Nitin Spinners soars 18% in 3-days as CARE revises rating outlook to stable

Shares of Nitin Spinners (NSL) hit a record high of Rs 183.60, rallying 12 per cent on the BSE in intra-day trade on Friday, after CARE rating upgraded long-term bank facilities of the company to stable from negative. The stock has moved up 18 per cent in  the past three days.

In past three months, the stock of textiles company zoomed 126 per cent, as compared to 9 per cent rise in the S&P BSE Sensex, ACE Equity data show. At 11:19 am; it was trading 11 per cent higher at Rs 182 on back of two-fold jump in trading volumes. A combined around 2.1 million shares have changed hands on the NSE and BSE.

NSL is engaged in manufacturing of varieties of cotton yarn, knitted fabrics and finished woven fabrics. Yarn accounts for the majority of the revenue generated by the company through count ranging from 6 to 100s, registering around 68 per cent of the sales in FY21 (PY: 73 per cent), followed by woven and knitted fabrics. The company's range of products are used to manufacture products such as apparel and garments under garments terry towels woven fabrics home furnishings carpets denim industrial textiles medical textiles and socks.

While changing the rating, CARE Rating said: "The ratings assigned to the bank facilities of Nitin Spinners (NSL) take into account the significant experience of its promoters in textile industry, NSL being a well-recognized entity with a long track record of operations in the industry and a diversified product profile. The rating also factors in the company’s increasing scale of operations with healthy profitability margins, its reputed customers, low customer concentration risk and its integrated manufacturing facility with captive thermal and solar power plants."

"The ratings, however, remain constrained by the company’s moderately leveraged capital structure partially offset by subsidized interest rates and its susceptibility to volatility in raw material prices and foreign exchange fluctuations. Ratings are further constrained by highly fragmented nature of the textile industry coupled with intense competition," the rating agency added.

The company's total income registered a compounded annual growth rate (CAGR) of 14.44 per cent from FY19 to FY21 at Rs 1,626 crore. "NSL registered a PBILDT margin of 15.91 per cent in FY21 compared to 13.22 per cent the previous year. The PAT margin of the company has bounced back to 4.24 per cent in FY21 from 1.54 per cent the previous year with the increase in scale of operations," CARE Rating said.