Dinesh Nolkha, Chairman and Managing Director at Nitin Spinners, “Demand at this point of time, especially for the yarn segment, looks okay. If you see in last one and a half to two years, there is no major capacity addition in this business. Also, in fact, some of the smaller capacities have gone out of business because of the tough times we had because of higher cotton prices in India and other factors. At this point of time, demand and supply of yarns looks finely balanced.”
The company expects demand to improve further as trade agreements open up larger export markets. Nolkha highlighted the UK trade agreement and the expected EU trade agreement as key opportunities for the textile industry, particularly for yarn and fabrics.
The stock was trading at ₹584.60 at 2:43 pm on the NSE and has gained more than 66% over the past year.
Nitin Spinners expects to generate revenue of around ₹3,800 crore in the current financial year, with new capacity expected to contribute an additional ₹300-400 crore once it starts ramping up.
The company is investing around ₹1,350 crore across its textile and renewable energy businesses. The capex will be funded largely through internal accruals and debt.
While the ramp-up of new capacity could lead to some initial cost pressure, the company expects this to be offset by savings from renewable energy and a higher share of fabric production, which offers better value addition compared with yarn.
Nolkha said the company’s renewable energy initiatives could provide annual savings of around ₹65-70 crore once fully operational.
The company’s spinning capacity is currently running at around 97.5-98%, while fabric capacity utilisation stands at about 92%. New spinning capacity is expected to take around four to five months to ramp up, while the fabric capacity could take eight to 10 months.During the ramp-up phase, the utilisation of the new fabric capacity could remain at around 55-60%, before moving towards the company’s existing utilisation levels.
Exports currently account for around 65% of Nitin Spinners’ revenue, helped by strong demand following the reduction in US tariffs. However, the company continues to target a longer-term revenue mix of around 60% exports and 40% domestic sales.
Nitin Spinners’ current market capitalisation is ₹3,281.84 crore.
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