Nitin Spinner - textile yarn story


(Dhaliwal) #144

I like this company. Their performance over last 10 years has been impressive. I am little skeptical about the massive capex plans they have. Rs 1000 crore for a company with market valuation of Rs 600 crore.

I am also not sure how much of this capex will be in form of loans. I know they have done QIP but that amount of much lower than capex plan of 650 crore (during first phase). They might need Rs 350 crore for next phase of expansion.

I have read some parts of 2017 AR and Investor Presentation but I couldn’t find the source of funds for capex (maybe I have missed).

And, textile companies are seen with bit of doubt these days, after the amazing move over last few years.

Invested small amount but planning to invest more at the right time.


(manan1379) #145

The company has raised arround 108cr thru qip. Promoter has infused arround 8cr. Plus the company wud generate cash flow from operations of arround 82cr ths yr (54cr net profit + 28cr depreciation). So tht takes d total to arround 200cr. The company shud be able generate significant cash flow for 2018-19 as well. I assume it to be near 100cr (conservative). This will take the total to arround 300cr. I dont know wat is d expected time of completion of this project. I guess the balance wud b from debt. The company has also mentioned in the presentation tht dey wud receive interest subsidy of 6% for this project. So d interest wud be relatively low.

Also post these expansions nitin wud become a competitor with arvind and other like players and wud enjoy gud margins being an integrated player. I feel dis wud result in pe expansion and cud rerate d stock post expansion


(Chemist) #146

Nitin Spinners Ltd reports FY18 Q4 Result

http://equitybulls.com/admin/news2006/news_det.asp?id=227769


(Aditya Mehta) #147

NOTE:


(Abhishek shah) #148

4th quarter results have been flat Y-on-Y. the growth in FY 19 is expected to come from better capacity utilization of the enhanced capacities. In Fy 18, revenue volume growth has been 10% and value growth has been 10%, hence the topline has been able to grow at 20-21%. Major part of the value growth must have come from price rise passed on to the customers and minor portion must have come from increase of proportion of value added items in the overall topline. The reduction in margins at EBITDA level must be because of two reasons mainly -

1). Appreciation of Rupee in FY 18.
2). Company unable to pass on all the raw material price rise to its customers - which they had mentioned in FY 17 AR and the same situation has repeated in FY 18.

Looking at the 10% volume growth only in Fy 18, what is the expected topline for FY 19?
What can be drawn from the numbers is that the new capacity might be operating at 42% only. The estimated revenue from the capacity enhancement can be estimated to be close to 420 cr (without value growth) whereas company has already booked 180 odd crore of turnover in FY 17 and FY 18 (from the new capacity).

So, almost 1400 odd crores including the value growth impact!!

Now, the cotton price have stabilized and rupee has depreciated and is back at 67 levels - which hints probability of improvement is EBITDA margins.

Valuation - Available at rock bottom price - Price to Book of nearly 1.15 times!! And available at sufficient discount to the QIP price.

Please correct me if I am wrong. We have to wait for the timeline for the completion of the new project of 650 odd cr.

Disc - Invested.


(Aditya Mehta) #149

You are somewhat mistaken dear. Capacity utlization is more than 90% and further expansion which they have taken up in Chittorgarh will come up by the end of this year most prob. So growth will start coming from Q3 onwards.

On margins front yes alot of improvement is possible, recent move in rupee and improvement in yarn prices will help in improving margins.


(skg) #150

I started tracking Nitin spinner recently. I looked at its balance sheet on screener and found that it has lot of debt(D/E is 2.2 and FCF is -ve). P/E ratio is around 10 and other parameters like ROE and ROCE looks good. But I was concerned about D/E. Does anyone has any comment on it?


(Chemist) #151

20180515_Nitin-Spinners-Limited_202_QuarterUpdate.pdf (525.7 KB)


(Chemist) #152


Have Investors Priced In Nitin Spinners Ltd’s (NSE:NITINSPIN) Growth?
https://simplywall.st/stocks/in/consumer-durables/nse-nitinspin/nitin-spinners-shares/news/have-investors-priced-in-nitin-spinners-ltds-nsenitinspin-growth/


(Man) #153

Quarterly results out…Nitin Spinners_ Quarter Results.pdf (2.8 MB)


(riki2583) #155

fabric length*realisation should be expected revenue from new capacity (650 crore expansion)
interest cost on around 500 crore of debt in expansion
ebitda margin on new revenue
above estimations should give growth rates
any calculations on the above ?


(AJ) #156

Yes, Dolly Khanna seems to have exited or significantly pared down his stake as per the latest share holding disclosure made by the company on BSE.
Public Share holding disclosure

AJ


(James Sebastian) #157

Q2 standalone results. Revenue 9.4% growth YoY
PAT doubled YoY (97%)
EPS 2.92 against 1.82 last year.

Details here.


(lingalarahul7) #158

This story looks great to me so far!

Positives:

  1. Management is transparent, providing some great detail in their annual reports. Management sounds able too, given their ability to grow the company at such a high rate.
  2. Current valuations are cheap!
  3. Expecting improvement in their PAT margins over the coming years, as revenues would rise disproportionately to D&A and finance costs.
  4. Sustained profitability even though cotton prices are rising high.

Concerns:

  1. Their new plant is for finished fabrics, which is exactly not their business at the moment. Is it safe to assume they can sell those products?
  2. Debt ratios are high. If they raise money once more for some other project before this Chittorgarh project is a success, I’m out.
  3. Rising power & fuel costs. The management must do something about it. Such high costs even after factoring in RIPS is food for trouble.

The recent decrease in margins, asset turnover ratio are explained by the expansion going. So that doesn’t bother me much.

Disclosure: Invested <2% of net worth. As the expansion is expected to complete by Sept 2019 (refer BWR 2018 credit rating report), I’ll slowly increase my holdings each quarter as the story keeps unfolding.


(lingalarahul7) #159

Would really appreciate if someone from the textile business can help on this question :slight_smile: