NITINSPIN - Nitin Spinners Ltd. Share Price

Management Outlook:
Nitin Spinners anticipates a positive textile industry outlook driven by stable cotton prices, favorable forex rates, and government initiatives. Exports are recovering (global cotton yarn exports up from ~60k to 100k+ tons/month), and domestic demand is steady. The spinning segment shows resilience with consolidation (12"“15% capacity closures) improving demand-supply balance. Geopolitical shifts (e.g., Bangladesh instability) may benefit Indian exports. Margins are expected to improve with cost controls, better spreads, and value-added fabric expansion.

Major Points:

1. Capex Plan: INR 1,100 crores approved for 24 months to add 66,000 spindles (+22k MT yarn), 250 looms (+35M meters fabric/year), and 11 MW solar power. 60% yarn for captive fabric use; fabric revenue to rise from 25% to 33%.
2. Margins & Efficiency: Focus on cost optimization and operational efficiency. Current EBITDA margin ~14%; new projects target 20%+ EBITDA.
3. Debt & Funding: INR 800 crores debt (subsidized at ~5.7% post-subsidy) + internal accruals. Total debt to reach ~INR 1,900 crores by FY27.
4. Market Trends: Stable cotton prices (INR 54k/ton MSP); international prices at cyclical lows. Knitwear demand recovery noted.
5. Volume Growth: Capacity utilization at 95% (spinning) and 90% (weaving); growth post-FY27 via new capex.

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Question 1:
Sir, just wanted to understand, I think in the opening remarks, you highlighted that the cotton prices have stabilized and domestic demand is back into traction with the export recovery. So can you throw more light in terms of how the export has picked up in the last 9 months? And how do we see exports picking up in the short to medium term from here?
Answer:
Cotton yarn exports recovered from ~60,000 tons/month (2023) to ~100,000 tons/month (2024) due to stable prices, geopolitical easing, and demand recovery in the US/Europe. Domestic demand remains steady, supported by garment exporters' order books. Future export growth hinges on stable raw material prices and improved global demand.

Question 2:
Sir, now if you indicated that the domestic cotton prices are still at a premium to international prices. So if one wants to take a short to medium-term view, how do you see the yarn prices or the spreads moving up for the industry?
Answer:
Consolidation (12"“15% industry capacity closed) has balanced demand-supply. Stable international cotton prices and MSP-led domestic stability may improve spreads. Margins are at cyclical lows, but cost optimization and operational efficiency will aid profitability.

Question 3:
The much-awaited capex that you were waiting for and you have announced INR 1,100 crores of capex. So just wanted to understand the IRR that you are expecting on this? And what are the growth drivers until the capex is operational?
Answer:
IRR is projected at 14"“15%, with EBITDA margins targeting 20%+ post-expansion. Growth until FY27 will rely on cost optimization, slight utilization improvements, and stable cotton prices. Partial capacity (e.g., weaving/finishing) will start contributing within 12 months.

Question 4:
What percentage of our revenue is derived from fabric at the moment, meaning annual revenue?
Answer:
Fabric contributes ~25% of revenue. Post-capex (24 months), this is expected to rise to ~33%, driven by 35 million meters/year of added dyeing/finishing capacity and 66,000 new spindles (60% captive use).

Question 5:
What is the debt profile of the company right now? What is the debt outstanding as of today?
Answer:
Total debt is INR 1,250 crores (INR 850 crores term loans + INR 400 crores working capital). Capex will add INR 800 crores debt (~INR 1,900 crores total by FY27 post-repayment). Blended post-subsidy interest cost is ~5.7%.

Question 6:
Are you a bit late in announcing the capex? Why not pursue inorganic growth?
Answer:
Timing aligns with demand recovery and product diversification planning. Inorganic growth is limited due to unviable small/aging assets. Capex focuses on value-added fabric (higher margins) and backward integration for cost efficiency.

Question 7:
What is the breakup of the capex across segments?
Answer:
INR 400 crores for spinning (+11 MW solar), INR 550 crores for fabric (250 looms + dyeing), INR 50 crores for efficiency upgrades, and INR 100 crores for working capital. Spinning capex cost: ~INR 56,000"“57,000/spindle.

Question 8:
What are the drivers for FY26 earnings without new capacity?
Answer:
Margin improvement via cost optimization (~150"“200 bps), better product mix (higher fabric share), and slight utilization gains in knitting/weaving. Cotton price stability and export demand recovery will support revenue.

Question 9:
What is the outlook for domestic and international cotton prices?
Answer:
International prices are range-bound (5"“7% downside capped by strong crop). Indian prices are anchored to MSP (INR 54,000/candy) with 45% procurement by CCI. Parity with global rates expected via government interventions.

Question 10:
Any plans for forward integration into garments?
Answer:
No immediate plans. Garmenting would require large-scale entry and policy incentives (e.g., PLI). Focus remains on yarn/fabric verticals (capex completion by 2026) for now.