Nitinspinners зафиксировала рекордную квартальную выручку в 875 крор рупий и расширила маржу EBITDA до 17,78%

This article first appeared on GuruFocus. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points - Nitin Spinners Ltd (BOM:532698) reported its highest-ever quarterly revenue of Rs. 875 crores, a 10.3% YoY growth, driven by improved yarn realizations and better demand. - EBITDA margin expanded significantly to 17.78%, up 376 basis points YoY, due to improved realizations and cost-saving initiatives. - The company is benefiting from improved cotton price parity between domestic and international markets, which has corrected from a 5-7% premium to a 1-2% discount, enhancing competitiveness. - Capacity expansion plans are on track, with new spinning and fabric capacities expected to contribute to revenue growth in H2 FY27 and FY28, potentially adding Rs. 200-300 crores in incremental revenue. - Renewable power expansion is progressing as scheduled, with expected annual EBITDA savings of around Rs. 50 crores once fully operational, further reducing power costs. - The company maintains a strong export presence (65% of revenue) and is well-positioned to benefit from the India-UK FTA and potential EU FTA, opening new market opportunities. - Management expects to sustain current margin levels in the 16-20% range, supported by a favorable product mix and permanent cost savings from automation and energy efficiency. Negative Points - Yarn volumes declined on a QoQ and YoY basis, partly due to increased internal consumption for fabric and logistics challenges, which may raise concerns about volume growth. - The knit fabric business is operating at only 55-60% utilization, below pre-US tariff levels of 60-65%, due to ongoing uncertainties in the US market. - Cotton prices increased by 8-10% during Q1, driven by lower global production and supply chain disruptions, which could pressure margins if not fully passed on. - The company faces potential margin pressure in the fabric segment, as it has only been able to pass on raw material cost increases without improving margins, unlike in yarn. - Management refrained from providing specific guidance on margin improvement beyond maintaining current levels, citing geopolitical uncertainties and market volatility. - The ramp-up of new fabric capacity is expected to take 6-8 months, with full utilization likely only in FY28, delaying potential revenue and margin benefits. - The company is not considering a buyback at this time due to its growth phase and capital deployment, which may disappoint investors seeking shareholder returns. Q & A Highlights Q: What were the yarn spreads during Q1 FY27, and are they sustaining in Q2? What has led to this spread improvement?A: Shri Dinesh Nolkha, Chairman, stated that spreads improved from approximately Rs. 110 in the last quarter of FY26 to around Rs. 130 in Q1 FY27, and this level is being sustained in Q2. He attributed the improvement to an improved demand scenario, consolidation of capacities (with some players exiting the business), and a correction in the price parity between Indian and international cotton. Indian cotton, which was previously priced 5-7% higher than the Cotlook index, is now at a discount of 1-2%, representing a significant delta change of 7-8%. Q: Can you provide a bridge for the year-on-year EBITDA margin expansion from 14.02% to 17.78%? How much is from cost savings versus realizations?A: Shri Dinesh Nolkha, Chairman, explained that the major increase is due to improved yarn realizations, with gross margins improving from the 34-35% range to over 40%. He noted that cost savings on power contributed about 0.5% to EBITDA, driven by increased solar capacity and energy-saving initiatives. He clarified that the company does not carry extraordinary inventories, so only a very small portion of the margin expansion came from inventory gains, with the majority stemming from realization increases. Q: Regarding the new capacity expansion, what is the timeline for the spinning and fabric capacities to come online, and what is the expected incremental revenue contribution?A: Shri Dinesh Nolkha, Chairman, provided a detailed timeline: weaving capacity should start in a couple of months, processing capacity around Diwali, and spinning capacity by December. He expects yarn capacity to be fully ramped up by March 31, 2027, while fabric ramp-up may take a quarter or two into FY28. The company expects to add Rs. 500 crores to fabric revenue (from Rs. 700 crores to Rs. 1,200 crores) and approximately Rs. 1,000 crores in total incremental revenue, with fabric contributing about 60% of the new capacity's output. Q: Is the demand from China for Indian cotton yarn a major reason for the sustained high demand and yarn prices? What is the outlook for this trend?A: Shri Dinesh Nolkha, Chairman, confirmed that China's buying is one of the reasons but not the only one, noting that domestic demand has also been good. He highlighted that Indian yarn exports to China increased from 90-100 million kgs in calendar year 2025 to 110-115 million kgs in 2026. He expects this trend to continue as China faces a lower domestic crop and may maintain import levels, though not at the peak levels seen in 2021-2022. Q: With the new capacity coming online, what will be the impact on blended margins? Also, what is the expected benefit from the renewable power expansion?A: Shri Dinesh Nolkha, Chairman, stated that the increase in fabric's share of the revenue mix (from 20-21% to about 30%) should add 100-150 basis points to overall margins. Regarding renewable power, he noted that the full solar capacity, expected to be operational by Q3 FY27, should generate annual EBITDA savings of around Rs. 50 crores. The blended power cost is expected to be around Rs. 5.50 per unit once the solar capacity, which will cover about 60% of requirements, is fully operational. Q: The yarn volumes have degrown on a Q-o-Q and Y-o-Y basis. Is this due to lower demand or a shift in strategy?A: Shri Dinesh Nolkha, Chairman, clarified that there is no actual degrowth in sales. The reduction in external yarn volumes is because the fabric division consumed more yarn internally. Additionally, some stock was left undispatched at the end of the quarter due to logistics challenges (vessel availability), which was subsequently dispatched in July. The company is operating at 98% capacity utilization, and the revenue growth is driven by improved realizations rather than volume increases. Q: What is the current utilization level of the knitted fabric business, and what is the outlook given the US tariff situation?A: Shri Dinesh Nolkha, Chairman, reported that knitted fabric utilization is currently in the range of 55-60%, which is below the pre-tariff level of 60-65%. He attributed this to ongoing uncertainties in the US market, where the company has a major presence. The frequent changes in tariff rates have impacted demand, and the company has not yet fully recovered to previous utilization levels. Q: Are you considering venturing into garmenting or home textiles for the next leg of growth? Would you consider inorganic opportunities?A: Shri Dinesh Nolkha, Chairman, acknowledged that both garmenting and home textiles are key growth areas for Indian textiles. He stated that the company is evaluating these opportunities and is open to both organic and inorganic routes if the right opportunity arises. However, he emphasized that no firm plans are in place, and the company will first focus on ramping up its current capacity expansion. He noted that home textiles had a rough phase due to US regulatory changes but sees opportunities in the EU market. Q: What is the current cotton crop size and quality outlook for the upcoming season?A: Shri Dinesh Nolkha, Chairman, stated that the current season is expected to close at around 318-320 lakh bales, slightly lower than the 326-327 lakh bales of the previous year. For the upcoming season, sowing acreage is currently about 0.5-1% lower than last year, but the final crop size will depend on rainfall over the next month. He noted that last year's quality was poor, prompting imports, but this year's quality looks good so far, subject to the monsoon's performance. Q: Can you provide an update on the pass-through of raw material price increases in the fabric business compared to yarn?A: Shri Dinesh Nolkha, Chairman, explained that in the yarn business, the company has been able to pass on more than 100% of the raw material increase (e.g., passing on 120-125% for a 100% increase). However, in the fabric business, only the actual For the complete transcript of the earnings call, please refer to the full earnings call transcript.