Any current/future new fundraising through debt or equity?

As of May 31, 2016, Nandan Denim Limited has incurred CAPEX of Rs. 400 Crore out of a total announced Rs. 600 Crore expansion plan. The remaining Rs. 200 Crore CAPEX is likely to be incurred during H1 FY17. The expansion is funded approximately 70-80% through debt and 20-30% through equity. Current outstanding debt is around Rs. 520 Crore, with expected peak debt between Rs. 600 to 650 Crores based on working capital utilization. The company has repayment liabilities of about Rs. 54-55 Crore annually. No specific plans for fresh fundraising through additional debt or equity beyond the ongoing

Any current/future capex/capital investment/strategic investment?

Nandan Denim is in the middle of a major capacity expansion plan with a total CAPEX of Rs. 600 Crore. As of March 31, 2016, Rs. 400 Crore has already been incurred, with an additional Rs. 200 Crore expected to be spent by H1 FY17. Post-expansion, the installed Denim fabric manufacturing capacity will increase to 110 million meters per annum, making them the largest Denim manufacturer in Asia. Spinning capacity will increase from 70 tons per day to 124 tons per day, enabling production of 80-85% of required yarn in-house. The expansion is funded approximately 70-80% by debt, with peak debt expe

Future growth expectations in sales/revenue/volumes?

Nandan Denim expects double-digit growth in FY17 driven by capacity expansion and increased market share. Export business has doubled in 3 years (from Rs 70 crore in FY13 to Rs 140 crore in FY16), with further improvements targeted in next 2-3 years. Post capacity expansion, installed Denim fabric manufacturing capacity will reach 110 million meters, making Nandan the largest denim manufacturer in Asia. Major volume growth will come from new capacities becoming operational (increase from ~100 million meters to 120 million meters). Capacity utilization currently around 82%, with limited scope f

Future growth expectations in earnings/operating earnings/profits/EPS?

The company targets double-digit growth in FY17, supported by capacity expansion coming on stream. EBITDA margins improved from around 14% two years ago to 16.5% in FY16, with expectations of further margin enhancement as integration improves. Capacity expansion (completion by H1 FY17) will lead to increased denim fabric capacity (110 million meters) and spinning capacity (124 tons/day), enabling higher in-house yarn production (80-85%), which is margin accretive. Focus on value-added denim products and moving up the value chain to improve realizations and sustain ROE above 20%, potentia

Current/ Expected Orderbook/ Pending Orders?

The transcript does not explicitly provide details on the current or expected order book or pending orders for Nandan Denim Limited. However, the company is optimistic about growth with expanding capacities expected to be operational by H1 FY17, which should drive volume growth. The management highlights aggressive business development efforts targeting both domestic and international markets. They expect a significant increase in exports and market share over the next 2-3 years. Capacity expansion to 120 million meters (110 million Denim + 10 million shirting) indicates readiness to handle in

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Nandan Denim LtdQ1 FY16Textiles & Apparels

Nandan Denim Ltd Q1 FY16 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹2.46P/E: 11.8Market Cap: ₹402 CrSector: Textiles & Apparels

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Nandan Denim expects double-digit growth in FY17 driven by capacity expansion and increased market share.
→Export business has doubled in 3 years (from Rs 70 crore in FY13 to Rs 140 crore in FY16), with further improvements targeted in next 2-3 years.
→Post capacity expansion, installed Denim fabric manufacturing capacity will reach 110 million meters, making Nandan the largest denim manufacturer in Asia.
→Major volume growth will come from new capacities becoming operational (increase from ~100 million meters to 120 million meters).
→Capacity utilization currently around 82%, with limited scope for improvement; volume growth primarily from added capacity.
→Focus on expanding domestic market share and global footprint.
→Emphasis on developing value-added denim products and diversifying customer base to sustain growth and margins.

Margin guidance

Category 2

→The company targets double-digit growth in FY17, supported by capacity expansion coming on stream.
→EBITDA margins improved from around 14% two years ago to 16.5% in FY16, with expectations of further margin enhancement as integration improves.
→Capacity expansion (completion by H1 FY17) will lead to increased denim fabric capacity (110 million meters) and spinning capacity (124 tons/day), enabling higher in-house yarn production (80-85%), which is margin accretive.
→Focus on value-added denim products and moving up the value chain to improve realizations and sustain ROE above 20%, potentially peaking around 24-25%.
→Efforts on market development, product R&D, and customer diversification to drive sustainable profits and counter commoditization challenges.
→Exports have doubled from Rs. 70 crore in FY13 to Rs. 140 crore in FY16, with further improvements expected over the next 2-3 years.
→Overall, the company is optimistic about improving operating margins and profitability with completed expansions and strategic initiatives.

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Fundraise plans

Yes

→As of May 31, 2016, Nandan Denim Limited has incurred CAPEX of Rs. 400 Crore out of a total announced Rs. 600 Crore expansion plan.
→The remaining Rs. 200 Crore CAPEX is likely to be incurred during H1 FY17.
→The expansion is funded approximately 70-80% through debt and 20-30% through equity.
→Current outstanding debt is around Rs. 520 Crore, with expected peak debt between Rs. 600 to 650 Crores based on working capital utilization.
→The company has repayment liabilities of about Rs. 54-55 Crore annually.
→No specific plans for fresh fundraising through additional debt or equity beyond the ongoing CAPEX funding were mentioned.

Order book

→The transcript does not explicitly provide details on the current or expected order book or pending orders for Nandan Denim Limited.
→However, the company is optimistic about growth with expanding capacities expected to be operational by H1 FY17, which should drive volume growth.
→The management highlights aggressive business development efforts targeting both domestic and international markets.
→They expect a significant increase in exports and market share over the next 2-3 years.
→Capacity expansion to 120 million meters (110 million Denim + 10 million shirting) indicates readiness to handle increased orders.
→Supply chain and integration improvements (spinning capacity increase to 124 tons/day, in-house yarn production of 80-85%) aim to support meeting demand efficiently.
→Overall, order inflows are expected to improve with widening customer base and value-added product focus, but no exact order book figures are mentioned.

Capex plans

Yes

→Nandan Denim is in the middle of a major capacity expansion plan with a total CAPEX of Rs. 600 Crore.
→As of March 31, 2016, Rs. 400 Crore has already been incurred, with an additional Rs. 200 Crore expected to be spent by H1 FY17.
→Post-expansion, the installed Denim fabric manufacturing capacity will increase to 110 million meters per annum, making them the largest Denim manufacturer in Asia.
→Spinning capacity will increase from 70 tons per day to 124 tons per day, enabling production of 80-85% of required yarn in-house.
→The expansion is funded approximately 70-80% by debt, with peak debt expected between Rs. 600 to Rs. 650 Crore.
→Completion is expected by mid-FY17, with full operations and benefits realized within 4-5 months post-completion.
→Strategic focus on backward integration, value-added products, and global market expansion accompanies capacity growth.

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