Nitin Spinners Q2 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- The company targets yarn production to exceed 1 lakh tons per annum, aiming for ~24,000 tons in the current quarter and crossing 25,000 tons in the next quarter as capacity ramps up.
- Fabric business is growing rapidly and expected to reach over Rs. 600 crores by year-end, aiming to constitute at least 30% of total business in coming years.
- Additional capacity from recent CAPEX (~Rs. 955 crores) is expected to generate incremental turnover of Rs. 1,200 to 1,300 crores at current price levels.
- Export demand has normalized with volumes recovering to over 115 million kg per month and aims to sustain above 125-130 million kg for several months to see further growth.
- Post-FY26 growth focus will be on consolidating expanded capacity, improving cost efficiency, enhancing value-added products, and potentially adding fabric capacities based on market dynamics.
- Overall, revenue growth is expected in the second half FY24 due to capacity expansion and improving demand.
See what Nitin Spinners management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no explicit mention of any current or future fundraising through debt or equity in the call transcript.
- The company has recently completed significant CAPEX of about Rs. 955 crores, with Rs. 790 crores already capitalized and Rs. 165 crores left.
- The company is focusing on consolidating its new capacities and improving utilization before considering further capacity additions.
- Debt repayment schedule mentions long-term debt maturity of about Rs. 145 crores in FY25 and Rs. 115 crores repayment in the current year.
- Interest cost is expected around Rs. 25 crores per quarter post expansion, and there are interest subsidies from the government.
- No mention of new fundraising plans; focus is on operational consolidation and capacity ramp-up.
See what Nitin Spinners management said on order book — free account, 30 seconds.
Capex plans
Yes- Total CAPEX planned around Rs. 860-955 crores, mostly commissioned except Rs. 165 crores remaining.
- Remaining CAPEX relates to ring spinning expansion at Begun plant (32,640 spindles) with machinery arrived; commissioning expected within November 2023.
- Capacity expansion aims to increase yarn production to over 1 lakh tons annually (currently ramping up to 24,000-25,000 tons quarterly).
- The company plans to consolidate and fully utilize the expanded capacities before considering further additions.
- Future capacity additions likely focusing on fabric division, which is growing faster and expected to form ~30% of total business.
- Exploring new product offerings, including blended yarns (polyester viscose, modal, recycled fibers).
- Open to adding capacity aligned with market demand and government policies (e.g., new FTAs).
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Margin guidance
Category 3- Company targets production of over 1 lakh tons of yarn going forward, expecting 24,000 tons in Q3 FY24 and 25,000+ tons in Q4 FY24 as capacity ramps up.
- Revenue growth expected due to expanded capacities kicking in; Q2 FY24 revenue up 19.5% QoQ and 45.8% YoY.
- EBITDA margins currently subdued (~11-12%), expected to improve once cotton prices stabilize and demand picks up.
- Long-term margin target around 16% based on historical averages.
- Profit after tax for H1 FY24 is Rs. 60 crores vs Rs. 94 crores last year; improving trend expected as utilization and efficiencies increase.
- EPS for Q2 FY24 at Rs. 5.64; cash EPS at Rs. 9.98; half year EPS Rs. 10.7.
- Focus on growing fabric business to 30% of total revenue, which should improve margin and ROCE profile.
- Interest costs expected around Rs. 25 crores per quarter post-expansion; subsidies to reduce net interest cost.
- Management cautious but optimistic about demand and export recovery, especially post capacity consolidation.
Order book
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