (FTA) impact Nitin Spinners? A: (Chairman) The UK market imports about $17-18 billion in textiles, with India currently holding a small share. The FTA will improve our competitive advantage by 6-7%, potentially doubling our market share. We already have a presence in the UK market and expect to expand further with the FTA.
Q: What is the impact of Chinese fabric imports on the Indian market? A: (Chairman) The government has imposed a minimum import price on Chinese fabrics, which should improve domestic demand. However, the impact is more significant on synthetic fabrics, not cotton. Yarn prices have seen slight increases due to rising cotton prices and import restrictions.
Q: What is the current status of cotton procurement and its impact on margins? A: (CFO) About 15-16% of our cotton is imported, with the rest sourced domestically. Changes in import duties could reduce costs. Our margins are currently 300 basis points below our target range of 16-20% due to higher domestic cotton prices compared to international prices.