Q1 2027 Nitin Spinners Ltd Earnings Call Transcript
Key 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.
- 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.
Ladies and Gentlemen, Good day and welcome to the Nitin Steiners Limited Q1 and FY27 Earnings Conference Call. As a reminder, all participants will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation continues.
Should you need assistance during the conference call, please signal an operator by pressing then 0 on your dash tone phone. Please note that this conference is being recorded.
I would now hand the conference. Over to Mr. Abhish Chandra from Smith Limited.
Thank you and over to you.
Thanks a lot Muskan and thank you very much everyone for joining this call. On behalf of Smith Limited, I welcome you all to first quarter financial FY27 earning conference call of Nissan Spinners Limited. We are pleased to host the top management of the company. Today we have with us Mr. Dinesh Nolka, Chairman and Managing Director of the company. Mr. Nitin Nolkha, Managing Director of the company, and Mr. P. Maheswari, Chief Financial Officer.
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