Nitin Spinners gains 4%, hits record high on hopes of strong earnings

Shares of Nitin Spinners hit a record high of Rs 303, up 4 per cent on the BSE in Friday’s intra-day trade. The stock has gained 10 per cent in the last two trading sessions on expectation of strong earnings.

The stock of the textiles company crossed its previous high level of Rs 295 touched on November 10, 2021. Currently, the stock is traded under the T Group, which represents securities that are settled on a trade-to-trade basis as a surveillance measure. At 10:41 am; Nitin Spinners was quoted 3 per cent higher at Rs 300, when compared with a 0.76 per cent rise in the S&P BSE Sensex.

In the past six months, the stock has zoomed 106 per cent, as compared to a 13 per cent rise in the S&P BSE Sensex. In one year, the stock has rallied 242 per cent, as against a 25 per cent surge in the benchmark index. Nitin Spinners is one of the leading manufacturers of cotton and blended yarns, knitted fabrics, greige and finished woven fabric.

For the first half (April-September) of financial year 2021-22 (H1FY22), Nitin Spinners had reported profit after tax (PAT) of Rs 147 crore as against Rs 3 crore in H1FY21. Revenue from operations grew 88.6 per cent year on year (YoY) to Rs 1,218 crore from Rs 646 crore in the same period last fiscal. Earnings before interest, taxes, depreciation, and amortization (ebitda) margin improved to 25.1 per cent from 12.2 per cent.

The company said it achieved sales of 11.34 million meters of woven fabric in H1FY22 contributing to 14 per cent of revenue in H1FY22. The company exported more than 70 per cent of its production to over 50 countries across the globe during H1FY22.

On December 30, 2021, the company’s board had approved capacity expansion at a total project cost of Rs 950 crore. The expansion is targeted to be completed over next 20 months with an aim to strengthen the company's market position and capture the benefits of a growing market opportunity in international as well as domestic markets, Nitin Spinners said.

The company further said the Indian cotton industry is well poised to take advantage of improving demand across the globe and the china + supply chain strategy adopted by global majors.

The government thrust on Atmanirbhar Bharat is expected to surge internal demand for raw materials thereby uplifting industry ecosystem. The company said it to capitalize on growth opportunities arising from investment promotion scheme of the state government and other schemes of central government.

Apparel exporters, in the past couple of quarters, have witnessed strong customer interest owing to many large global retailers diversifying their sourcing and reducing dependence on China. Overall order booking from India has increased rapidly due to the China+1 strategy of global retailers. Indian apparel players are exploring opportunities to expand their garmenting capacities to capitalise on long term growth opportunities, analysts at ICICI Securities said in textile sector report.