NITIN SPINNERS LIMITED IN-DEPTH FUNDAMENTAL ANALYSIS

Overview of Business

Nitin Spinners Ltd. (NSL) was incorporated in 1993 at Bhilwara, Rajasthan. It is a well-established player in the cotton yarn segment, Knitted Fabric and Woven Fabrics. It is an ISO 9001:2008 certified company and a Government of India recognised export house.The company also has Environment and Energy Management System certifications ISO 14000 and ISO 50001, OSHAS for occupational safety and SA 8000 for social accountability. 

It is a listed entity on the NSE and BSE. The company has a present capacity of 300048 spindles with a production capacity of 63929 MTPA and 3488 rotors with a production capacity of 10416 MTPA. The company is promoted by Mr. R.L Nolkha, who has more than four decades  of experience in the cotton textile industry. He is supported by his sons Mr. Dinesh Nolkha and Mr. Nitin Nolkha. The promoters have also hired qualified professionals to manage the different aspects of the business. The board also includes three independent directors to ensure corporate governance in the company. 

 

Financial Analysis of Nitin Spinners Ltd

Let us come to the financial performance analysis of Nitin Spinners Ltd over the last 10 years. 

Sales Growth 

Over the last 10 years, the sales of the company have increased at a growth rate of 22% from ₹446 Cr in FY2013 to ₹2690 Cr in FY2022. Further, the company reported a slight drop in sales i.e. ₹2689 Cr in its last 4 quarters ending Sep-2022. 

If we see the sales growth of the company over the last 10 years, we can conclude that the journey of the company was quite smooth as sales were continuously increasing over the years. There was not a single year between FY13 to FY22, where the company reported a drop in sales. 

Continuous increase in sales over the years is a very healthy sign for a good company. It indicates that the company is capturing more market shares or we can say that there is solid demand for the products or services offered by the company. 

Initially the company was growing its sales with a beautiful growth rate i.e. 22% as 10 Year Sales CAGR is 22%. Further, if we see here the sales growth rate of the company in 7 years, 5 years and 3 years, we will find out that the company has maintained a continuous improvement in its sales growth rate. 7 Years sales CAGR is 23% , 5 Years sales CAGR is 24% and 3 Years sales CAGR is 29%.  

Operating profit and Operating profit margin 

Over the last 10 years, the operating profit of the company has increased from ₹88 Cr in FY2013 to ₹652 Cr in FY2022. Further, the company reported a drop in its operating profit i.e. ₹512 Cr in its last 4 quarters ending Sep-2022. 

Similarly, if we see the operating profit margin of the company over the previous 10 years, we can note here that the operating profit margin of the company is following the cyclical pattern because it is going down initially from 20% in FY 2013 to 12% in FY 2020. Further, it has started to improve and it is 24% in FY 2022.  Operating profit margin of the company again dropped to 19% in its last 4 quarters ending Sep-2022. 

Operating profit. 

Such cyclicality in the operating profit margin of the company indicates that the company has less pricing power over its customers and the company is facing difficulties to withstand the volatility in the raw material prices and the company is not able to maintain its operating profits. 

CARE Ratings has mentioned the same reason that we were discussing above in its credit report of July-2022. 

Susceptibility to volatility in the raw material prices and foreign exchange rate fluctuations: 

The basic raw material consumed by NSL to produce yarn is raw cotton, which accounts for more than 90% of the total cost of production. The prices of raw cotton are volatile in nature and depend upon factors like area under production, yield for the year, vagaries of the monsoon, international demand-supply scenario, inventory carry forward from the previous year and minimum support price (MSP) decided by the government. Prices of raw cotton have been volatile over the last couple of years, which translates into risk of inventory losses for the industry players; albeit at times it also leads to inventory gains. Collectively, these factors along with intense competition in the industry contribute to low bargaining power of yarn manufacturers and volatility in profitability. 

Further, NSL is also exposed to foreign currency rate fluctuation as the company derives a significant portion of its revenue from the export market (exports accounted for 73% of the total revenue in FY22). Thus, profitability margins of the company remain susceptible to any adverse movement in the foreign currency. 

Net profit and Net profit margin 

Over the last 10 years, the net profit of the company has increased from ₹14 Cr in FY2013 to ₹326 Cr in FY2022. Further, the company reported a reduction in its net profit i.e. ₹273 Cr in its last 4 quarters ending Sep-2022. 

Similarly, if we see the net profit margin of the company over the previous 10 years, It is also following the similar pattern as operating profit margin i.e. cyclical pattern. Net profit margin of the company was within the range of 2% to 7% over the last 10 years till FY2021. 

But, if we see the net profit margin of the company for FY2022, it is 12% which is very healthy and we will try to find out further the reason for such a beautiful net profit margin of the company for FY 2022. 

However, the net profit margin of the company further dropped to 10 % during the last 4 quarters ending Sep -2022. 

Tax Payout ratio 

The company is paying taxes in the range of 32% to 36 % during FY2013 to FY2022. It is a good sign that the company is fulfilling the need of statutory compliances. 

Interest coverage ratio 

While I prefer a company that has an interest coverage ratio of at least 3. If we see the interest coverage ratio of the company over the last 10 years, it was getting down from 4.1 in FY2014 to 1.5 in FY2020. Further, it has improved and currently it is 6.6 in FY2022. 

It indicates that currently the company is having  a very good sign in terms of interest coverage ratio. The company is very much in a comfortable position to service its debt, but as the interest coverage ratio of the company was below our comfortable level i.e.3 too over the previous 10 years and hence we need to monitor the interest coverage ratio of the company in coming years. 

A good business needs to maintain its interest coverage ratio on a healthy side.  

Debt to equity ratio 

While I prefer a company that has a debt to equity ratio less than 1. If we see the debt to equity ratio of the company over the last 10 years, it was 2.1 in FY2013 which has improved over the years and reached to 0.8 in FY2022. 

Debt to equity ratio of the company is now within the comfortable range as of FY2022 and it indicates that the company is now trying to improve its capital structures which is a very good sign for any company. However, if we see the reason for the improvement in debt to equity ratio, we will note that equity has increased from ₹101 Cr in FY2013 to ₹876 Cr in FY2022. Whereas the debt has been increased from ₹207 Cr in FY2013 to ₹689 Cr in FY2022.

Therefore, increase in equity is higher as compared with the increase in its debt and it resulted in the improvement in debt to equity ratio. Debt was taken to fund the capex that the company has done over the previous 10 years. 

Current ratio 

The current ratio of the company is currently 2.13, it indicates that current assets are very much enough to take care of its current liabilities.  

Conclusion of Financial Analysis of Nitin Spinners Limited 

After analyzing the financials of Nitin Spinners Limited for the last 10 years (2013-22), we have noted here that the company is growing at a healthy growth rate i.e. CAGR 22%. Operating profit margin and net profit margin of the company is following the cyclical pattern. 

Change in raw material price along with intense competition in the industry contribute to low bargaining power of yarn manufacturers and volatility in the profitability of the company. NSL is also exposed to foreign currency rate fluctuation as the company derives a significant portion of its revenue from the export market. 

Company is able to increase its sales by capacity expansion without overly leveraging its balance sheet, as we can see the debt to equity level which was earlier not in a comfortable position but as of FY2022 it is improved and comes under the comfortable position. 

The company has also improved its debt-servicing position, which is reflected by its good interest coverage ratio in FY2022. Current ratio is also on a healthier side which indicates that current assets are very much enough to take care of its current liabilities. 

Operating Efficiency Analysis of Nitin Spinners Limited 

Net fixed asset turnover (NFAT)

Let us analyze the Net fixed asset turnover (NFAT) of the company in the last 10 years. We will notice here that Net fixed asset turnover of the company was continuously in the range of 1.48 to 2.6 over the last 10 years. 

Net fixed asset turnover (NFAT) of the company dropped slightly in between as the company has executed capex during FY17, FY19 and FY20.  

Inventory turnover ratio 

Let us analyze the inventory turnover ratio (ITR) of the company in the last 10 years. We will note here that most of the time the inventory turnover ratio (ITR) of the company was in the range of 5.2 to 7.5. So, the company is able to maintain its inventory effectively. 

Analysis of receivable days 

Let us analyze the receivable days of the company in the last 10 years. We will note here the receivable days of the company increased from 20 days in FY14 to 28 days in FY22. It has fluctuated basically in a range of 17 to 36 days in the last 10 years.  Still receivable days of the company are at a comfortable position.  

Cumulative cash flow from operation (CFO) vs Cumulative profit growth (PAT)

We can note here that cash flow from operation for the last 10 years is ₹1229 Cr and cumulative profit after tax for the last 10 years is ₹727 Cr. So, we can note here that the company is very efficiently converting its profits into cash flow from operation. It is also a very healthy sign for Nitin Spinners limited. 

Conclusion of operating efficiency Analysis of Nitin Spinners Limited 

After analyzing the operating efficiency analysis of Nitin Spinners Limited for the last 10 years (2013-22), we have noted here that the company is maintaining a good NFAT which is in the range of 1.48 to 2.6 during the last 10 years. 

Most of the time the inventory turnover ratio (ITR) of the company was in the range of 5.2 to 7.5. Hence, we can say that the company is able to maintain its inventory effectively. 

 

The company is able to maintain its receivable days within a comfortable position. Hence, we can say that funds are not getting stuck in receivables and the company is efficiently collecting its receivables from its customers. 

Result of efficient operating efficiency of the company could be seen by observing the cumulative CFO and cumulative PAT over the previous 10 years. Company is very efficiently converting its profits into cash flow from operation. 

Margin of safety in the business of Nitin Spinners Limited  

Self sustainable growth rate 

The self sustainable growth rate of the company was continuously on a lower side than its 10 years sales CAGR 22%. When we see the sales growth of the company, we can note here that the company was growing at a much higher rate as compared with its self sustainable growth rate. In other words, we can say that the company could not grow with the pace as it was growing by using its own funds only. Therefore, we have seen above that the company has taken debt to fund this pace of growth rate. 

Same could be seen by observing the debt on the company over the previous 10 years. If we see the debt to equity ratio of the company over the last 10 years, we can note that debt to equity ratio never came below 1 till FY2021. Most of the time it was around 2. Debt to equity ratio of the company improved and came first time below 0 in FY2022. 

We need to monitor the debt level and debt to equity ratio in the coming periods.  

Dividend payout 

During the period FY13 to FY22, The company has paid a dividend of ₹58 Cr and retained the earning by ₹669 Cr. Company has increased the value of the fund that it has retained and reinvested in its growth plan by 1.53 times. It also indicates a good sign as the company has not deteriorated the trust of its shareholders. 

Free cash flow 

Let us see here the cash flow performance of the company. During the period of FY2013 to FY2022, the company has generated cash flow from operation ₹1229 Cr. During the same period, the company has executed CAPEX of ₹1303 Cr. So, if we determine here the free cash flow for the same period, it will be  ₹74 Cr short. 

Other income for similar period of FY2013 to FY2022 = - ₹3 Cr

Interest expense for similar period of FY2013 to FY 2022 = ₹354 Cr 

Therefore, net free cash flow will be negative i.e. - ₹431 Cr (i.e. ₹1229 - ₹1303 - ₹354 -₹3) after considering the other income and interest expenses. 

Conclusion of margin of safety analysis in the business of Nitin spinners Limited 

The company is not comfortable to grow with the pace as it was growing by using its own funds and the company will have to be dependent on the outsource funds like debt and equity dilution. Same could be seen by observing the debt level of the company over the previous 10 years. 

If we see the debt to equity ratio of the company over the last 10 years, it was 2.1 in FY2013 which has improved over the years and reached to 0.8 in FY2022. 

Debt to equity ratio of the company is now within the comfortable range as of FY2022 and it indicates that the company is now trying to improve its capital structures which is a very good sign for any company.

Business Analysis of Nitin Spinners India Limited

Comparison of Nitin Spinners Limited with its peers 

Nitin Spinners Limited has a higher sales Growth rate (CAGR) and profit growth rate (CAGR) for the previous 10 years as compared with its peers and maintained its margin too beautifully over the last 10 years. 

Debt to equity ratio of the company is now within the comfortable range as of FY2022 and it indicates that the company is now trying to improve its capital structures which is a very good sign for any company.

Conversion of sales growth in to profits 

We can see from the above table that net profit margin was fluctuating over the years in a range of 2 %to 7 % till FY2021. But in FY2022, Net profit margin of the company is 12% which is a very healthy sign. 

But, we must think about why the net profit margin of the company has increased to 12%. While reading the annual report of FY2022, I have noted that net profit margin has increased sharply to 12% because management has decided to increase sales of value added products and high margin products. Therefore, we need to monitor the net profit margin of the company in the coming years and see whether the company is able to maintain its new net profit margin level or not. Maintaining such a level of net profit margin is very good. 

Conversion of profits in to cash

We can see from the above table that net profits of the company are getting efficiently converted into cash. It is a very good sign for a company when net profits are getting efficiently converted into cash. 

If we see the cash flow from operation for the last 10 years, it is ₹1229 Cr and cumulative profit after tax for the last 10 years is ₹727 Cr. So, we can note here that the company is very efficiently converting its profits into cash flow from operation. It is also a very healthy sign for Nitin Spinners limited. 

Creation Of Value For Shareholders From The Profits Retained By The Company 

We can see from the above table that the company has created 1.51 times of the fund retained by it and hence we can say that the company has passed the test of creating at least one INR of market value generation for its shareholders for each INR profit retained by it over the last 10 years. 

Conclusion of business analysis 

Nitin spinners Limited had a higher sales Growth rate (10 Year CAGR) and profit growth rate (10 year CAGR) as compared with its peers and maintained its operating profit margin too beautifully over the last 10 years. But, we must monitor the sustainability of the company to maintain its net profit margin as it has achieved in FY2022 i.e. 12%. 

We can say here that sales growth is getting converted into profits but net profit margin is not so beautiful as the company is maintaining a net profit margin in the range of 2% to 7% over the last 9 years i.e. from FY13 to FY21. But in FY2022, Net profit margin of the company sharply increased to 12% due to sales of value added and high margin products which is a very healthy sign. 

When we see the cash flow from operation, we found that net profits of the company are getting efficiently converted into cash. 

The company has passed the test of creating at least one INR of market value generation for its shareholders for each INR profit retained by it over the last 10 years. 

Key Strength in the business of Nitin Spinners Limited 

Source - CARE Ratings 

Experience of promoters in the textile industry: 

NSL was promoted by the Nolkha family in 1992. Mr. R. L. Nolkha (first generation entrepreneur), Chairman, has an experience of over four decades in the textile industry. He has also served as Vice Chairman of Confederation of Textile Industries (CITI), Chairman of Northern India Textile Research Association (NITRA), Chairman of Rajasthan Textile Mills Association and a member of the Board of Governors of Textile Skill Development Council. Mr Dinesh R. Nolkha, Managing Director, has around three decades of industrial experience and handles yarn marketing, finance and general administration. He has served as the president of Mewar Chamber of Commerce and Industry and presently, serves as a Chairman of NITRA. Mr Nitin R. Nolkha, Joint Managing Director, has around two decades of industrial experience, and looks after marketing of fabrics, procurement of materials and implementation of projects. 

Long and established track record with integrated nature of operations in textile industry: 

NSL has a track record of around three decades of operation in the Indian textile industry. NSL commenced operations in 1992 with a small capacity of 384 rotors at its plant located in Bhilwara (Rajasthan). Over the years, NSL has expanded its operations to include open-end yarns, ring-spun yarns, blended yarns, knitted fabrics, and finished woven fabrics. 

As a part of value addition and widening its product range, the company has set up an integrated textile mill in Chittorgarh (Rajasthan) equipped with modern spinning,weaving, dyeing, finishing and printing facilities with zero liquid discharge water treatment plant. 

Presently, NSL has an installed capacity of 3,07,000 spindles and 3,488 rotors producing 75,000 tons of yarn per annum. It also has 63 knitting machines with a capacity to produce 8,500 tons of knitted fabrics per annum and 168 looms and dyeing, printing, and finishing capacities to make approximately 300 lakh meters of finished fabrics per annum at its two plants located in Rajasthan. The company also has an 8.5 MW rooftop solar power plant for captive power consumption which helps in reducing power cost to some extent. NSL also had a coal-based power plant of 10 MW for captive power consumption which was scrapped during the year due to impact of rising coal prices and availability of sufficient power supply by State Electricity Boards at a competitive tariff.

Moderately diversified product profile with large share of revenue contributed by cotton yarn: 

NSL is engaged in manufacturing a wide variety of cotton yarn, knitted fabrics and finished woven fabrics. Cotton yarn accounts for most of the revenue generated by the company registering around 70% of the sales in FY22 (FY21: 67%) followed by woven and knitted fabrics. The company manufactures varied quality of cotton yarn with the count of cotton ranging from 6s to 100s. NSL is continuously focusing on providing value added products to its customers. It provides a wide range of yarn to meet its customer requirement both for woven fabric and knitted fabric. 

Reputed and diversified customer profile with good presence in export markets: 

The customer base of the company is diversified with top ten customers accounting for 25% of the total income of the company in FY22, with each customer having less than 5% share of the total income. NSL supplies its products to some of the renowned brands like Raymond, Arvind, Donear, D’Decor, Siyaram’s, Welspun etc in domestic market and Zara, United Colors of Benetton, Hennes & Mauritz (H&M), Marco Polo in the international market. 

The company enjoys good relationships with these customers and receives repeat orders from them. Moreover, NSL has presence in more than 60 countries globally, deriving more than half of revenue from exports. During FY22, the company earned nearly 73% of its revenue from the export market. Further, NSL earned around 70% of its export revenue from yarn and remaining from fabrics. 

Healthy growth in TOI along with significant improvement in its profitability during FY22: NSL’s TOI grew by 66% on y-o-y basis and stood at Rs.2,692 crore during FY22 largely due to significant improvement in the average sales realization of cotton yarn and knitted fabrics amidst strong export demand. During FY22, export revenue of the company grew by 92% on a y-o-y basis. The sales realization of cotton yarn and knitted fabric improved by 54% and 44% respectively during FY22 as compared to FY21. PBILDT margin of the company also witnessed significant improvement by nearly 800 bps to 24% during FY22 as compared to 16% during FY21 respectively on account of sizable jump in the spread between cotton and cotton yarn along with improved operating efficiency led by better capacity utilization. With healthy growth in scale of operation coupled with improved profitability margin, the gross cash accruals (GCA) of NSL grew by 116% on a y-o-y basis and stood at Rs.426 crore during FY22. 

Improvement in leverage and debt coverage indicators; albeit expectation of moderation due to drawal of term debt for ongoing large-size capex: 

The capital structure of NSL marked by overall gearing and TOL/TNW improved to 0.79 times and 0.94 times respectively as on March 31, 2022 as compared to 1.71 times and 1.88 times respectively as on March 31, 2021 backed by healthy accretion of profit to reserves coupled with reduction in debt level. 

Debt level of the company stood at Rs.689 crore as on March 31, 2022 which reduced from Rs.962 crore as on March 31, 2021 due to scheduled repayment of term debt of Rs.114 crore, prepayment of term debt of Rs.65 crore and lower utilization of working capital utilization in light of healthy cash flow during FY22. 

With improvement in profitability and cash accruals, the debt coverage indicators also improved marked by PBILDT interest coverage and Total Debt/PBILDT of 11.77 times and 1.06 times respectively in FY22 as compared to 4.18 times and 3.74 times respectively in FY21. However, the capital structure and debt coverage indicators are again expected to moderate in the medium term due to on-going large size debt-funded expansion project and expectation of higher utilization of its working capital limits considering envisaged internal accruals to be deployed for capex. 

Further, post commissioning of the expansion project, the company would also require additional working capital borrowing to fund its incremental sales which may also lead to some moderation in capital structure and debt coverage indicators. 

Liquidity: 

The liquidity of NSL remains adequate backed by healthy cash accruals and cash flow from operation apart from cushion in the form of undrawn working capital limits. The company is envisaged to earn healthy cash accruals during FY23 which is expected to be adequate for meeting its capex funding requirements apart from its term debt repayment obligation of around Rs.90 crore during the year. The average utilization of its working capital limits stood at a moderate 42% for trailing twelve months ended May 2022. The current ratio improved and remained strong at 1.83 times as on March 31, 2022. 

Key weakness in the business of Nitin Spinners Limited 

Source - CARE Ratings 

Implementation and saleability risk associated with large size ongoing debt funded capex: 

NSL is implementing a brownfield project to expand its cotton yarn and weaving capacity at existing locations in Rajasthan, as the company is currently running at optimum utilization of its existing capacities. The capacity addition is also expected to meet increasing demand of its product, penetrate newer geographies, aid widening of product portfolio and to bring competitive cost advantage by having economies of scale. 

The estimated cost of the project (including margin money for working capital limits, pre-operative expenses and contingency) is Rs.955 crore (~ 1.09 times of tangible net-worth as on March 31, 2022) which is being funded through term loan of Rs.655 crore and remaining through internal accruals translating into project debt-equity ratio of 2.18:1 time. 

The company has invested nearly Rs.75 crore as on June 30, 2022 towards the aforesaid project. The capex is expected to be completed within the next 12-15 months. The scheduled commercial operation date (SCOD) is October 2023 (i.e. Q3FY24). 

The term loan for the project is tied-up and is repayable with the door-to-door tenor of 9.5 years (including implementation and moratorium period of 2.5 years). The loan would be repayable in 28 quarterly installments starting from December 2024 (i.e. Q3FY25). The company is expected to receive interest subsidy for the aforesaid term loan under the Rajasthan Investment Promotion Scheme (RIPs), 2019 for 7 years. Such large size projects are susceptible to inherent implementation risks and consequently any delay in execution of the project may result in cost overrun and impact the currently envisaged timelines for cash flow generation. 

Apart from that, demand for cotton yarn is driven by international demand-supply dynamics and susceptible to economic cycles. Historically, the textile industry has witnessed high cyclicality wherein demand shoots up and then falls rapidly. Hence, there is a salability risk associated with the project in case of sudden drop in demand which may adversely impact the credit profile of the company. Timely completion of the project within envisaged cost parameters and realization of envisaged benefit therefrom would be a key rating sensitivity. 

Susceptibility to volatility in the raw material prices and foreign exchange rate fluctuations: 

The basic raw material consumed by NSL to produce yarn is raw cotton, which accounts for more than 90% of the total cost of production. The prices of raw cotton are volatile in nature and depend upon factors like area under production, yield for the year, vagaries of the monsoon, international demand-supply scenario, inventory carry forward from the previous year and minimum support price (MSP) decided by the government. Prices of raw cotton have been volatile over the last couple of years, which translates into risk of inventory losses for the industry players; albeit at times it also leads to inventory gains. Collectively, these factors along with intense competition in the industry contribute to low bargaining power of yarn manufacturers and volatility in profitability. 

Further, NSL is also exposed to foreign currency rate fluctuation as the company derives a significant portion of its revenue from the export market (exports accounted for 73% of the total revenue in FY22). Thus, profitability margins of the company remain susceptible to any adverse movement in the foreign currency. However, the company has a policy to hedge its foreign currency exposure through forward contracts mitigating the forex exposure to an extent. As on March 31, 2022, Rs.6.95 crore of the company's foreign currency exposure remained unhedged, therefore reducing the risk to minimal levels. The company has reported net foreign exchange fluctuation gain of Rs.28.35 crore in FY22.

Presence in fragmented, cyclical and competitive textile industry: 

NSL operates in a cyclical and fragmented textile industry marked by presence of many organized as well as unorganized players leading to high competition in the industry. Apart from competition, the commoditized nature of cotton yarn also limits the pricing ability of the industry players to an extent. 

Further, the textile industry is inherently cyclical in nature and closely follows the macroeconomic business cycles. The prices of raw materials and finished goods are also determined by the global demand-supply scenario, hence any shift in the macroeconomic environment globally also impacts the domestic textile industry. 

Industry outlook – near term headwinds: 

Post first wave of Covid-19 pandemic, cotton spinners had gained momentum supported by healthy export demand. With availability of low cotton inventory and improvement in operating efficiency, the majority of cotton spinners reported high revenue and profitability during FY22. 

However, availability of raw cotton and its present elevated prices is posing a challenge. In the last 4-5 months till June 2022, the cotton prices have increased significantly due to lack of adequate availability of raw cotton in India. 

The Government of India has allowed duty-free import of raw cotton till October 2022 to ensure adequate availability of cotton in the domestic market. Presently, Indian raw cotton prices are 10- 15% higher than international prices which is impacting the competitiveness of Indian spinning mills. 

Also, there is a shift in the demand from cotton yarn to blended/ manmade yarns due to the higher cotton prices. Further, US and UK are the major cotton textile consuming nations globally which are facing a higher inflationary and rising interest rate scenario which may impact the demand temporarily. 

CARE Ratings expects that the sales volume and profitability of the industry players including NSL could be impacted adversely primarily in H1FY23 due to aforesaid near-term headwinds in the industry. However, it is expected that the cotton price shall fall from October 2022 with the arrival of the new cotton crop. On a sustainable basis, NSL is expected to earn a normalized PBILDT margin of 15-16%, unlike the exceptional PBILDT margin it had earned during FY22. On a long-term basis, Indian cotton spinners are expected to maintain stable demand growth and profitability supported by increasing urbanization, rising disposable income, China+1 strategy adopted by the major global retail players along with various incentives from government like Refund of Duties and Taxes on Exported Products (RoDTEP), Rebate of State and Central Taxes and Levies (RoSCTL) and Mega Integrated Textile Region and Apparel (PM MITRA) Parks etc. 

I hope you have enjoyed the complete fundamental analysis of Nitin Spinners Limited. Please share to reach up to max people for educational purposes only. It should never be considered as a recommendation as this post is only and only for educational purposes only. 

References

CARE Ratings

https://www.screener.in/

Annual Reports of Nitin Spinners Limited